Paul Blomfield (Sheffield Central) (Lab)
I beg to move,
That this House notes with concern the Business, Innovation and Skills Department's proposal to close its Sheffield policy office, moving 247 posts to London; further notes that the Sheffield BIS office proposal runs counter to the Government's welcome commitment to create a public sector that reflects the diverse nature of the UK following the publication of the Bridge report and also to the commitment in Budget 2016 to move civil servants out of expensive Whitehall accommodation; and therefore calls on the National Audit Office to conduct a cost benefit assessment of the BIS Sheffield proposal.
I thank the Backbench Business Committee for granting the time for this debate and right hon. and hon. Members from both sides of the House for their support for the application. The breadth of that support reflects the concern over the two issues central to this debate. The first issue is to underline the value of locating civil servants, particularly those involved in policy making, right around the country, in the regions and nations that make up the UK. That is something on which I think we can all agree and which has been reflected in the approach of successive Governments, including this one, in many of the things they have sought to do. The second issue is the seemingly perverse decision by the Department for Business, Innovation and Skills to centralise policy work in Whitehall and close its Sheffield office. It is a decision that runs counter to the general thrust of Government policy.
On 28 January, the BIS permanent secretary announced plans to close the St Pauls Place office in Sheffield, which is part of the Government’s national policy function, and to relocate those jobs to London, in order to centralise all departmental policy functions in Whitehall. In justifying the decision, he explained that the Department needed
“to modernise the way we work, reduce operating costs and deliver a simpler, smaller department that is more flexible and responsive to stakeholders and businesses.”
Those are fine, legitimate goals, but a decision to move policy functions from Sheffield to London does not tick any of those boxes. As Members, we asked the Department for figures explaining how a move from Sheffield to the most expensive city in the country could possibly reduce operating costs.
Jenny Chapman (Darlington) (Lab)
My hon. Friend is making the central point of our argument. I would like to make the point that it is not just jobs in Sheffield that are at stake. Although the numbers are smaller, jobs in Darlington are being moved to London, too, which makes absolutely no sense.
Paul Blomfield
I very much share my hon. Friend’s sentiment that there are many benefits derived from locating jobs outside London. These include cost benefits and the enrichment of decision making by involving people located around the country in administering government and advising the Government. My hon. Friend made a very important point.
When we asked the permanent secretary for a cost-benefit analysis, we got no answer. A cost-benefit analysis of moving a departmental office is not commercially sensitive and, so far as I can see, it is not a matter of national security. Why, then, right from day one, has the Department refused to provide the evidential basis for this proposal? Members have asked for this analysis in a Westminster Hall debate, in oral questions, in an urgent question, in written parliamentary questions, in over three separate evidence sessions of two Select Committees—the BIS Committee and the Public Accounts Committee—and in written correspondence. Yet we are still to see this information.
We can only assume that the reason for that is that the decision does not stand up to scrutiny. Such information as we have managed to wheedle out through written questions and other ways seems to confirm that. The answer to parliamentary question 33917 tells us that each year it costs £3,190 on rent, rates and maintenance to have an employee in the Sheffield office, compared with £9,750 in the London office. The Department rightly offers the London salary weighting of £3,500 a year, so we are already up to more than £10,000 per employee in London in comparison with Sheffield. That is before we even consider recruitment issues in London, where a more competitive jobs market inevitably drives salaries up further, which was acknowledged by the permanent secretary. When questioned on the issue, the permanent secretary told the Public Accounts Committee last month:
“We have not sought to put a price”
on those additional costs. That is extraordinary, and it is not good enough.
Alex Cunningham (Stockton North) (Lab)
My hon. Friend is making an excellent financial case to show why this change should not happen. The BIS office at Billingham in my constituency is not a headquarters, but it lies three miles from the constituency of the Minister responsible for the northern powerhouse. What kind of message does my hon. Friend think is being sent about the Government’s commitment to a northern powerhouse when they close down offices even in the constituency of the Minister who is supposed to be responsible for it, as well as next door?
Paul Blomfield
My hon. Friend makes a very important point, and he will not be surprised to learn that I shall come back to the point a little later in my contribution.
The Government say, quite understandably, that they want to save money, but we have done the maths from the limited information that we have managed to get. This decision will cost the Department in operational costs an additional £2.5 million a year, every year. I shall press the Minister further on the figures. When we tried to get a proper cost-benefit analysis, the permanent secretary told the BIS Select Committee:
“I do not think I can point to you one specific document that covers specifically the Sheffield issue.”
Furthermore, when the Minister for Universities and Science drew the short straw in having to defend the seemingly indefensible at a Westminster Hall debate back in February, he was clearly briefed by civil servants to respond to the repeated requests we made for a cost-benefit analysis, by saying:
“I am unable to provide a disaggregated breakdown of that figure because we are talking about a system change.”—[Official Report, 24 February 2016; Vol. 606, c. 138WH.]
That is not so. I have it here in an internal BIS management document on a page entitled, “Potential Savings from Sheffield Office Closure”.
I think that there are some serious issues here relating to the hand that Ministers have been dealt by senior civil servants in their Department. Indeed, when answering an urgent question asked by my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) immediately after the announcement, the Minister for Small Business, Industry and Enterprise said:
“We are confident that many of the workers will choose to take new jobs down in London.”—[Official Report, 29 March 2016; Vol. 605, c. 562.]
I am afraid that that is not the case, according to the leaked internal document, which states that
“90% of the potential savings are dependent on how many jobs are retained and moved to London.”
In other words, the more people reject the non-offer to up sticks, try to find a house in London’s hugely overheated housing market and move their children to different schools, the more money will be saved—and, to make sure of that, no relocation package was offered to the staff.
That takes me back to the obfuscation that we have encountered throughout the months during which we have debated this issue. In response to my most recent attempts to obtain the figures via written parliamentary questions, I was referred to a letter from the permanent secretary and the Chairs of the Business, Innovation and Skills and Public Accounts Committees. It sets out quite exaggerated costs for the Sheffield office, and some incredulity was expressed in the Public Accounts Committee when the issue was discussed there. Unless none of the functions being carried out in Sheffield—relating to the higher education White Paper and higher education in general, to apprenticeships, and to further education funding—is to be replaced in London, the letter provides only one side of the story, because the costs will be incurred in the replacement of the posts of people who do not move in London.
Is this simply a case of cutting 247 posts because they happen to be in Sheffield—posts which, because they are in Sheffield, are by definition, as I have said, £10,000 cheaper? A decision was made without regard for costs, without regard for the policy areas in which the people involved were working, and without regard for the expertise that would be lost. Indeed, the former—and highly regarded—Conservative special adviser in the Department, Nick Hillman, who is now head of the Higher Education Policy Institute, has lamented the loss of institutional expertise that this move will involve, and has condemned the decision for that reason.
Jo Stevens (Cardiff Central) (Lab)
Many of my constituents work for the Insolvency Service. At a time when there is a steel crisis, BHS has collapsed and other businesses are becoming insolvent, one would think that the Government would want to retain staff with expertise in insolvency, yet 153 jobs are at risk. Does my hon. Friend agree that that does not seem to be a sensible policy approach?
Paul Blomfield
I do indeed, and I think that other Departments are recognising that problem. For example, the Department for Education is trying to take some of the Sheffield-based BIS staff into its headcount because it is so worried about the loss of institutional expertise in respect of the programmes and the policy agenda that they share. The loss of that institutional experience and expertise is a really worrying issue, and it prompts concern about the Government’s ability to deliver their agenda.
What this begins to look like is a lazy decision, easily taken by top managers in the Department, and based on a prejudice that policy people should be together in Whitehall. I have to say that it is not a prejudice shared by other Departments. Indeed, the Department for Education celebrates the fact that it has members of staff making policy in offices around the country, bringing the experience of their lives and work in the regions and nations of the United Kingdom to those policy decisions.
Caroline Flint (Don Valley) (Lab)
I congratulate my hon. Friend on securing the debate. As he will know, not only has the Department for Education made it clear that it does not think it is for the good of education policy to move all staff to London, but it shares a building with BIS staff. Alongside is a skills agency, which, when questioned by the Public Accounts Committee, confirmed that it had no problem with having good, bright staff based in Sheffield to do policy work. Is it not worrying that BIS feels that we should move all the policy jobs—many of them good, highly paid and highly qualified jobs—to London? What does that say to young people in south Yorkshire and other areas outside London?
Paul Blomfield
I thank my right hon. Friend for her question, and for her robust questioning of the permanent secretary at the Public Accounts Committee. She is absolutely right to say that this sends out the wrong message. When we raised this matter with the permanent secretary, he pointed out that there were many other BIS jobs around the country. It is almost as though BIS is happy to have administrative functions carried out around the country but policy people have to be together in London. This raises another point about silo thinking within Government. As my right hon. Friend points out, there is a synergy involved in having civil servants in policy roles in BIS and the Department for Education working together on a similar agenda. Taking them away and moving them to London will diminish their role.
Alex Cunningham
I am really interested in this idea of policy people having to be at the centre. The Department argues that the move will bring BIS policy operations closer to Ministers and contribute to the huge saving of £350 million of running costs. However, the “Government’s Estate Strategy” states:
“With modern IT, officials no longer necessarily need to be physically present, for example to brief ministers. Having offices on the periphery will also encourage local growth and regeneration.”
That is the Government’s own strategy. Does my hon. Friend not detect a conflict there?
Paul Blomfield
I do indeed. I would simply reflect that this is the Department responsible for innovation. It is supposed to lead on creative thinking and thinking outside the box.
I worry, as do colleagues, that proper consideration has not been given to better options. The Department set itself an ambitious cost-saving strategy in “BIS 2020”, but what is its thinking on how it is going to get there? Normally, faced with decisions such as these, big organisations would think about the resources they needed to achieve their objectives, look at the matter in the round, model how those resources should be most cost-effectively located around the country, then make the decisions. Decisions about office closures would naturally come at the end of that process, not at the beginning, as has been the case here. The Department is putting the cart before the horse.
Chris Stephens (Glasgow South West) (SNP)
The hon. Gentleman is making an excellent speech. Should not part of the process he has just outlined involve proper consultation with the relevant trade unions?
Paul Blomfield
The hon. Gentleman makes an important point. We saw a process of consultation, which concluded on 2 May. The trade unions, working with the affected staff, have put in some substantial submissions and alternative proposals, and I shall be seeking reassurances from the Minister that they will be properly considered and their merits given the weight they deserve.
As a number of Members have commented, the “BIS 2020” review might result in some relocation of staff and in the concentration of policy staff in some areas. However, the idea that all policy functions need to be concentrated in London is simply absurd. It is even more ironic, given the wider Government policy that my hon. Friend the Member for Stockton North (Alex Cunningham) has just mentioned.
This year’s Budget committed the Government to moving out of “expensive Whitehall accommodation”. The Cabinet Office recently launched a raft of measures in a bid to diversify the civil service, after one of the Bridge report’s key findings was that students from lower socio-economic backgrounds were “less likely to move” to London. One such measure that the Cabinet Office is recommending is to take graduate recruitment
“outside of London by establishing regional assessment centres”.
The most recent “Government’s Estate Strategy” expresses a commitment to
“turn around the prevailing tendency to locate head office staff in central London”.
That is Government policy.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Does my hon. Friend agree with me, a London MP, that centralisation and the relocating of staff presents a problem for London? It leads to congestion, more overheating, incredibly expensive accommodation, and so on. Most graduates cannot afford to rent in London, let alone buy their own property.
Paul Blomfield
My hon. Friend makes an important point. No one wants this to be seen as a north versus south issue. The proposal flies in the face of logic for both north and south. It makes no sense to add to the overheating in London, so we share a common agenda on that.
Colleagues commented earlier on the northern powerhouse agenda, which Sheffield and south Yorkshire have been deeply involved in and embrace. It is about encouraging the private sector to invest in the north, to build there, to relocate there, and to revive its economy, but if the very Department responsible for building the northern powerhouse wants out of the north, withdrawing 247 highly skilled jobs from the local economy with it, what message does that send?
Today’s debate came about because our key questions were not answered by the permanent secretary. Now is the Minister’s opportunity, so I want to conclude by asking four questions, to which Members and the hard-working staff of the BIS office in Sheffield have been seeking answers since January. I gave the Department advance sight of the questions last Wednesday to allow for full consideration and comprehensive answers. First, in reaching the decision to close the Sheffield office, what assessment has been made of the additional costs of moving the posts to London? That is the core question that we have been asking all along. Secondly, what assessment of the decision has been made against the Government objectives of moving out of expensive Whitehall accommodation, diversifying the civil service, and not locating head office functions in the capital? Thirdly, what assessment has been made of the impression created by the decision to move to London the functions of an office of the Department responsible for the northern powerhouse? Fourthly, aside from the proposals to centralise policy functions in London, what consideration has been given to the other options for achieving the “BIS 2020” objectives?
I understand that the decision, which was at one stage to have been taken by the BIS board tomorrow, has now been postponed and will be announced in the week commencing 23 May. I hope that that reflects a willingness to think seriously about the concerns that have been raised. I hope the Minister recognises that if the proposal goes ahead, the National Audit Office scrutiny we propose in today’s motion will find it flawed. I hope that she will therefore accept that it is the right time and in the interests of good policy making, effective use of public funds and confidence in the case for the north to exert ministerial authority and pull the plug on the closure of the Sheffield office.
David Mowat (Warrington South) (Con)
It is a pleasure to follow the hon. Member for Sheffield Central (Paul Blomfield). He made a coherent speech, and I congratulate him on leading the charge on this whole issue.
Unlike the hon. Gentleman, I do not have a direct constituency interest in the matter. My interest came about because I was involved in the Public Accounts Committee’s questioning of the permanent secretary, and it struck me that the logic and reasons given for the decision were, unlike the speech we just heard, less than coherent and that they raised several potential issues about contradictory Government policy.
I am not against “BIS 2020” at all, but I do not think that we need this Sheffield closure to bring about its benefits. There are, however, potential contradictions between how “BIS 2020” is being rolled out and talked about, and the devolution, northern powerhouse and Government estate strategies. The latter came out most recently, in 2014, as a piece of analysis further to the Lyons strategy and all the rest of it, with the general intention, apparently, of trying to get civil service jobs out of London. Since 2010, we have, unfortunately, found that the civil service has become more concentrated in London than it was previously.
I am addressing my remarks not only to you and the House, Madam Deputy Speaker, but to the BIS board, who have yet to make this decision, to Mr Donnelly, who has a chance to row back from some aspects of this, and to Mr Manzoni and Mr Heywood, both of whom have responsibility for consistency of the design principles of some of these initiatives across the civil service. As we have heard, some elements of what is happening in “BIS 2020” do not make sense vis-à-vis what is happening in the Department for Education, the Ministry of Justice and other Departments. If that is not an issue for Mr Manzoni and Mr Heywood, I am not sure what their jobs are.
On “BIS 2020”, I support the need to rationalise; Ministers have been given a target on saving money and if money can be saved, we should do it, if that does not affect efficiency and effectiveness. I have heard that there are 80 BIS sites across the country and that number is to be rationalised to eight, and I have no difficulty with the principle of that. We will come on to understand whether that figure of eight should be nine or seven, and the logic behind how that decision has been made. There are 45 partnership bodies in BIS, and there is clearly a need to change. As we heard in the previous speech, the permanent secretary often says that BIS is quite a distributed Department, and I accept that. I am sure the Minister will have statistics that allow her to discuss how much of BIS is outside London currently, but that is not a logical reason to bring more of it into London in response.
The permanent secretary used a phrase when he was talking about this, saying that a “hub and spoke” strategy is being implemented in “BIS 2020”. The principle of that strategy is that all policy has to be in one place—the hub—with all the other bits being the spokes. Apparently, we have one hub, in London, where the Ministers are—perhaps that is fair enough—and these seven or eight spokes, which is what the focus is going to be on. When I first heard that, I thought, “Okay, we are going to have all the policy in one place. There could be some logic in that. Does that mean 10 people doing policy and they all have to be in London, working together? That might be reasonable. Even 20 or 50 might be reasonable.” Apparently, the number of people who need to be in one place to do policy is 1,600, and that is not a rational approach, although the question is raised as to what is meant by “policy” and by “strategy”. This is based on the advice that McKinsey has given the Department, apparently based on a relatively small amount of input. I know that you don’t get an awful lot of days out of McKinsey for £200,000, and I accept that this is a BIS strategy and not a McKinsey strategy, and that the accountability for it lies with BIS, although the phrase “hub and spoke” does come from McKinsey. We will come back to that issue and to policy.
We have talked about the northern powerhouse and the need for devolution. There is a need in our country to bring gross value added per head up to the same level—as best as we can—as it is in London. If we were able to do that, it would be great. The difficulty is that no region in the UK has more Government spending per capita than London, apart from Northern Ireland, where historical reasons are involved. We see that in the sort of decision that has been made here, and it is why we end up with a great concentration of civil servants in London and all that goes with that. At other times and in other places, we face the same issue in respect of the concentration of transport spend in London, which is partially due to London-centric thinking, resulting from the fact that so many of the civil service and top policy makers are here.
It is also true to say that cuts have been made right across the civil service since 2010. As I say, I do not oppose that, but 9% of those cuts have occurred in London whereas 20% have occurred in the regions, according to the Institute for Government. The consequence is that 18% of the civil service is now in London whereas the figure was 16% six years ago, according to the IFG, and I do not think that is acceptable. I do not think that is the right answer.
Mr Clive Betts (Sheffield South East) (Lab)
The hon. Gentleman is making a very coherent case. When my constituents hear the phrase “northern powerhouse”, they ask what it means. We tell them that it means transferring powers, responsibilities and decision making out of London and to the regions, but they then say, “But why are you taking all these jobs from Sheffield and transferring them to London?” Is that not completely inconsistent with what the Government claim their objectives are?
David Mowat
It is not for me to answer that intervention, but I would say that the answer is yes. In all fairness, the northern powerhouse is about more than public sector investment and civil service jobs; it is also about private sector investment. When the time comes to say whether the northern powerhouse has worked, the judge and jury will be whether or not the gap in GVA per head has closed—we will see. Let me make a point in defence of Mr Donnelly’s position: he might well accept the analysis that we just heard from the hon. Member for Sheffield Central about cost, but his point would be that he gets more efficiency from having all these policy makers in one place. If he were here, he would make that point—indeed, that is what he did say to the Public Accounts Committee—but it is not a view shared by other permanent secretaries. The argument runs away when he is talking about 1,600 policy makers being in that one place as opposed to 100 of them—it does not bear thinking about.
We have talked about the estate strategy, which was published quite recently, in 2014. It contained a lot of sexy examples of how the Government are saving money through Departments rationalising and moving things out of the capital. It talks about the Ministry of Justice as a case study and about what is happening at the Ministry of Defence; one startling statistic was that the accommodation costs for somebody in Whitehall were £35,000 per annum whereas if we were talking about Croydon, which is still a relatively busy place, the cost would have been £3,000 per annum—goodness knows what the figure would be for Sheffield. Clearly, what we are talking about today is contradictory to that space strategy, which is another reason why Messrs Heywood, Manzoni and Donnelly need to get their act together on this.
I want to discuss three things in a little more detail. The first is the hub and spoke strategy and the need to have all 1,600 people in one place. Mr Donnelly has said, “Well, that is what Vodafone do.” He said that to the Public Accounts Committee. He has said, “That is what Google do.” I am surprised if that is the case. I accept what he says, but I can give other examples of organisations that do not take that approach—Accenture, Shell and many others. Many of these companies would take the view that having people who are doing strategy in different geographic locations helps formulate that strategy, particularly if it is being applied across those locations. I do not feel that the argument being put forward is coherent. But if that is the policy of the civil service, why does it apply only to BIS? Why does strategy in the Department for Education not all have to be in one place, whereas in BIS it apparently does? Why does strategy in the Ministry of Justice not have to be in one place, whereas it does in BIS? At the very least it would be reasonable if the people charged with running the civil service would address that question and tell us the answer, because I have some difficulty in seeing it.
In addition, a design principle is involved there, because lots and lots of civil service rationalisation is coming up in the next decade. If a considered position of the civil service is that all policy is done in one place, let us make sure that everybody knows that when they are doing this. If that is the position, the Department for Education is doing it wrong and the Ministry of Justice is doing it wrong, and I think Her Majesty’s Revenue and Customs may be doing it wrong, too.
We have heard a great dealing about the costing of this proposal. Let us remember that “BIS 2020” has not been published and is not in the public domain. I am not going to charge, as McKinsey did, a couple of hundred thousand pounds for what I am about to say, but I am going to say that although the hub and spoke strategy may well be worth thinking about, there is a Mowat variation to it—it is the double hub and spoke strategy. It could be a model, in the same way as all these consultants have models. Given that we have a starting point with all these people in another hub, it does seem rather odd that, in the context of reducing the size of everything anyway, we have to impose this single hub strategy on the whole thing. Therefore, if the BIS board do get a chance to go through Hansard, I would like it to think about the double hub and spoke strategy and reflect on the fact that, almost certainly given the analysis that we have just heard from the hon. Member for Sheffield Central, it will save money as well as being equally effective.
Finally, there is a policy point about the civil service and the role of London. We have mentioned the fact that it is the major location of civil servants, especially the more senior ones. It is not an entire coincidence that the consequence of that is that current public spending in London is significantly higher per capita than any other region of the UK. This sort of decision will exacerbate that issue. As I said in the Public Accounts Committee, it just does not smell right.
I say to the BIS board that, before it signs off this proposal, it should ensure that it has asked some of the same questions that have been asked today and that will be asked later on this afternoon. Similarly, I say to Mr Manzoni and Mr Heywood that there are points of coherence in BIS vis–à–vis other Departments here and that they need to satisfy themselves that they are happy that rational decisions are being made across the wider civil service. Mr Donnelly, who is the owner of all of this in terms of the civil service, needs to reflect on whether the hub and spoke system is worth dying in a ditch for, or whether a double hub and spoke strategy, which would save money, would be a much more sensible system. If, in order to achieve design purity, we have to go through a NAO audit of costs and sensibleness, then so be it.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I hope that we will not need a formal time limit, but this is a short debate and if Members who wish to speak keep their remarks to under 10 minutes, everyone will have a chance to make their views known.
Mr Nick Clegg (Sheffield, Hallam) (LD)
I, too, am very grateful to the hon. Member for Sheffield Central (Paul Blomfield) for securing this debate, and I strongly support him—albeit from a different constituency in Sheffield and across party lines—in his and our shared endeavour to have the National Audit Office look at a decision that remains wholly unjustified and entirely opaque in the way it has been reached.
I am grateful to the Minister for being here. To be fair to her, she will not be in a position to undo the origins of this eccentric and unjustified decision. In the time since that decision was originally announced, what happened has become more obvious. In the Whitehall scrum that takes place, in which the Treasury cracks the whip and demands lots of savings and obliging Departments are told to jump ever higher and to cut ever deeper—I discovered that for myself over the five years I was in government—BIS took the political decision, the wrong decision in my view, to offer up far, far greater cuts than was either justified or necessary compared with other Whitehall Departments. That decision affected not only many of my constituents who work in the BIS office in Sheffield, but many other BIS projects that have been cancelled in this cull.
Once that high-level decision was taken that BIS should offer up far greater sacrifices in the Whitehall race to make savings for the Treasury, the Department then lurched, as the hon. Gentleman has said, into a panicky and lazy response to create the impression that a number of savings had been made. That duly had the political effect of creating noise, anguish and controversy, but, as we are discovering, the Department did not produce any material savings whatsoever. It is important that we understand the genesis of all of this as we seek now to ask the NAO to cast an expert light on the decision.
What is the evidence for that analysis of what has gone on? First, it is worth comparing the savings that BIS has offered up to the Treasury in this Parliament with those that it offered up in the last one. In the last Parliament, over that five-year period, the BIS savings amounted to about 18%—I remember well that they were an agonising 18%—of the total departmental budget, which meant that BIS was roughly in the middle of the table of Departments offering up savings to the Treasury. What is striking is that that 18% has gone up to 26% in this Parliament, which means that BIS now leaps from mid-table for savings offered up to the Treasury to enduring the second largest cut of well over £4 billion. That was a choice taken by BIS and accepted by the Treasury. It was an extremely unwise choice given BIS’s important role in trying to foster dynamism and investment in our private sector to support our challenged manufacturing sector, and to reform and support further education and higher education, which are so important to the long-term prosperity of our nation. It was that decision that led to this rather desperate attempt to try to gather together lots of savings in a hurry to meet that headline and somewhat draconian cut of 26%, which in turn led to the announced closure of the Sheffield office.
The hon. Member for Sheffield Central quite rightly referred to the opacity of the Government’s pronouncement on exactly how much this closure will save. In response to a parliamentary question on 14 April 2016, the Department estimated that the current annual cost of the Sheffield office is as follows: £500,000 on travel; £890,000 on rent; and £150,000 on hotel stays. It said:
“These savings would be independent of any decision on headcount reductions, on which we are still consulting.”
The only concrete saving figure that I have been able to get is £1.54 million—a risible, almost microscopically invisible, amount when it is set against total Government expenditure. It is about 0.005% of BIS’s annual expenditure and, by my rough calculations, it is 0.0002% of total Government spending. It is a tiny amount given the loss of expertise, the disruption that will be incurred and the other relocation costs that have not been factored into those figures.
When I was walking through Portcullis House, I asked, by way of comparison, how much the fig trees cost. I was told that renting 12 fig trees costs £32,500. By my reckoning, what BIS is saving is the equivalent of renting just over 550 fig trees. That is such a piffling saving compared with the cost to BIS’s expertise in a very, very important area of policy.
The decision also flies very directly in the face of stated Government policy, and very recently stated policy. As the Bridge report of 2 February 2016 has confirmed, the London-based nature of the civil service fast stream, emphasised by much of the fast stream literature featuring London landmarks, is a deterrent for many students from lower socio-economic backgrounds. The Budget document of 2016 stated that the Government are working on an
“ambitious strategy to move civil servants out of expensive Whitehall accommodation and into the suburbs of London, delivering substantial savings for the taxpayer”.
This decision therefore has at its origin an excessive zeal on the part of BIS to satisfy Treasury demands in this somewhat self-harming manner at the time of the comprehensive spending round of last year. All the evidence that has been presented to the House so far suggests that the savings, if there are any savings, are of an almost invisible nature and that the decision is damaging not only to my constituents, but to the knowhow and expertise and collective memory of BIS. The decision flies in the face of the Government’s stated affection for the northern powerhouse agenda and other stated policies. When we bear all of that in mind, the least that this House can do—and the least that the Minister who is busy chatting from a sedentary position can do—is seriously reflect on what is an uncontroversial request that the NAO cast an objective and dispassionate eye on this decision.
Kevin Foster (Torbay) (Con)
It is a pleasure to follow the right hon. Member for Sheffield, Hallam (Mr Clegg); some might say it makes a change for a Conservative to follow him, rather than the other way round.
I congratulate the hon. Member for Sheffield Central (Paul Blomfield) on securing this debate on a worthwhile subject. Obviously, my focus will be more on the principle of moving Government Departments out of London, but it is welcome that a matter that affects his constituency has brought this debate to the Floor of the House. Although she has disappeared, it was welcome to see the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) in the Chamber at the start of the debate; the former Member for that constituency would almost certainly have been here, had he been able to.
We are looking at why it is right to move Government Departments out of London—and the wider south-east; if we are candid, some of the issues and difficulties to do with locating in London that were outlined so well by the hon. Member for Brentford and Isleworth (Ruth Cadbury) apply to many locations close to London. I look particularly at the success of the Met Office’s relocation to the constituency of the right hon. Member for Exeter (Mr Bradshaw). It managed not only to relocate itself and its work successfully, but to help provide a boost to businesses all around by taking its very high-skilled, intensive activity to Exeter. It provides in the far south-west the types of jobs and opportunities that we too often say are available only in the large metropolitan areas, or around London.
As we look increasingly at opportunities to take Departments out of London, I hope that places such as Torbay will be considered. The plan for a public service hub in Torquay that the Torbay Development Agency has been promoting for the last couple of years is an opportunity to regenerate a site around the Riviera International Centre; staff at that centre would have the opportunity to live in one of the best places in the country, with some of the best schools. There would also be a huge cost saving to the Government if it located jobs there and not in central London. It is worth remembering that when we free up office space in central London, it does not mean that jobs are lost there; in many cases, within a short period, those buildings in London have more people working in them, at a higher salary, because of the huge pressure for development and office space in London.
I do not intend to get into the details of the issue in Sheffield, given that speakers who are much more knowledgeable on this subject have already spoken on it, but I have always had the concern that too often we review the issue of departmental offices in London or the south-east only when a lease is expiring, a building needs to be sold, or the Treasury is putting the pressure on. It is in some ways welcome that BIS has been slightly more proactive in reviewing its office estate. It is important to remember that a consultation on the proposals is ongoing. I am sure that the Minister will take on board all the comments that have been made. It is important that we do not have reviews only when a lease expires and there is an absolute need to think about what should be moving out; we should do that proactively.
Speaking as an MP from the south-west, I think that locating people outside London gives them more of a feel for the regional policies being delivered, be that in the north-west, the north-east, the midlands, Yorkshire and the Humber, or the far south-west. It is right to continue that drive. Some functions will always remain in London, mostly those directly related to supporting the Government. The same can be said of debates about the future of this place, given the need for major refurbishment. I do not think that anyone will seriously suggest that the core functions of Government, and Parliament, which holds Government to account, could be moved away from the capital, but there are more opportunities that could be explored, such as the one that I highlighted in my constituency.
Crucially, we can use skilled jobs to help generate the sort of training courses, and stimulate people’s aspirations and opportunities, without them having to incur the cost of moving to the capital. I grew up in a family who were rich in love, but not in money, and one of the first things that I encountered when starting to think about a career in the legal service was the fact that my only relative who lived within commuting distance of central London had passed away about six years earlier. That meant that the option of staying in the spare room had disappeared, and with it the likelihood of sensibly being able to take up opportunities in London. Owing to the costs, I ended up spending a year commuting from Coventry to London. With a young person’s railcard, it worked out cheaper to commute over 100 miles daily than to live in the vicinity of where I was taking the Bar vocational course.
That challenge applies to many. I am sure that many other right hon. and hon. Members in the Chamber will think of special training courses or experiences that are available only in the capital, and that it is difficult for people to take up unless they have a granny, aunt or uncle with whom they can stay. That is a separate challenge that the Government could look at in the context of this debate.
I welcome the fact that this debate has been brought to the Floor of the House. I am sure that the Minister will respond to the specific points brought up about the Sheffield office, but I hope that she will also reflect on the wider opportunities presented by relocating Government Departments out of the capital, and in particular to the far south-west. We have seen the successful move of the Met Office; more bodies could follow it.
Kevin Barron (Rother Valley) (Lab)
May I, along with the hon. Member for Torbay (Kevin Foster), thank my hon. Friend the Member for Sheffield Central (Paul Blomfield) for getting this debate, and the Backbench Business Committee for giving it time? I start with the response that the Minister, who I am pleased is here, gave to my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) when she posed an urgent question on this issue earlier this year:
“We are having to ensure that we spend public money wisely. Unfortunately, that means that we have to reduce the number of people who are working for us.”
The question of whether cutting jobs is necessarily wise is a debate in itself. It might be a few years before we know whether the decision was wise. The Minister went on to say:
“We must make sure that we use the money to best effect, which is why we considered the decision so very carefully, as I hope that she understands we would.”—[Official Report, 29 January 2016; Vol. 605, c. 562.]
Most of us would like to know whether the Government took the right decision. The sad fact is that, on this subject, there are many things that we just do not know. The so-called McKinsey report that the hon. Member for Warrington South (David Mowat) mentioned, costing some £200,000, has not yet been published, yet we are all this way down the road towards a decision that we think will be taken. Why can we not have that report, so that we can see whether the decision stands up to proper scrutiny?
Indeed, do we actually have a report? When the permanent secretary gave evidence to the Business, Innovation and Skills Committee, my hon. Friend the Member for Sheffield Central said, at question 72,
“If there was more than one paper, we could probably look at them all, so if you could share those with us it would be helpful. Can you also share the McKinsey report with us?”
The permanent secretary replied:
“The McKinsey report was about a set of actions to validate internal calculations, both quantitative and in terms of the strategic vision.”
He contradicted himself two questions later; in question 74, my hon. Friend said:
“So you will share those papers with us.”
The permanent secretary said:
“There is not such a thing as a McKinsey report, but there is McKinsey input into a set of different aspects of the work that we were doing. I will see what further information we can usefully share, because the process is one where we have come to a very clear business conclusion in terms of a sustainable model for the Department delivering”.
That is as clear as mud. The proposal, which will affect my constituents and those of many other Members, is beyond the pale.
We have to look at the proposal against the backdrop of a recent Financial Times report that 20% of civil service jobs had been lost in the regions since 2010, as opposed to only 9% in London. That is an extraordinary figure which seems to go against the main thread that we have had—or should have had—in Government thinking, not for the past five or six years, but for decades. I well remember when the Labour Government built the advanced manufacturing park near Sheffield— it is actually in Rotherham, but it is often said to be in Sheffield—and it is a glowing example of what Governments can do if they have the will. It is a centre of excellence now. Minister go there every other week, smiling for the cameras and saying how wonderful it is.
On the Sheffield BIS closure, I was contacted by a person now in their third decade in the civil service, who said:
“I’ve worked in the civil service 10 years in London and the rest in Sheffield. For the majority of that time, I have worked in teams that have been split between Sheffield and London. To my knowledge, there has never been any issues regarding the quality of work or negative impact on policy decisions/policy work due to operating split site teams.
Aside from the obvious impact on me personally with respect to having to find another job, I am concerned about the effect this decision will have on the City of Sheffield and surrounding areas. I am still trying to understand why the Department for Business would take such a step.”
Not only will the closure be devastating for south Yorkshire, but it will lead to a huge loss of expertise for the Department—for example, the person I have just quoted, who has been in their job for decades. It is difficult to imagine that such people could uproot themselves and come down to work in London, even if they could afford to buy a property in London. The absence of any relocation programme speaks volumes about the intention behind the closure, as my hon. Friend the Member for Sheffield Central pointed out. The intention is to get rid of those staff and not to relocate them to London. Surely a package would be presented if the Government’s intention were to relocate them.
My hon. Friend spoke about Nick Hillman who, as we know, was a special adviser to David Willetts during his time as Universities and Science Minister. Nick Hillman has described the closure as
“a genuine tragedy for good public policymaking”.
He says that the Sheffield civil servants
“hold BIS’ institutional memory on HE and often know more than the policymakers who are nominally closer to the centre of power”.
The staff in Sheffield work closely with external organisations, such as employers and education providers, visiting them to explain policies on funding, deregulation, further and higher education, and Government strategy on rail, as well as listening to their issues so as better to inform policy. A purely London-based staff will mean additional costs, particularly as a result of pay differentials, and a less prompt service for organisations based in the midlands and the north. Gone will be the knowledge and understanding of localities, sectors and industries that can make a difference to effective policy making and allocation of funding.
Sheffield staff are responsible for applying ministerial policies and strategies on the ground. BIS sites such as the one in Sheffield ought to be in the vanguard, helping the Government to rebalance the economy and supporting rebalancing in the sectors based in the regions. It seems particularly strange that BIS, with its supposed ambition to create more geographically balanced growth, should take this decision, when other Departments, such as the Department for Education, plan to remain in Sheffield. It is nonsense and the concept of a northern powerhouse is weakened by such decisions, which undermine what this Government and previous Governments have said for years—that Government Departments should be relocating out of London.
The people who deserve to see the information that is largely absent from this debate are the 247 people who have a cloud hanging over their heads. As I stated previously, the Government must publish all the facts. I support the motion calling for the National Audit Office to conduct a cost-benefit assessment of the BIS Sheffield proposal, so that we can properly review the decision. I hope that when the Minister replies, she will respond to that call and to the four questions posed by my hon. Friend the Member for Sheffield Central.
Craig Williams (Cardiff North) (Con)
I am conscious of the time so I will try not to regurgitate too many of the points that have already been made. I welcome the debate and the manner in which the hon. Member for Sheffield Central (Paul Blomfield) opened it.
In my constituency I have officers of Her Majesty’s Revenue and Customs, Companies House and the Department for Work and Pensions, to name but a few, so I am mindful of the “BIS 2020” programme. I wholeheartedly support the Public Accounts Committee and the Business, Innovation and Skills Committee in their requests to the permanent secretary, and I hope those reports are forthcoming, as I look forward to an evidence-led debate. I look forward also to the Minister’s response today.
From talking to some of the most energetic, determined public servants in Cardiff, I know about the project. Twenty jobs in the Companies House policy and analytical unit will be moved to London. Staff feel insulted by the lack of consultation and they are conscious of the cloud over their heads, which the right hon. Member for Rother Valley (Kevin Barron) referred to. The lack of engagement with the staff at Companies House is extremely worrying to me. Given that the BIS board is looking more broadly at the position, I hope a conclusion will be reached soon and that it can be seen in the context of the reports that we have asked for.
I would like to emphasise what I have been told by constituents who work at Companies House. The staff affected have never been on poor performance measures and it has never been suggested to them that being based in Cardiff has affected the policy advice that they gave to civil servants and Ministers. The rationale for the decision has never been explained to them. They have been left bemused and seeking answers. I hope that this debate and my contribution will help to elicit some clarity that I can share with my constituents.
I welcome the double hub and spiral strategy that my hon. Friend the Member for Warrington South (David Mowat) came up with on the hoof, provided the second hub is Cardiff. I am sure hon. Members from across the United Kingdom have different ideas. The Government’s estates strategy is welcome in Cardiff because the new Government hub will reinvigorate parts of the city. When HMRC moves in with other Departments—we do not quite know where in Cardiff, but we have that commitment to Cardiff—we will see more civil service jobs coming to our great city.
The Government hub is welcome, but the BIS announcement is a cloud overshadowing the excitement in the public sector in Cardiff. People are seeing the estates strategy delivering for them, pulling more jobs to Cardiff, but the staff affected feel insulted by a decision whose rationale they do not understand, especially given their role in advising on policy.
Jessica Morden (Newport East) (Lab)
Newport Public and Commercial Services Union members asked me to be present at the debate today to show their support for those who work in the BIS office, whom the hon. Gentleman mentions. Newport has benefited hugely over the years from the relocation of civil service jobs from the Office for National Statistics and the Intellectual Property Office, which will also come within the scope of “BIS 2020”. Does the hon. Gentleman agree that although this debate is about Sheffield and he is speaking about Cardiff, it is well worth reiterating to the Minister just how valued those jobs are across our country, including in Newport, and how important it is that we protect that principle?
Craig Williams
I agree entirely, and I hope that that came out of my contribution. Like me, the hon. Lady will welcome the fact that the Minister for the Cabinet Office and Paymaster General came down to south Wales to announce that the ONS was safe in Newport. South Wales has a great cluster of UK Government Departments, and their offices make an incredible contribution to the Government in terms of policy analysis and other instruments.
That is why I wanted my contribution to strike a note of caution, and I hope we get some clarity on the issues that have been raised. I again commend the hon. Member for Sheffield Central on securing the debate and on leading it in the manner that he did.
Louise Haigh (Sheffield, Heeley) (Lab)
I, too, thank the Backbench Business Committee, as well as my hon. Friend the Member for Sheffield Central (Paul Blomfield) and the hon. Member for Warrington South (David Mowat), who have worked hard to secure the debate and the cross-party support it has gained. I hope the Minister is starting to understand that we are not going to go away on this issue.
This decision has been extraordinary: in one fell swoop, BIS Ministers have delivered a thumbs down to the northern powerhouse, a thumbs down to the taxpayer and a thumbs down to their ministerial colleagues who wax lyrical about the benefits of having key staff outside Whitehall.
Crucial board meetings are scheduled for this month, following the end of the consultation. I urge the Minister to go into them with an open mind and to relay the points that have been made here today. First and foremost, I hope she understands that, for people in our city, a decision to close the Sheffield office would be highly symbolic; it would be a signal of the London-centric contempt for the north and for the skill and perspective of northerners—a contempt that has prevailed for far too long. The “BIS 2020” plan appears to reinforce that contempt for a regional perspective, with the London headquarters strengthened while regional posts carrying out vital work are threatened.
We would have expected the Department to support such a significant decision—to move all policy-making expertise from a northern centre into a London HQ—with some reasoning. When I was granted my urgent question, the debate on which has been widely quoted today, the Minister assured me that the decision was part of a cost-saving programme, but officials and Ministers have told us time and time again that a cost-benefit analysis for this decision does not exist.
As my hon. Friend the Member for Sheffield Central and others have said, the admitted cost is far, far higher in London than it would be in Sheffield, Bristol, Cardiff, Darlington or Salford. As the Minister well knows, taxpayers will continue to foot the bill for the office space in Sheffield anyway, as the entire building is leased by the DFE. Furthermore, BIS is one of the few Departments in Whitehall without enough space to accommodate staff adequately, so further centralisation will mean that a rent review is almost certain to hike up the rent yet again.
And for what purpose? So far, the only possible reason we have been able to ascertain is the benefit of London water-cooler conversations. Well, those conversations at BIS must be very good indeed. However, there has been no individual analysis of exactly why they outweigh the unique perspective and institutional memory of staff in Sheffield. Instead, we have seen more tired old thinking from senior Whitehall officials, who, when asked what they wanted the Department to look like in 2020, came back with the same old Whitehall answer: all employees should be within eyesight and earshot of the permanent secretary and the Minister. It is astonishing that, in place of evidence, we seem to have a seriously consequential decision that is costing taxpayers money and reversing Government policy but that is based on lazy assumptions and flimsy justifications.
In the months since the decision was announced, there has been no sense from Ministers or departmental officials that they recognise the exceptionalism of the Sheffield BIS office. Research excellence in the Sheffield region is second to none, with two fantastic universities at the cutting edge of innovation. That work is supported fantastically by BIS’s multibillion pound budget, which is directed from Sheffield. Just a few months ago, researchers from Sheffield University helped to confirm Einstein’s theory of relativity, which will unlock the secrets of the universe—not a bad record.
Sheffield is also the only office outside Whitehall carrying out high-level policy functions. A Government report from 2010 tells us why that matters. It said:
“power and career opportunities will only truly move out of London when significant parts of the core policy departments are moved.”
That is exactly what we already have in Sheffield and what we put at risk with this decision.
The Sheffield office could become the eyes and ears of the northern resurgence. Instead, we will have a centralised BIS, alongside a Department for Communities and Local Government with a northern powerhouse Minister whose entire staff is based in London, and a Treasury producing its template devolution deals exclusively from London, with no understanding of the geographical and socioeconomic challenges.
That gets to the heart of the reasons why moving civil servants out of London is a decades-old mantra: cost and perspective. The Smith report, which I just mentioned, wanted to move civil servants out of London to
“bring government closer to the people”
and “stimulate economic vibrancy”. The report was hardly groundbreaking; in fact, it was based on decades of movement away from Whitehall—something the Minister’s colleagues are encouraging as part of the March Budget. The Ministry of Justice has announced a large-scale move away from London, and the DFE is waxing lyrical about its regional base and is looking to expand it further. That is because doing that is cheaper, and having powerful civil servants in other regions can only be a good thing.
In trying to justify this decision, the Minister will no doubt be adamant that the plan will continue the existing arrangement, with more of her civil servants outside London than in it. Even ignoring the importance of policy-making clout, the leaked report that has been referenced today has revealed that even that argument does not hold water: all the jobs under threat are distinctly regional, including those in places such as Lancaster, Cardiff and Bristol, to name just a few.
The Skills Funding Agency, with its vast majority of regional staff, who are working hard to deliver the Government’s apprenticeship target, is set to be slashed. The UK Commission for Employment and Skills, which has been doing vital work in getting to the bottom of the slow-burning productivity crisis, is set to go entirely. Rotherham, a town where public sector jobs act as ballast, will be left counting the cost. The entire “BIS 2020”plan looks like a perverse counter to the northern and regional powerhouse agenda: slash jobs in the regions, take no account of the importance of local economies and centralise the Department’s work in London.
If hon. Members think I am leaping to conclusions about the way in which BIS HQ in Whitehall instinctively adopts a London-centric approach that is totally at odds with the devolution of power to a northern powerhouse, they can look at the details of a seminar given to BIS employees early last year by McKinsey and Company—the same company that authored the report into this restructuring. An item on the agenda, which I and other hon. Members have seen, read
“how can London ensure it outstrips rival cities”,
This is the same city whose infrastructure spending is more than every other UK city’s combined, at £45 billion.
BIS’s mission statement says the Department will achieve its objectives by having the
“right people, in the right place, at the right time”.
How on earth does this strategy achieve that stated aim? The Minister and senior officials may not appreciate it, but there is a reason why an idea that few of their colleagues sign up to, that damages the northern powerhouse and that costs the taxpayer money is not such a good idea.
I urge the Minister to use the end of the consultation to think again. She should think about what message these proposals send and what damage they do, and she should put a halt to this decision, which will reverse a decades-long progressive trend of moving civil servants out of London.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I congratulate the hon. Member for Sheffield Central (Paul Blomfield) not only on leading the charge in the debate, but on his quite excellent forensic analysis of why this is a deeply flawed policy decision.
The dispersal of Government offices has been argued for for many years—from as far back as the early 1960s. Although this is not a new debate, therefore, it may be wise to rehearse some of the reasons why dispersal can be forcefully argued for. I would like to focus in my short speech on just three.
First, on cost, it will be considerably more cost-effective to locate Departments in Sheffield or Kirkcaldy than in overheated London. A number of hon. Members have pointed to the fact that they cannot find, or cannot get released, any detailed cost-benefit analysis. Perhaps that is not surprising if no proper cost-benefit analysis has been undertaken in the first place.
Secondly, this is about not just the cost of dispersal but the benefits to the recipient regions. In particular, if dispersal happens in areas that have relatively weak economies compared with London, the benefit of even a few hundred well-paid and secure jobs can be considerable. Many towns in the north of England would benefit greatly if there was more dispersal out of London.
The third point I want to raise, which is much less talked about generally, although a number of hon. Members have raised it today, is the benefit to Government intelligence and decision making. It is unhealthy for all key decision makers and advisers to be based in one location, particularly if that location is out of character with the rest of the country. Dispersal provides an opportunity for better engagement. When we presented the case for this debate at the Backbench Business Committee, I argued that one of the problems is that this decision seems to reek of group-think by the Government. To put it in a slightly more academic fashion, it reminded me of reading for the first time the work of Kenneth Hammond on his cognitive continuum theory, with which I know everybody is deeply familiar. He argued that decision making can be on a continuum from highly intuitive, at one extreme, to highly analytic, at the other extreme, with a mix in between. It strikes me that the reason why a lot of evidence cannot be provided for this decision is that it reeks more of intuition than of detailed analysis of the true benefit.
In the Backbench Business Committee, I was asked why a Scottish MP would want to speak in this debate. Perhaps, without wishing to be accused of any arrogance, there might be one or two examples that could be brought from Scotland to show the benefit of dispersal.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
Give us some.
Roger Mullin
Well, I will give the right hon. Lady 15. I was going to make it three, but because of her intervention I know she would like many more. The first, of many, is that of the five major buildings that house all the policy civil servants in Scotland, two are based well beyond Edinburgh. To give an example close to the functions of BIS, locating lifelong learning well outside Edinburgh in a place closer to the majority of higher education and further education institutions has given great benefit. When I talked to the principal of a college in Scotland who had originally been a principal in England, he commented that he found it so much easier to get access to senior civil servants in Scotland than south of the border.
Since the Minister kindly invited me to provide more examples, let me talk of Scotland’s 34 executive non-departmental public bodies, the majority of which—some 19—are based outwith the capital, Edinburgh. This includes headquarters in such centres as Inverness, Grantown-on-Spey, Dundee, Stirling, Balloch, Hamilton, Newbridge and Paisley, in addition to Edinburgh—[Interruption]—and Glasgow, of course. Some of these play a very significant role in supporting local economies, in addition to being cost-effective locations.
I can go even further, to satisfy the Minister, on to those whom one might want to influence in terms of policy-making advice—the cabinet, for example. Way back in 2008, my right hon. Friend the Member for Gordon (Alex Salmond) instituted a then fairly modest initiative to take cabinet meetings, during the summer recess, to one or two different locations away from Edinburgh. This has developed over the years until, now, in mid-2016, 42 cabinet meetings have been held outwith Edinburgh. In the past year alone, cabinet meetings have been held in Dumfries, Aberdeen, Alloa, Inverness, Cupar, Ullapool, Oban, Coatbridge, Greenock, and West Dunbartonshire. Those meetings help with engagement because when they are over, public meetings are held so that the public can come along and question cabinet members. The benefit of that is that thousands of ordinary members of the public have been able to come along and influence decision making.
We should be debating not so much why 247 jobs are being moved from Sheffield to London, but why tens of thousands more jobs are not being located out of London into the regions and nations of the UK.
Mr Clive Betts (Sheffield South East) (Lab)
I, too, begin by congratulating my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing this debate and on his introductory comments. Unfortunately, I only heard the second half of those comments because I was chairing a Select Committee at the time. I apologise to you, Madam Deputy Speaker, and to him for my lateness in arriving at the debate.
I want to concentrate on devolution. The Communities and Local Government Committee recently produced a report in which, on a cross-party basis, we welcomed the Government’s commitment and general approach to devolution. We might have had certain reservations on detail or on the pace at which devolution is going, but nevertheless recognised that it is a key aspect of Government policy that we welcome. We said that devolution is a matter not just for the Department for Communities and Local Government but for all Government Departments, and we want to see all Departments signed up to the policy and contributing to it. It is welcome that economic development and skills are an integral part of the devolution deals in cities such as Manchester and my own city of Sheffield. Key responsibilities of BIS are part of these devolution deals.
We then move on to the use of the term “northern powerhouse” to cover the totality of devolution proposals for our northern cities. It leads to complete incredulity among my constituents and those of the wider Sheffield city region when the Government talk about the northern powerhouse over and again and then take a decision to move civil service jobs out of Sheffield and back to London which seems completely contradictory to their own policy on devolution. People just do not get it. I mentioned this in an intervention on the hon. Member for Warrington South (David Mowat). It was good to hear his excellent and well-thought-out contribution, which shows that there is real cross-party concern across the House about this aspect of Government policy, where it is going, and how it does not really fit in with the overall Government approach on devolution that we would want to see.
As the hon. Gentleman rightly said, the location of civil service jobs is not the only reason for a totality of approach through the northern powerhouse. Indeed, it is probably not even the main reason. The main reason is to try to secure a growth in GDP per head in our northern cities to get them up towards the national average, because currently not one single northern city has a GDP per head that is equivalent to the national average, and that is a matter of concern. It is also about trying to ensure that decision making takes place nearer to those who are affected by it, and that we recognise that different approaches and policies will be formed in different areas as part of the process of trying to improve public services and their delivery and to get the increase in GDP per head that we want to see. This approach is going to change the way in which our country is governed if we carry it through and onwards in the next few years.
What people see on the ground in terms of this policy is the Government talking about a grand design with the northern powerhouse but saying one thing and doing another. People do not understand the general direction of Government travel. They hear Ministers talking about the northern powerhouse and then see the reality of jobs being moved out of their home city and transferred down to London without, as far as they can tell, any good reason. If the Minister is intent on pursuing a policy that seems, at least at face value, to be contradictory to the overall thrust of Government devolution policy, there has to be a very good, explicit and clear reason why that policy is going to be carried through. The Minister has to be able to justify this to the House, as well as to my constituents.
Is the policy being followed through because of clear, demonstrable and provable cost benefits, with figures that can be laid before the House to show what those benefits are, or because Ministers can demonstrate that there is a clear policy benefit—that policy will be unequivocally better and Ministers will be better advised—to having all their civil servants located in one place? Could it not work just as well with two hubs as with one, if Ministers want a concentration of policy making? If Ministers cannot demonstrate that there will be either a clear and explicit cost saving or demonstrable benefits in policy advice to Ministers, why on earth are they pursuing a policy that seems completely contradictory to the overall thrust of Government devolution policy?
The Government have been given a challenge: produce the McKinsey report, the McKinsey papers or the McKinsey input into decision making—whatever it is—or produce some cost-benefit analysis. Ministers must have such analysis at their disposal. They cannot have taken this decision, or be about to take this decision, without having any figures before them. Will they share those figures with the House, or at least commit to making all the information available to the NAO so that it can conduct an audit into the decision? That would enable the NAO at least to advise Members of the House about whether Ministers have taken this decision, or will take this decision—I hope that it has not yet been made—on clear and credible facts and figures about the financial benefits of their proposals.
Deidre Brock (Edinburgh North and Leith) (SNP)
I thank the Backbench Business Committee and the hon. Member for Sheffield Central (Paul Blomfield), who has doggedly pursued the matter. He gave us a precise dissection of the numerous issues at the heart of this decision, or proposal, and the many questions that are still to be answered. The hon. Member for Warrington South (David Mowat), a colleague of mine on the Public Accounts Committee, provided a searching contribution, challenging the hub and spoke concept that BIS is apparently set on, as demonstrated by this peculiar decision.
The right hon. Member for Sheffield, Hallam (Mr Clegg) gave us an interesting insight, as a former member of Government, into the inner workings of Departments. The hon. Member for Torbay (Kevin Foster), another colleague from the Public Accounts Committee, who is not in his place at the moment, made a thoughtful contribution in support of decentralisation, using his experience as an example. The right hon. Member for Rother Valley (Kevin Barron) raised the question of the McKinsey report, or papers, and whether it indeed exists. He called for the work that was done to be released to allow for proper scrutiny.
The hon. Member for Cardiff North (Craig Williams) made clear his support for the calls from the Business, Innovation and Skills Committee and the Public Accounts Committee for clarity and for the proposal to be looked at by the NAO. He also raised the concerns of those who have benefited from the dispersal of jobs from London to his constituency. I am certain that Scottish Members await with interest clarification around the Minister’s comment about initial centres of excellence in Glasgow, for example. The hon. Member for Sheffield, Heeley (Louise Haigh) made a thoughtful contribution highlighting the many benefits that were placed at risk by the decision, and she said that cost and perspective were important elements that needed to be looked at.
My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) made an excellent contribution, with a particular focus on how unhealthy it is to locate key decision makers in a place that is so very different from all other areas of the UK. He gave numerous examples of areas outside our capital city in Scotland that have benefited from Government dispersal policies. The hon. Member for Sheffield South East (Mr Betts) called for all Departments to sign up to the concept of devolution.
Offices and staff should be moved out of this overheated, overvalued and ridiculously overpriced city to take up residence in less expensive areas, which, frankly, could do with the Government investing in them for a change. As budgets are being slashed by this Chancellor, who seems to be channelling Sweeney Todd, why is the cost of concentrating offices and staff in London not becoming the major issue? As a number of Members have commented, the Chancellor’s most recent Budget—at least, I think it was the most recent one; lately, a new Budget seems to come along every few weeks—showed that the Chancellor thought that moving offices out of London would be a good idea. Unfortunately, some of his colleagues and senior civil servants do not share his vision, and the shrinkage of Government continues. The Government are becoming smaller geographically, with a smaller workforce, but that will not save money.
I was pleased to take part in recent the Westminster Hall debate on this issue. To me and many others, the upshot seemed to be that Ministers wanted their civil servants close to them. Apparently, a bit of distance dilutes a civil servant’s message. My staff are about 400 miles from here. I have already annoyed them twice today, and I am going to call them as soon as I get out of here, just because I can. We use telephones; Ministers might have heard of them. It is quite amazing how I can talk to someone who is not nearby. With a bit of practice, I think Ministers could learn to use the telephone. If that does not suit them, there is another thing that my friends and I use. It is called the internet. That, too, would allow Ministers to communicate with civil servants in distant lands, such as Sheffield. Far better that than the ridiculous situation of moving the offices of the northern powerhouse into the southern hothouse.
Quite how civil servants are expected to do their jobs when they are being held at such a distance from the subjects in which they specialise is anyone’s guess. It smacks of the days when the UK Government thought that they could pontificate from a Whitehall office and tell large chunks of the world how to behave. The British empire attitude saw nothing wrong with a Whitehall Minister telling people on the other side of the world what to do, but surely we have moved on from that. For the sake of us all, and for the sake of good government, let us get offices and staff moved out of London. Let us spread them around the UK. If they have a geographical remit, let us base them in the areas that they are supposed to be helping. Surely, that is nothing more or less than common sense.
Bill Esterson (Sefton Central) (Lab)
I join Members in paying tribute to my hon. Friend the Member for Sheffield Central (Paul Blomfield) and the other Members who secured this important debate. We have had a good debate, and I am pleased to see the Secretary of State and the Minister of State in their places to listen to the advice they have been given, by Members from all parties, about what needs to be done. I sincerely hope that they listen to the comments that have been made, take them on board and go away after the debate and act on them.
On 28 January, the closure of the BIS office in Sheffield was announced, with the loss of 247 jobs. I remind the Secretary of State that he said at the time that the closure was to save money. The Minister of State told the House the following day, in response to an urgent question, that
“we take the view that this is the best way to spend public money more efficiently and more effectively.”—[Official Report, 29 January 2016; Vol. 605, c. 562.]
Yet Members from all parts of the House have challenged what both Ministers said at the time, because of a lack of evidence and a lack of any kind of business case. We have heard today some of the evidence about costs, including the fact that staff in Sheffield are employed at an accommodation cost of £3,190 each, while at Victoria Street in London the figure is more than three times as high, at £9,750. Adding London weighting takes the figure well over £12,000. That is hardly a case of saving money.
What is the reason for closing the Sheffield BIS office? A number of suggestions have been made. Is it so Ministers can have water-cooler conversations with staff in Whitehall? Is it part of a desperate scramble for cash to plug the Chancellor’s black hole, as the BIS proposal for the privatisation of the Land Registry appears to be? Or is it because the Government know that many staff will leave and costs will be reduced as a result? Whatever the reason, the Minister and the Secretary of State really should tell us. They should tell us what the strategy is and how the plan will work, because, so far, what BIS has come up with does not seem to add up in any way, shape or form.
As we have heard, in the Budget, the Bridge report and the estate strategy, there is a cross-government move to recruit high-calibre staff outside London and to move Departments out of London to continue a trend that has been going on since the 1960s. Other Departments recognise the benefits of a diversified civil service, so why is BIS moving in the opposite direction? Staff in BIS have been told that Ministers need their advisers closer to them, but why do other Departments take the opposite view? Why, after the initial announcement, were staff later told that the move was due to computers and phones not working properly? I know that the quality of our broadband service is one of the poorest of any major economy, but even so we might be forgiven for thinking that the IT systems could be fixed even by this Government. To give an example elsewhere in Government, the Department for Education says on the subject of the benefits of a regional approach:
“We benefit from maintaining sites around the country—we get alternative perspectives on our policy issues, we can draw from a wider recruitment pool, and employing people in sites outside London helps to keep costs down.”
That says it all, does it not?
The many experienced staff who do not wish to relocate to London will of course leave a gap at BIS at a time when it faces serious challenges wherever we look, such as in the steel crisis and the need for significant support for manufacturing, and in the delay announced by the Minister for Small Business, Industry and Enterprise to the introduction of the pubs code and in setting up the office of small business commissioner. All those important and demanding policy areas will need the expertise of experienced civil servants. In Sheffield, there is a need to support our universities and the ambitious plans for a mass expansion of apprenticeships. Such a need for experienced staff to give top-quality advice to Ministers could not be more important; yet BIS is taking a big gamble with its ability to do its job as many of those experienced staff will leave. That point made has been made in the House of Lords by the BIS Minister, Baroness Neville-Rolfe.
I want to pay tribute to hon. Members who have spoken in this debate. My hon. Friend the Member for Sheffield Central spoke with great expertise, and from his experience of talking to staff who are his constituents, about the benefits of regional offices. The hon. Member for Cardiff North (Craig Williams) made some excellent comments about the importance of the work that goes on in his constituency, including in the Insolvency Service. He supported requests for proper evidence to be provided to support, and to help us to understand, the proposals made by BIS.
My right hon. Friend the Member for Rother Valley (Kevin Barron), who secured the Westminster Hall debate, made the point that the success of BIS in its current location is crucial for his constituents and those of several other Members of the House. He mentioned the lack of relocation expenses, and he might have added the lack of extended travel cover as another reason why these experienced members of staff simply cannot do anything but accept redundancy.
My hon. Friend the Member for Sheffield, Heeley (Louise Haigh) talked about the apparent thumbs down to the staff in BIS by the Department’s leadership, which is in stark contrast to the excellence of the many people who work there. My hon. Friend the Member for Sheffield South East (Mr Betts) questioned the Government’s commitment to their own devolution agenda given their decision to move the centre for the northern powerhouse to London and away from the north itself.
We have had excellent contributions from Members on both sides of the House, including the hon. Members for Kirkcaldy and Cowdenbeath (Roger Mullin), forEdinburgh North and Leith (Deidre Brock) and, indeed, for Warrington South (David Mowat), who pointed out the contradiction between this move and the northern powerhouse and the contradiction between the “BIS 2020” document and the estate strategy.
So much has been made by Ministers of the so-called northern powerhouse. Having a network of Government offices and key staff in the regions is a vital part of understanding the needs of the whole country and avoiding the sense that all policy is solely about the Westminster bubble. It is therefore baffling, at the very least, that BIS of all Departments might even consider withdrawing from the regions, given the importance that Ministers say they ascribe to the northern powerhouse. BIS should be the eyes and ears of Government out and about in building key local relationships with business, universities, colleges, local government and, of course, trade unions. Why are the trade unions saying that they have not been allowed to have discussions with management about the proposals? There is also of course the message received by the private sector and local communities that the Government just are not serious about supporting the north. I am afraid that actions speak louder than words, and the term “the northern powerhouse” is more and more becoming just a set of words, and meaningless ones at that.
It strikes me that the way the Government are going about their reorganisation has not exactly been business-like. For a start, a forward-looking business would use technology to communicate. Video conferencing is available at the touch of a button and is a very cost-effective way of working, because it saves travel costs and time. I do not know whether the Secretary of State has ever used video conferencing. When he was in Australia at the time of the Tata Steel debacle, he could have used it to speak to people in Mumbai at the annual general meeting that he should have tried to attend to look after our steel industry. [Interruption.] If he turns around to talk to someone behind him, he should perhaps expect me to make such comments. [Interruption.] I am sorry; it was a board meeting. I appreciate the Secretary of State correcting me about the meeting in Mumbai.
Video conferencing and other technologies allow staff to work around the country, closer to home and to family, and to be more productive. Simply put, it is common practice for national and international businesses to have a strong regional presence and to use technology where possible. Should the Government not be at the forefront of using technology? Of course they should.
In any restructuring, would not business produce a sound business plan? Such a plan would evaluate the costs and benefits of the current arrangements set against those of the alternatives. Yet we have not been given a business case by the Secretary of State or the permanent secretary. Two Select Committees were not given a business case, and even the recall of the permanent secretary to give evidence only confirmed the initial suspicion that there was no case for the defence, as he admitted he had not sought to put a price on the changes.
Questions therefore remain about why BIS proposes to close the office in Sheffield. One clue can be found in the single departmental plan to disclose that capital receipts are expected to be achieved from the sale of the many sites around the country that BIS plans to close. Such sales suggest that they are savings for short-term gain. In the case of the Sheffield BIS office, that is at the expense of massively higher annual costs in Whitehall and significantly reduced expertise in supporting business and the economy. The businesses that rely on BIS, including the universities and colleges that rely on BIS in Sheffield, do not operate without proper business plans and neither should the Government or Departments. They will be concerned that the Government do not follow best practice in the way they operate. The sad reality is that BIS Ministers and senior management are developing a reputation, but it is not the reputation they should have. It is a reputation not for competence but for being a complete shambles. That cannot be good news for Sheffield or for the country.
We have been told that the decision has been suspended for two weeks. When the Minister responds, will she tell us that in those two weeks she will find the business case for these decisions and make sure that it is in the public domain, so that it can undergo proper scrutiny, including by the two Select Committees and through consultation with the trade unions, and decisions can be taken on a full evidence base? We need to know whether this is a cost saving, an improvement in policy, or a combination. Whatever it is, the evidence will show. The Minister needs to put that evidence in the public domain and show us, either way, so that proper decisions can be taken, and full public scrutiny of those decisions can show whether the Government are right.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
I begin by congratulating the hon. Member for Sheffield Central (Paul Blomfield) on securing this debate through the Backbench Business Committee. It has been a very good debate. A number of hon. Members from both sides of the House have raised a number of very good points. I know that the clock is against me—that is the rule of Parliament. The last time I said that people seemed to think it was my choice. It certainly was not. I will of course write with an answer to all those hon. Members whose questions I do not answer in my response. That may include the hon. Gentleman, in this respect: his questions were quite long, and I do not have time to answer them all at length. I will deal with the points he made, but in the time allowed to me I will not be able to answer them all in the sort of length that I would like.
It is very important that we have as the focus of this debate the 247 people who currently work in the Sheffield office. I make the point that, yes, we have put forward the proposal, but a final decision has not been made. It has been out for consultation, and I very much hope that a number of hon. Members took part in that consultation. A final decision will not be made until 23 May. Everyone on both sides of this House will know that Governments of whatever colour have at times to make very difficult decisions, but we have to be sure that we make the right decisions for the right reasons.
I also make this point, which is very important. Whatever the decision on Sheffield, 83% of the people who work for BIS will continue to work outside London. To some extent, I take a little exception to the suggestion that we in BIS are not in touch with what is going on in the rest of the country outside London. The Secretary of State and I do not represent London seats; as hon. Members might imagine, we return to our constituencies. Most importantly, we still have an exceptionally fine team of local BIS civil servants working throughout the whole country, who feed in—indeed, I have at least a monthly meeting with them—when they give me a round-up of everything that has happened across the country.
By way of example, the Green Investment Bank is proudly based in Edinburgh. UK Trade & Investment exists throughout the whole country. Today, I have been on a visit in Leicestershire, where I opened the marvellous new extension of an excellent business. Not only did I then meet the Leicester Asian Business Association, but, as I often do, I met the local enterprise partnership. I say to the hon. Member for Sheffield South East (Mr Betts) that when I come to Sheffield on 23 May, it will be a pleasure to meet him and have him there at my visit to those steel mills. I will also meet the LEP, because getting that feedback is so essential.
I turn now to the reasons behind the proposal. It is really important to set this in the right context. That context is a mixture, of course, of the financial position that we are in and the decisions that we have rightly made to make sure that we have a budget that we can cope with and that BIS plays its part in reducing overall spend. But it is not just about cutting money. It is about making sure that this Department works as efficiently and effectively as possible. The situation that the Secretary of State and I inherited was the frankly historical problem of an abundance of sites. A decision has been taken, against that financial background—I hope that this answers the questions of the right hon. Members for Rother Valley (Kevin Barron) and for Sheffield, Hallam (Mr Clegg)—
Anna Soubry
It is not as simple as cutting costs. The right hon. Gentleman, with his great experience in and out of government, should know that. It is a question of making sure that we have an efficient and effective way of working in BIS, set against the financial restraints that we have quite properly put upon our Department as part of our overall requirements with regard to the deficit.
Our current HQ office locations are based on the legacy I mentioned, and have resulted in a complicated map of management relationships, with work in policy teams spread across 14 different locations. We are committed to reducing our headcount by 2020. That will involve becoming more flexible and redeploying fewer staff quickly to new priorities. We need simple structures that allow staff to interact through quicker, less cumbersome means and stay close to each other in flexible teams. We rightly put a strong emphasis on staff engagement, excellent management, visible leadership and developing and coaching our staff. Those are harder to achieve if teams are not collected together or are not working under the same roof. We believe that having a single-site BIS policy headquarters is the best way to preserve our effectiveness. Given that our teams serve Ministers in Parliament, those headquarters have to be in London.
I want to make this point absolutely clear. Whatever the decision, we will continue to provide good and full support to the 247 members of staff who have had this proposal hanging over them—we are very conscious of that—since 28 January. If the decision is made to close the Sheffield office, that support will continue, because this Department takes its duty of care to each and every one of our staff extremely seriously, as I hope hon. Members would imagine.
I have said that tough decisions have to be made. The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) and his colleagues on the Scottish National party Benches will understand that, for Governments of all colours, there are times, set against a difficult financial background, when tough decisions have to be taken. I make no criticism of the SNP’s decision back in 2013 to close 10 sheriff courts and seven justice of the peace courts, with operations transferred to other locations. Those are the difficult decisions that have to be made. Of course, the SNP closures were justified as cost-saving measures, but, to be fair, as part of a wider reform of the justice system as well. We can all take away from that the fact that the SNP was not just cutting things for the sake of savings, but was doing so as part of a broader strategy.
Anna Soubry
Unfortunately, the clock is against me, and the hon. Gentleman has only just walked into this debate, so I am even less disposed to take his intervention.
Those are the difficult decisions that Governments have to make if they are to fulfil their duty, which is not only to make sure that we live within our means but to ensure that we act efficiently and effectively.
I will deal with the four questions that the hon. Member for Sheffield Central asked me—I am grateful for the email and attachment that he sent to my Department. Some of what he raised has already been dealt with by the permanent secretary in his evidence to the various Committees. I will take just the sharp end of the hon. Gentleman’s questions. He asked what assessment had been made of the cost of replacing jobs and moving them to London. A full assessment has not yet been made, but, as he will know from the evidence of the permanent secretary, the total over time for the Sheffield office was thought to be some £14 million. As I have said, however, this is not just about costs. As for the assessment of the cost of replacing Sheffield jobs in London, the final decision has not been taken, and until it has been and we know all its ramifications it will not be possible to give that assessment.
The hon. Gentleman and other hon. Members asked about the northern powerhouse, but I do not need to be told what a great and wonderful city Sheffield is. You do not need to know, Madam Deputy Speaker, about my connections with Sheffield, or the fact that my family comes from there—[Interruption.] Exactly. Because I am from north Nottinghamshire, I spent a great deal of my youth in Sheffield. It was an outstanding city then, just as it is now and will no doubt be in future. In our devolution deal, we have put Sheffield at the heart of south Yorkshire, and we have delivered millions of pounds to Sheffield—[Interruption.] Which part of the Sheffield city deal do Labour Members not understand? The clue is in the name: Sheffield is at the heart of that deal, with all the attendant money and power that comes from it. That is to be welcomed, and I am surprised that Labour Members are not talking up that excellent deal, the outstanding city that is Sheffield, and the northern powerhouse. I hope that they will make the case for HS2 to have a proper station in Sheffield. I have a bias because I want an east midlands hub in Toton, as I am sure there will be, but we must now ensure that Sheffield plays its part in HS2.
Anna Soubry
I do not wish to be rude to my hon. Friend, but the clock is against me and Madam Deputy Speaker is urging me to conclude my remarks.
The final question from the hon. Member for Sheffield Central concerned what other options there are apart from the proposal. Full consultation has taken place with unions and staff, and several alternative proposals have been received. The BIS executive board will take full account of those when reaching its decision on the proposal, and I hope that goes some way to answering his question.
In conclusion, I wish to pay a full and handsome tribute to all staff in BIS. We take their future, work conditions, and the contribution they have made very seriously, but sometimes tough decisions have to be made. This is not just about saving money; it is also about ensuring that the Department works effectively and efficiently, and that is what we seek to achieve.
Paul Blomfield
I thank the Minister, the shadow Minister, and all Members who have contributed to what has been a thoughtful debate, with a cross-party consensus in support of the central thrust of Government policy to devolve jobs, but with concern expressed about this decision. I acknowledge and am grateful for the Minister’s frank reply in saying that no full assessment of the costs has been made. The motion simply seeks what other Members have called for, namely a proper cost-benefit analysis so that any decision can be made on the basis of demonstrable and provable facts, and the commitment that all that information will be available—perhaps through the National Audit Office, as we suggest—before the BIS board makes its decision. That is an important step, and I thank Members for their participation.
Paul Blomfield
I am not sure that I am allowed to give way, but I thank the hon. Gentleman for all his support in this debate and the points that he has made, and I very much commend his double-hub strategy. I am grateful to the Minister for saying that no final decision has yet been taken, and for acknowledging that no cost assessment has been made, which is frankly extraordinary. I hope that a decision will now be made, and I commend the motion to the House.
Question put and agreed to.
Resolved,
That this House notes with concern the Business, Innovation and Skills Department’s proposal to close its Sheffield policy office, moving 247 posts to London; further notes that the Sheffield BIS office proposal runs counter to the Government’s welcome commitment to create a public sector that reflects the diverse nature of the UK following the publication of the Bridge report and also to the commitment in Budget 2016 to move civil servants out of expensive Whitehall accommodation; and therefore calls on the National Audit Office to conduct a cost benefit assessment of the BIS Sheffield proposal.