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Toby Perkins (Chesterfield) (Lab)
I beg to move,
That this House has considered redundancies at CSC.
It is a pleasure to serve under your chairmanship, Sir Edward. I want to talk today about the redundancy programme that has been introduced by Computer Sciences Corporation; the impact of the redundancies on my constituency and on services provided to the UK Government and the wider economy; the management of CSC and its financial and service performance; and the way in which CSC performs its functions and how that fits into the UK’s economic interests. I am also keen to explore the plan to merge with Hewlett Packard Enterprise Services to create one of the world’s biggest IT services conglomerates, and whether the rush to deliver that change and the attached bonuses might be becoming a paramount concern over the long-term interests of the business and the impact that it has on the services that it provides in the UK.
CSC is a Texas-headquartered IT services software and outsourcing corporation employing 70,000 people worldwide—that number has gone down 26,000 in the last five years. The company designs, builds, runs and maintains major critical IT systems for many UK private and public sector organisations, including—but not limited to—the Metropolitan police, the national health service, Network Rail, civil nuclear fuels, BAE Systems, HM Passport Office, the Department for Work and Pensions and many other Government Departments. It also has specialisms in other industries, such as insurance.
CSC employs around 5,500 people in the UK. Its latest round of redundancies, which will see about 1,100 more people laid off on top of the 499 redundancies that were recently announced, means that around 2,350 people will have been made redundant in the last financial year. CSC has many employees who work from home—so, in potentially every single constituency in the country—and major offices in Aldershot, Banbury, Chorley, Leeds, London, Preston and in my constituency. Those jobs are high-skilled, with people predominantly employed on salaries that are considerably above the average national wage—we might say that those jobs are precisely the kind that the UK economy needs more of. The move follows the announcement that CSC will merge with Hewlett Packard Enterprise Services to form DXC Technology, which will, with revenues worth $26 billion dollars, be one of the world’s largest IT services companies. I will refer more to the merger shortly, but first I will tell the House about CSC and its impact on Chesterfield, as I think that will put the firm’s performance and actions into context.
CSC has been based in Chesterfield since 2003, when it won the Royal Mail outsourcing contract to provide IT services to Royal Mail. At the time, Royal Mail IT employed around 1,500 people in Chesterfield. Royal Mail has been a very significant Chesterfield employer since the 1960s, when Harold Wilson’s Government set out on a programme of moving Government institutions out of London. Thousands of staff moved to or were recruited into Chesterfield.
The Royal Mail contract was awarded to CSC in 2003. In Chesterfield, 1,500 staff were TUPE-ed across and in the 13 years since the awarding of the contract, around 80% of those staff have left the business. Others have been recruited and about 500 staff now work in Chesterfield on services relating to the NHS contract, BAE Systems, the HM Passport Office, Aviva, Department for Work and Pensions, the Ministry of Defence and others. The 500 employees mean that CSC is still one of the biggest private sector employers in Chesterfield and the jobs make a significant contribution to our economy. I have no idea what the exact cost has been to the Chesterfield economy of the 1,000 skilled, well-paid posts that we have lost over the last 13 years, since CSC took over the Royal Mail contract, but it is very substantial and should not be overlooked.
As we all know in this place, jobs come and go. Tough as it is for a local area—even more so for the families and individuals involved—global businesses will organise their affairs in a way that suits them, and as long as the rules of consultation and severance are followed, there is often not all that much of a role in that for Government. However, elements of this programme of redundancies should concern us in this place.
It is useful to understand and consider how CSC has grown its business to such a significant size in the United Kingdom. The growth has come from winning predominantly outsourcing contracts with a range of companies, including a large number of Government contracts. I have alluded to how 80% of the staff on the Royal Mail contract in Chesterfield are no longer there. CSC’s work with the Department of Health has attracted considerable previous scrutiny, and the last report that I read in The Guardian suggested that its NHS contract was still worth about £2.2 billion. CSC has contracts in a huge variety of sensitive Government and corporate installations, including police services, HM Passport Office, civil nuclear and aerospace. I think it is fair to say that when CSC moves in, jobs often move out. It is not like many firms in my constituency that have moved in, grown exponentially and recruited more as they go. What CSC has done in Chesterfield is move into an existing contract and, over a 13-year period, gradually reduce the number of jobs in the local community.
As well as the impact of CSC’s operating methods, there are legitimate questions about its performance. Managerial and accounting failures led to the business being fined $190 million for over-reporting profits on its NHS work, and it is currently on its fourth UK head in the last two years, having reported very disappointing figures recently. Notwithstanding those reports, the UK management repeatedly advised Unite the union throughout the first 11 months of 2016 that the UK business was healthy and profitable. Given the extent to which there appears to be a constant cycle of change, panic and retrenchment, the unions are understandably concerned.
Unite believes that the company is making redundancies in the UK of such a significant size that it is critically endangering its ability to continue to provide those services. Unite says:
“What is most alarming with this programme is both the scale and the speed with which the company is seeking to achieve the reductions, the sense of chaos it has created within the delivery functions of the company—and the sense of impending catastrophe within the staff body.”
I think that we should take that very seriously. It says:
“The staff cuts are being made seemingly without regard for the impact on staff and services. Senior managers of large parts of the UK business who have questioned the breakneck speed or the business logic”—
of the cuts—
“have been removed, and much of the UK organisation is being managed by managers brought in from elsewhere globally, who know nothing of the day to day running of the UK business, and care little of the significance to the country of the services delivered by the company.”
Under any circumstances, redundancies of that scale should be a cause for real concern. However, when the company has experienced so much upheaval and has gone from one failure to another, and given the sensitivity and national importance of CSC’s work, I think that the Government should be very interested indeed. I would like to know from the Minister what cross-Government work is going on to monitor service delivery, whether there have been any further breaches of contract with Government since the Department of Health found CSC in breach in 2011, and what work she is doing to ensure that the Cabinet Office is aware of the potential impact on Government services if the fears of the unions are borne out.
Members of the House will be aware of the Prime Minister’s suggestion that, although her Government would work to defend free markets and to promote the UK as a place where industry and enterprise is encouraged and thrives, she would expect business and government to work closely together to root out the worst excesses of capitalism. In that context, what interest are the Government taking in the motivations behind CSC’s decisions? The driver seems to be entirely about ensuring that the right financial targets are hit to ensure a merger on the most favourable terms for CSC shareholders. Figures published for the US stock exchange show that 12 individual directors stand to make bonuses of $90 million on successful completion of the merger. How can we be confident that directors who stand to accrue untold riches in the short term will take a long-term view about the best interests of the business, its employees and the customers who rely on it?
Although the tale of CSC’s recent past includes rounds of redundancies, lost contracts, service failures and missed profit targets, followed by further redundancies and the whole cycle repeating itself, one area of CSC’s business has seemed to grow. Many Government contracts paid for by UK tax money are now being serviced by huge offshoring operations in India. An article on CSC’s own website describes how 25% to 30% of its global employees are now employed in India. There is a question for us in the House about how much GDP the UK is losing by allowing the Government to outsource work to an American company that then effectively lays off UK staff in order to provide services to the UK Government from India.
Mr David Hanson (Delyn) (Lab)
I have constituents who have been made redundant by CSC and who have found that their jobs have gone offshore. My question to the Minister, via my hon. Friend, is whether the Government knew about the offshoring when it occurred, as part of the contract. Did the Government make representations on that issue, and are they concerned for future employment in the UK in such a highly skilled, highly confidential and highly sensitive business?
Toby Perkins
My right hon. Friend makes the point excellently. There is a strategic question for us and for the Department for Business, Energy and Industrial Strategy about co-ordination with other Departments on how services are provided. He sums up perfectly the fact that it substantially affects the UK economy if such highly paid and skilled jobs disappear overseas. Presumably, cheaper contracts save Government money, but the impact on GDP and the fall in tax revenue then hit our economy.
Given the sensitivity of some of the contracts provided by CSC to the Ministry of Defence and other organisations, what national security implications should be considered when they are serviced overseas? I would be interested to hear the Minister’s response to that question. I am also interested in how CSC, run by global operators, sees its responsibilities to the UK and to our employees and constituents. For a company that employs so many people in my constituency and provides services to so many Government institutions, its interest in engaging with MPs seems minuscule. I have had no contact with CSC in advance of this debate, despite attempting to contact the company, and with the exception of a discussion about car parking on Old Road in Chesterfield, I have had no contact from CSC in my six years as an MP. I cannot think of a single company in Chesterfield that employs as many people that has not contacted me.
I would like the Government to take a close interest in the services being provided by CSC, and in whether CSC operations and activities in the run-up to the merger pass the Prime Minister’s test, as part of her grand contract between business and the Government, for how businesses should act. What discussions has the Minister had with CSC regarding its UK operations, and what steps is she taking to support the jobs of my constituents and those at the other CSC sites in the UK?
Mr Mark Hendrick (Preston) (Lab/Co-op)
I congratulate my hon. Friend the Member for Chesterfield (Toby Perkins) on securing this debate, which is particularly important given the number of jobs involved throughout the country at many different sites.
The CSC office in my constituency is located opposite my parliamentary office. I am concerned that many local people known to me who work there could well be out of a job soon. There are 79 jobs in Preston—four managerial, 28 professional and 47 technical—and around 500 jobs in central Lancashire as a whole. My staff have noticed that the signage on the CSC building on Marsh Lane in Preston was removed some weeks ago. None of the staff were told why, and we had heard recently about the extra job losses. That leads me to believe that the company management have known about them for some time, and are perhaps already setting about dismantling the Preston facilities, without bothering to tell the staff still working there.
As my hon. Friend said, CSC is responsible for many critical IT systems. In my constituency, we have BAE Systems at Warton and Samlesbury, civil nuclear power rod production at Westinghouse near Springfields and, like everybody else in the country, NHS facilities. All of those important employers, facilities and public services operating on behalf of Government or indirectly on Government contracts depend on the work of CSC. The redundancies announced are bound to have an impact on their ability to provide those services.
A recent announcement mentioned 1,100 redundancies, in addition to the 499 announced in December. That is roughly 1,500 redundancies announced over the last few months. We know that CSC has made 2,355 people redundant in this financial year alone, which is more than 20% of its staff. As my hon. Friend the Member for Chesterfield said, the company will merge with Hewlett Packard. We have already lost Hewlett Packard jobs in and around Preston in recent years, and that company is carrying out similar manoeuvres, we believe to exercise its share price in a way that keeps shareholders happy, as well as companies that might want to merge with it in future. HP has just announced 785 redundancies UK-wide, and has not given its workforce a pay rise for four years.
Many of us feel that the redundancies are being made as a knee-jerk reaction following disappointing financial figures for CSC, in order to prop up its share price before a merger with HP. I am sure that when the merger takes place, many managers will exercise their share options to ensure that they make a good deal of money. Meanwhile, the workforce producing the goods and services is being sold down the river by selfish management.
I have three quick questions for the Minister. Can she look into the impact, quality and delivery time of the Government contracts, whether NHS or Ministry of Defence orders from BAE, that might be affected by CSC’s provision of services either to the Government directly, to Government agencies or through companies such as BAE? Secondly—this is important in relation not just to CSC but to other companies providing outsourced services for Government—are staff and expertise being lost that could be critical in future to the maintenance and possible modification of those systems if and when change is required? As legislation changes, such as for DWP projects, software must clearly change. In order for software to be maintained, expertise must be kept close at hand, and often in house.
Finally, a related matter—also mentioned by my colleagues—is the question of offshoring. If we are losing staff at UK companies providing services for Government contracts, and if those jobs are disappearing offshore, that has implications for the deliverability and maintenance of those projects, which in many cases are critical to the country’s defence, as with BAE; to the country’s power, as with Westinghouse; or to the health of the nation, as with the NHS.
Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to see you in the Chair, Sir Edward. I congratulate my UK Parliament football club teammate, the hon. Member for Chesterfield (Toby Perkins), on securing this debate. I do not know about him, but it is certainly a while since I have been able to turn out for the team, and it appears results have been improving in that time—I am sure there is no correlation.
The hon. Gentleman’s excellent and powerful contribution brought a very important issue to the attention of hon. Members. He highlighted well the impact that the redundancies will have on his constituency and across the public sector. In Chesterfield, as he stated clearly, where CSC moves in, jobs move out. The size of the new company and its likely dominance of the market will therefore be of concern. Equally concerning is CSC’s lack of contact with its local Member of Parliament, particularly when it was about to become the subject of this debate. The hon. Gentleman raised some very concerning issues for the Minister to address.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Since I am a Newcastle Member of Parliament, it may seem that my constituents are not directly affected by this debate. However, I have been contacted by a constituent who is employed by the company, is very concerned about the news and wants some reassurance from the Minister about the support that will be provided for those being made redundant. They may not all be at specific employment sites; they may be employed remotely around the country.
Neil Gray
I thank the hon. Lady for raising a salient point, which relates to some questions that I will put to the Minister later.
The hon. Member for Preston (Mr Hendrick) highlighted the fact that the behaviour of CSC in Preston suggests that it knew about the recently announced redundancies long before it notified staff. He also said that 20% of staff had been made redundant this year alone, which is a very concerning trend for a large Government contractor.
As the hon. Member for Chesterfield said, CSC is headquartered in Texas and provides IT services for a large chunk of UK Government organisations, including Network Rail, the Metropolitan police, the NHS, the civil nuclear fuels and the Departments he mentioned, particularly the DWP. It is clearly an important public sector contractor that works in sensitive organisations, so the current issues have far-reaching consequences. At the end of this month, CSC will merge with HP Enterprise Services to form DXC Technology and the new company is likely to be the largest single IT services supplier by some margin. In the run-up to the merger, CSC has announced two redundancy programmes under which 1,600 out of just under 5,500 staff will be out of the company by the end of March. Those are the latest cuts at a firm that has had nine separate redundancy rounds in this financial year. In parallel, it is also running a contractor reduction programme from a starting point of around 700 contractors.
Unite, the largest union that serves CSC employees, has stated that it believes that
“the company is critically endangering its own ability to continue to provide these services.”
It appears that many of the jobs will be moved abroad. That alone should be of concern to the UK Government, and not just because CSC is an important public sector contractor. As we approach the Brexit Britain landscape, how will we ensure that such jobs are not only retained but attracted here? The job cuts do not appear to be about the performance of the business in the UK, which appears to be doing well, as briefings have outlined. The UK Government must be concerned about the implications for the public sector organisations that rely on CSC services.
I hope the Minister will advise us whether the Government are concerned about the speed of these cuts; what support they will provide to try to protect as many of the threatened jobs as possible; what support they will provide to anyone who is made redundant, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) asked; and what contingency plans they have to deal with the impact of the cuts on the services provided to major public sector bodies.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
It is a pleasure to serve under your chairmanship, Sir Edward. I thank my hon. Friend the Member for Chesterfield (Toby Perkins) for securing this debate and for his eloquent words. From the level of detail that he went into, we can be in no doubt about his passion for the subject; I will not repeat everything he said. I also note the excellent points made by many other hon. Members, especially the remarks from my hon. Friend the Member for Preston (Mr Hendrick) about his experiences in his constituency, which has already had the hard knock of job losses at Hewlett Packard, where workers have not received a pay rise for four years.
Labour is the party of working people and we will always stand up for them. My hon. Friend the Member for Chesterfield set out plainly the impact that the redundancies will have on CSC workers and the potential knock-on effect on public services. By March, the company intends to make 1,600 working people—a third of its UK workforce—redundant. At the end of March, it will merge with HP Enterprise Services to form DXC Technology, and the new company will be the largest single IT services supplier by quite a long way. In the run-up to the merger, CSC announced two redundancy programmes totalling 1,600 redundancies from 5,400 staff. Those are just the latest in a long line of cuts at CSC, which has had nine separate redundancy rounds this financial year as well as reducing its contractor programme.
The cuts are being rushed through, causing chaos within the company and huge dismay for CSC workers. Some of the roles are being offshored, but that is usually done in a controlled manner. We must consider that, with the scale and the speed of the cuts, CSC will endanger its own ability to provide its IT services; that is the view that we have heard from other hon. Members today, as well as from Unite, the union that represents many CSC workers. CSC provides critical IT systems for many private and public sector organisations, including the Metropolitan police, the NHS, Network Rail, civil nuclear fuels, and the Passport Office. Any knock-on effect to critical IT services could have very serious consequences.
Let us be clear about what is happening. The redundancy programme seems to be a knee-jerk reaction in order to reach arbitrary financial targets and ensure a favourable merger for CSC shareholders, which are largely US financial institutions, pension funds and hedge funds. If the targets are achieved, CSC’s senior executive team, which is based in the USA, will share out $90 million in bonuses. The chief executive officer, the chairman and the president will get between $37 million and $44 million—that is just one person, by the way. Needless to say, the nine members of the executive leadership team are all men, as are eight out of the nine directors. Senior managers of large parts of the UK business who have questioned the process have been removed. I have heard from Unite, the largest union in CSC, that throughout 2016 CSC’s UK management repeatedly advised it that the UK business was healthy and profitable. So this is not about emergency measures to save a failing business; it is corporate greed that will have an enormous impact on the CSC workers who face redundancy and potentially on the public services that depend on CSC’s IT systems.
In June 2013, the then Chair of the Public Accounts Committee, my right hon. Friend the Member for Barking (Dame Margaret Hodge), described CSC as a “rotten company”. Sadly, it seems that nothing has changed. It certainly appears that CSC is dangerously and negligently putting critical parts of UK infrastructure, Government services and private industry at risk, as well as unceremoniously getting rid of 1,600 workers in a quest for a successful merger and bumper bonuses.
I look forward to hearing the Minister outline how she will protect British workers and public services. Will she be willing to carry out an impact assessment of the critical IT provision that CSC currently delivers for many Government services? Also, will she please tell us how she will support the workers who face redundancy? Finally, I would like the Minister to comment on how supporting a company that often makes redundancies and then outsources the jobs overseas can possibly benefit our community, and how it can possibly be described as looking after UK workers.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Chesterfield (Toby Perkins) on securing the debate and on the detailed knowledge he has accumulated, despite the fact that the company does not seem to be in contact with him. Given the number of people it employs in his constituency, I must say that that is a surprise.
Business change is an inevitable consequence of modern competitive markets, and commercial and economic opportunities mean that companies will need to reorganise, merge, expand, and sometimes contract, in response. But what we have heard today is, indeed, a worrying picture, and I will do my best to respond to the key points about the security of the public sector contracts and the way in which the Government support people faced with redundancy. I will also try to address some of the corporate governance issues that have been raised.
Employers should want to implement changes as swiftly and efficiently as possible, to limit the impact on productivity and morale. Businesses need the flexibility to respond to the particular circumstances of their restructuring situation, but the number of rounds of redundancies that this company has engaged in causes one to ask in whose interest it is working. At the same time, employees will want to know how the changes are likely to affect them in this very fast-moving picture, and what their options are for the future. It is therefore vital that there is effective consultation with employees about the potential for collective redundancies.
I shall just remind right hon. and hon. Members what our legal obligations are. Collective redundancy legislation strikes a balance between the needs of the business and those of the employees. Collective redundancy occurs when 20 or more employees may be made redundant at one establishment within a 90-day period. In that situation, employers are under a statutory duty to consult employee representatives about the proposed redundancies. The length of a consultation period prior to the first dismissal depends on the total number of proposed redundancies. The consultation must be with the employees’ trade union representatives, or other elected employee representatives where there is no recognised trade union in place, and it must be completed before any dismissal notices can take effect. Importantly, it must be undertaken with a view to reaching agreement, even though sometimes agreement may not be possible. Therefore, any consultation should include consideration of ways of avoiding dismissals, reducing the numbers to be made redundant and mitigating the effect of the dismissals.
There are also a number of obligations on employers, including a requirement to notify the Secretary of State for Business, Energy and Industrial Strategy of the proposed collective redundancies before the start of statutory consultation. Employees who feel their rights have been denied may complain to an employment tribunal, which may make a protective award of up to 90 days’ pay to each of those affected. The ACAS helpline can provide advice to employees on their individual situation. ACAS has also produced a guide for employers on handling large-scale redundancies.
Government support is available for the many employees who have been made redundant or are likely to be faced with redundancy. Throughout the redundancy process, employers still have obligations to their employees and should be thinking about the help they can offer. First, employees with two years’ service under notice of redundancy have the right to reasonable time off to look for a new job or to arrange training. Employers in redundancy situations should contact Jobcentre Plus as soon as possible to discuss appropriate support that can be delivered locally. Jobcentre Plus has, indeed, made contact with CSC in this case to provide support, and that includes support for staff who work remotely, as may be the case with the constituent of the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). The Jobcentre Plus rapid response service is delivered in partnership with a range of national and local partners, including Her Majesty’s Revenue and Customs. Where no partner support is available, dedicated funding may be used to fill gaps in provision.
All decisions about appropriate support are made locally. That is because a decision that is based on the specific redundancy situation, in particular on an individual’s own transferable skills and experience and the availability of jobs in the local area, is more likely to be the right decision and in the interests of the individual concerned.
Mr Hendrick
The Minister is giving an excellent exposition of the rights of employees and employers in the handling of the redundancy process, but will she try—and if she cannot, will she write to me later—to address the points I raised about ensuring that the services provided to Departments are maintained and are still deliverable? Her current contribution looks like she is talking about what employers and employees can or cannot do under legislation, rather than about how we address the problem of losing jobs that are of value to the Government.
Margot James
I thank the hon. Gentleman for his intervention. I will come on to talk about the effect on the public sector contracts that the company has contracted to provide. I mentioned that at the beginning. I first just wanted to cover the rights of the employees in these circumstances and the support that the Government are trying to offer through Jobcentre Plus. I will, indeed, come on to the important matter that the hon. Gentleman just raised.
To conclude on the employment support that we are able to provide, I am hopeful that the rapid response service will be able to assist those workers who have been made redundant in finding alternative employment. Officials at the Department for International Trade have also contacted CSC and are in close contact with Jobcentre Plus.
I will now move on to the potential impact on public services that various right hon. and hon. Members have mentioned. CSC has undertaken numerous contracts with vital services such as, as we have heard, Royal Mail, the police, civil nuclear and the NHS, and it is indeed of concern to us all that the skills and the contractual obligations given by CSC are honoured. Given the situation, I can well understand right hon. and hon. Members’ concerns about the future. The Cabinet Office has assumed responsibility in Government for dealing with CSC on these matters, and is in regular contact with the company about the viability of the contracts it has assumed. It has been given every assurance that the business will be ongoing and unaffected.
Toby Perkins
I am pleased with the tone of the Minister’s remarks. However, I wonder whether she shares my concern—I suspect she does from what she has said. We are being given assurances by an organisation that has had four different leaders in the past two years and has gone, as the Minister has rightly identified, through nine rounds of redundancies. The trade unions have reported that the workplace is in chaos and there is a catastrophe of employee confidence. In that kind of environment, where there is a huge financial incentive to deliver in the short term and a track record of failure, does the Minister agree that there is a real need for the Government to pursue the matter and ensure that the assurances are worth the paper they are written on?
Margot James
I have sympathy with the hon. Gentleman. I have the assurances from the Cabinet Office, which is in regular contact with CSC, and I am sure that my Cabinet Office colleagues are wary of the information they are being given in the climate that has been described this afternoon. I will undertake to have a direct conversation with my counterpart in the Cabinet Office to test out the assurances that he or she has been given. In the past, I have been exposed to corporations that have been going through this process of rapid change. That can be very worrying, especially where software and computer contracts are the main focus, because there could be a loss of the skills vital to the delivery of such contracts. In this country, we have had many concerns about public sector contracting for IT systems. It would be a reckless Minister who assumed that all was well, given the circumstances we have heard about this afternoon.
Mr Hanson
To be clear, my constituents have been made redundant, but the jobs are not redundant; the jobs have been offshored to other countries. Have the Government got a view in any way, shape or form on not only the company’s current performance but its future performance, which is equally important for my hon. Friend the Member for Chesterfield (Toby Perkins) and others?
Margot James
I thank the right hon. Gentleman, because I note that the hon. Member for Chesterfield said in his opening remarks that a lot of jobs had gone offshore to India. The Government have to be cautious in how we respond to that. Business change is an inevitable consequence, and it is not for the Government to direct companies as to how they fulfil their contracts. Unless contracts have certain stipulations within them from the outset, it is difficult for a Government to intervene. Once those contracts have been agreed, it is for the company to fulfil that contract and organise itself in the best way possible.
Having said that, I will say a couple of words about how the Government view public sector contracting. I am responsible for small business, and I am conscious that the Government have set a target that a third of all public sector contracts of a decent size should go to small and medium-sized enterprises. In committing ourselves to that goal, I do not think we meant SMEs in India; I think we meant SMEs in the United Kingdom. Members raise pertinent points. However, once a contract is agreed, if it does not have stipulations on the supply chain, how the company fulfils the contract using its own employees and where those employees are located, it is difficult to intervene part way through.
I reassure Members that suppliers are contractually obliged to meet their performance requirements. Those obligations remain in place regardless of any internal changes that a supplier implements. Through the Cabinet Office, the Crown representative for CSC regularly monitors the company’s performance across all its Government contracts. CSC currently delivers services for a variety of important public sector organisations. It has been formally requested to offer reassurance that the current redundancy programme will not impact on that service. CSC provided verbal assurance during a programme board at the beginning of February. NHS Digital and the Department of Health continue to seek full written assurances. The Cabinet Office are in regular contact.
I understand the concerns that have been expressed this afternoon, not only about redundancies but about their impact on public sector contracts. Every collective redundancy situation, large or small, involves individuals and needs to be managed carefully. It is a very difficult time for CSC employees and their families. It is therefore important that individual workers receive the information and support they need as and when they need it. I am clear that we cannot stand in the way of certain changes, but we have a reasonable hope that companies will act in the long-term interests of their communities and employees. As Members know, the Government recently issued a Green Paper on corporate governance. One thing we are looking at is extending the responsibilities of publicly quoted companies to large private companies. The facts that have emerged during the debate underline the importance of the Green Paper. I am sure that Members will want to debate the Government’s response to it in due course. I thank Members for all their contributions.
Sir Edward Leigh (in the Chair)
Mr Perkins, do you wish to say anything to sum up?
Toby Perkins
In conclusion, I am pleased with the tone of the Minister’s response. I am grateful for her undertaking to pursue with the Cabinet Office the points that have been discussed. We are all conscious that we have had a history of people being put out of work by machines. We know that; it is progress. We are not all still riding on horseback; we have cars now. It seems a shame that we move from the people to the machines, and the machines get ever more efficient, with the outsourcing organisations coming in and saying, “We can provide the same services with many fewer machines.” Even then, the pursuit of profit means that those jobs, funded by the British taxpayer, are ending up offshore, and that poses serious questions for all political parties and for Governments about how we ensure that the desire to get the best value for taxpayer money does not come at too great a cost to the UK economy.
As the Minister has correctly reflected, we have genuine reasons to be concerned by the decision-making processes that have been pursued at CSC. As it lurches from one failure to another, there is concern about the implications not only for those employees and the communities left behind, but for those services that rely on CSC.
Question put and agreed to.
Resolved,
That this House has considered redundancies at CSC.