Sainsbury and Asda Merger

Lord Hanson of Flint Excerpts

Monday 30th April 2018 Commons Chamber

[Andrew Griffiths]

My hon. Friend makes an important point—I have dairy farmers in my constituency—and this is one of the issues that I have raised with Christine Tacon, the Groceries Code Adjudicator. My hon. Friend will know that in the last few weeks, in conjunction with the Department for Environment, Food and Rural Affairs, the Groceries Code Adjudicator and the Department for Business, Energy and Industrial Strategy, we have brought forward new proposals on dairy contracts to help exactly the kind of small suppliers that she talks about. In conversations with Sainsbury’s and Asda, both of them talk about the very real relationships that they have with their suppliers—with their dairy farmers. I hope that we can get some assurances to protect those relationships.

[David Hanson (Delyn) (Lab)]

Just to be clear, suppliers will not be squeezed, head offices will stay open and stores such as those in Flint, where there is an Asda next door to a Sainsbury’s, will both be open in two years’ time. Has the Minister sought those assurances from the companies today?

[Andrew Griffiths]

Let me reiterate to the right hon. Gentleman that the matter of stores in the same town will be considered as part of the phase 2 investigation by the CMA panel. It will consider the impact of the merger on individual towns. If it believes that it is anti-competitive, that it will lead to a worse deal for the consumer if the two supermarkets—one being Asda, one being Sainsbury’s—stay open, and if it has concerns, it will force the sale to a competitor.

As my hon. Friend the Member for South West Bedfordshire (Andrew Selous) said, where there is a wider marketplace with a huge number of supermarkets, the CMA’s view may well be that there is no impact on competition in the town as a result of the merger. However, it is clear that this will be judged on a case-by-case basis, to protect the individual consumers in the right hon. Gentleman’s constituency and mine.

Vauxhall Factory, Ellesmere Port

Lord Hanson of Flint Excerpts

Tuesday 20th March 2018 Westminster Hall

[Justin Madders]

My hon. Friend is absolutely right. The motor industry has been pressing on the business rates issue for several years, and it pressed again this year; I know that hon. Members with an interest in the subject have pressed on it, too. The case argues itself. An EY study has demonstrated that de-rating certain types of plant and machinery, not just in the automotive sector but across manufacturing, could stimulate additional investment of more than £8.7 billion and support an additional 33,000 jobs per annum. That is something we can do, and the argument for doing it is clear.

Let me give another example that relates to Brexit. If Vauxhall invested in solar panels on the site in the attempt to save on energy costs, it would attract a higher business rate. That does not seem in tune with much of what the Government are trying to achieve. Vauxhall has learned that its energy costs per MWh are twice those of plants in France. That has a massive impact on the competitiveness of the vehicles that it manufactures. I am grateful to the council and the local enterprise partnership for their work to address the issue by helping to source a local low-carbon supply for the plant. That will inevitably require some infrastructure investment, so I urge the Minister to keep in close contact with the LEP to ensure that everything possible is done to facilitate the proposal.

The final piece of the jigsaw is about taking a challenging part of the current set-up and reusing it to enhance the site’s overall viability. A good deal of land on site is surplus to requirements; as the number of people employed there has shrunk, so has the need for the land that the plant sits on. At the moment, only about a quarter of the Astra’s parts are sourced from the UK supply chain, and there has long been an ambition to increase that substantially. Given the uncertainties over future customs arrangements, the opportunity to utilise spare land to help local automotive suppliers to base themselves closer to the manufacturing site has many benefits. It will reduce transportation costs, improve productivity by providing more certainty about delivery, and benefit the wider community and environment by reducing lorry miles and thus emissions. Most of all, it will be a bulwark against a disadvantageous future customs arrangement.

[David Hanson (Delyn) (Lab)]

My hon. Friend will know that approximately 400 people from north Wales work at the plant. I urge him, along with the Minister, to contact the National Assembly for Wales. The Welsh Assembly Government, in co-operation with the UK Government, can help with infrastructure and with many of the issues that he raises.

[Justin Madders]

I thank my right hon. Friend for his intervention. He and I work with many other hon. Members in the all-party group on Mersey Dee North Wales. We recognise the symbiotic relationship in the north-west between Cheshire, Wirral and north Wales, and the interchange of people who move between those areas’ economies. I will certainly work with him and his Welsh Assembly colleagues on the matter.

Reshoring the supply chain is a clear element of the Government’s industrial strategy, although so far I have seen no financial or practical steps taken to deliver it. We need the Government to designate the area around the plant as a local enterprise zone to incentivise suppliers to relocate there. That would benefit the local supply chain, boost the local economy, provide more jobs and raise productivity. It would be a tremendous vote of confidence in the plant, so I urge the Minister to come back with a positive response as soon as possible. It would not only help Vauxhall, but help to improve the competitiveness of other motor manufacturers in the region.

The Vauxhall plants in Luton and in Ellesmere Port are among the most productive in the PSA family, and some of the most popular vehicles in the country are made there. We know that we are in a time of uncertainty and enormous challenge, but I do not see decline and closure as inevitable. We need to build on the positives. There can be no doubt that the ability to say that it supports British manufacturing boosts the company’s sales. Nor can there can be any doubt that the local management and workforce are committed to delivering the best. That commitment must be matched by the Government, ideally in the ways I have set out today, so that the owners are in no doubt that this is a community and a country that they want to invest in. When I go home, I want to be able to tell my friends and neighbours that Parliament is united and determined to give them all the backing they need to enjoy another half-century of production at Vauxhall Motors.

--- Later in debate ---

[Richard Harrington]

I thank the hon. Gentleman for his intervention, but I do not believe that that is the case; if Toyota was concerned, particularly about the Brexit issue, whatever decision it may have taken was certainly not finalised until well after the referendum. By the way, I look forward to visiting the Toyota plant in the constituency of the hon. Member for Wirral West (Margaret Greenwood)—I think it is in her constituency—quite soon.

[David Hanson]

It is in Deeside.

[Richard Harrington]

I do beg your pardon—in Deeside. Well, I look forward to visiting it anyway, and if I was invited to visit Ellesmere Port I would be very pleased to do so, subject to an agreement with the Conservative Whips.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 13th March 2018 Commons Chamber

[Claire Perry]

It is always a pleasure to respond to my hon. Friend, who is an assiduous campaigner for this form of energy. We continue to commit to supporting our marine energy industry. I refer him to the answer that my right hon. Friend the Secretary of State gave at the start of questions. We continue to exchange information with the Welsh Government, and we have to understand what is on offer. We want to reach the right decision on behalf of low-carbon technologies, but also British bill payers and taxpayers.

[David Hanson (Delyn) (Lab)]

The county in which I live, Flintshire, has only two electric charging points. Given the earlier exchanges, can the Secretary of State set targets for charging points in rural areas as well as urban ones?

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 12th December 2017 Commons Chamber

[Richard Harrington]

I am delighted that companies in Lowestoft, such as Sembmarine, are benefiting from offshore wind projects off the east coast. I met several of them earlier this year, thanks to my hon. Friend’s invitation, at the East of England Energy Group event in October. Developers must submit a supply chain plan before entering into a CfD auction.

[David Hanson (Delyn) (Lab)]

The north Wales coast is one of the key offshore wind sectors in the whole world, never mind the United Kingdom. Ministers announced £557 million for renewable energy in the Budget a few weeks ago. How much of that will go towards renewable offshore energy?

[Richard Harrington]

As the right hon. Gentleman will know, the system of CfD auctions is very efficient in allocating money, and I have every reason to believe that the north Wales coast will be a major beneficiary of it.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 7th November 2017 Commons Chamber

[Claire Perry]

We cannot comment on particular cases. Testing wells are being drilled at the moment, and we need to understand the scientific basis, so that we can prove or disprove these tests. I find it slightly odd that those who argue the loudest that people should accept the scientific basis for climate change refuse to have a conversation about the scientific basis that would prove or disprove the case for fracking.

[David Hanson (Delyn) (Lab)]

11. What discussions he has had with the Chancellor of the Exchequer on the conclusions of the recent Financial Conduct Authority report on the Royal Bank of Scotland and small business customers.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

My right hon. Friend the Secretary of State has frequent discussions with the Chancellor on a range of matters, including financial regulation. The Financial Conduct Authority has published a summary of Promontory’s skilled persons report, to which I think the right hon. Gentleman refers. The FCA is now considering the report’s conclusions, including whether there is any basis for further action.

[David Hanson]

Constituents of mine have, in good faith, used Government-based schemes such as the enterprise finance guarantee scheme to grow their businesses, only to find the Royal Bank of Scotland using the very same scheme to close down their businesses. Given that there is a litany of such cases throughout that report, is it not now time that the Minister and the Treasury conducted a proper investigation and perhaps even a judge-led inquiry?

[Margot James]

The enterprise finance guarantee scheme was exactly designed to enable businesses to borrow when they lacked collateral, with taxpayer support. If a bank is closing down overdraft facilities to claim on the guarantee—as in the case to which I believe the right hon. Gentleman refers—that would clearly be a gross abuse of the scheme. Any evidence of that will certainly be looked at very carefully by my Department.

Vauxhall (Redundancies)

Lord Hanson of Flint Excerpts

Monday 16th October 2017 Commons Chamber

[Claire Perry]

I admire the hon. Lady for speaking so passionately for her constituents, many of whom commute daily to work in the plant. She is more than welcome to come to any of the conversations we have with the auto industry about long-term investment here. We need to secure investment for the future because the whole automotive world is changing and pivoting away from diesel and petrol towards different forms of technology. [Interruption.] The hon. Member for Bolsover (Mr Skinner) talks about pivoting, but I am afraid that that is the way the world is going and I am determined that Britain will be at the forefront so that we can capture investment for the future.

Of course, the plant has reduced numbers previously, and then built up again. I gently point out that when it comes to practical help for those who might be affected and for whom this is clearly a worrying time, the LEP, the local council, the Department for Work and Pensions and Unite are ensuring that support is there and that people can find work quickly, if that is what they desire. There is also the talent retention scheme. We do not want to lose the skills that have been built up over the past 50 years for the industry and the country. It is vital that we work together to save those.

[David Hanson (Delyn) (Lab)]

Over 450 of the people who work at Ellesmere Port live on the Welsh side of the border, only 12 miles away. I am pleased that the Minister has said that she is meeting with the Cabinet Secretary for Economy and Infrastructure in Wales, Ken Skates, to discuss that. Will she give a commitment today to ensure that he is involved in discussions about the three big issues, which are cost, the performance in Europe and the clarity that the company seeks from the Government about future membership of the single market and a tariff-free economy?

[Claire Perry]

The devolved Administrations are of course rightly involved in all those conversations. I was heartened today to hear the head of Cheshire West and Chester Council say that they were working closely across the border, because they understand that so many people working in the plant commute across the border every day. It is interesting that that is perceived as the economic area, which crosses the border. It is absolutely right that we should not let artificial boundaries get in the way. On the issue of artificial boundaries, all of us in this House want a thriving automotive industry. As we have done with other strategic decisions, the more that we are all on the front foot on this together—showing that we are the place for future investment, rather than taking lumps out of each other across the Dispatch Box—the better.

Blacklisting

Lord Hanson of Flint Excerpts

Tuesday 5th September 2017 Westminster Hall

[Chuka Umunna]

I completely agree, and I commend my hon. Friend and the huge team of people who have worked on all the litigation we have seen in the High Court brought by a number of unions including UCATT— now part of Unite—which I am proud to say is headquartered in my constituency, and the GMB. Those unions deserve huge credit for the efforts they put into uncovering exactly what went on and then getting redress, working with my hon. Friend and others in the courts. Those cases have been settled in the past two years and millions have been paid, but the fact remains that not one director of the firms who funded the Consulting Association has ever been properly brought to book, fined or subjected to any individual court sanction for the misery they visited on construction workers over the decades. No one has been brought to book properly for that.

In fact, we are behaving as if all has been forgiven. Tears were apparently shed last month over the fact that we will not hear Big Ben’s bongs for several years. We should be far more concerned about the fact that Sir Robert McAlpine, a firm implicated in all of this, appears to have bagged a multi-million pound contract for the work that is to be carried out on Big Ben tower to fix those bongs.

Let us be clear about the role that the company Sir Robert McAlpine played. Cullum McAlpine, a director of Sir Robert McAlpine, was chairman of the Consulting Association when it was formed in 1993. Later, David Cochrane, the head of HR at that firm, succeeded him as chair of the association. During a hearing of the Scottish Affairs Committee’s inquiry into all of this in 2012, the late Ian Kerr, who died that year, admitted that his £5,000 fine for breaches of the Data Protection Act was met by Sir Robert McAlpine

“on the basis that I had put myself at the front and took the flak, if you like, for it all, so that they wouldn’t be drawn into all of this. They would remain hidden.”

How, in the light of that, can we parliamentarians sit here and say to the victims—many of whom are watching the debate in the Public Gallery—“It is an outrage”, while we stand by as Sir Robert McAlpine is awarded the contract to do the work on the parliamentary estate? There must be consequences when those who bid for public contracts are found to be involved in such practices. Will the Minister explain why on earth, given its disgraceful role in blacklisting, we are giving Sir Robert McAlpine the contract to fix the bongs of Big Ben, which so many parliamentarians have shed tears over?

I took up the blacklisting issue originally as a constituency issue, having been alerted to the scandal by my good friends at Unite; I took an even stronger interest when I was shadow Business Secretary, and I instigated the first full debate on the topic on the Floor of the House in 2013. As I have said, I instigated another debate on it earlier this year, because we must have a proper public inquiry into blacklisting, and the victims are continually denied it.

[David Hanson (Delyn) (Lab)]

One of my constituents, Alan Wainwright, is a victim of blacklisting, and was party to exposing it—he was a whistleblower. He has submitted a file of evidence to the Minister’s office on the very point about the public inquiry. Does my hon. Friend agree that the Minister should examine it seriously and in detail as part of the inquiry?

[Chuka Umunna]

I completely agree; I have met my right hon. Friend’s constituent. In the end, we need the inquiry because we need to know who knew what was going on. It was happening not just in the private sector but in the public sector. There are allegations that it was going on at the Olympic sites, Portcullis House and Ministry of Defence sites. Who knew it was going on? Did the permanent secretaries or the Ministers at the time know? Were the Departments that commissioned construction projects complicit in it? We do not know. Does the law need to be changed or tightened? To what extent is it still going on?

Each time we have debated the issue here the coalition and subsequent Conservative Governments have specifically refused to set up a public inquiry, saying that there is little evidence that blacklisting still goes on. Today I will present compelling evidence showing that the practice is definitely still going on, and that it is happening on one of the biggest construction sites in Europe—Crossrail, a publicly funded project that I have visited. Let us not forget that a construction worker died after being crushed by falling wet concrete, in March 2014, and that two other men were seriously injured in separate incidents in January 2015, working on Crossrail tunnels around the Fisher Street area in central London. In July this year the contractors concerned, BAM, Ferrovial, Keir— the BFK consortium—pleaded guilty to three offences following an investigation by the Health and Safety Executive, and were fined more than £1 million. The HSE said that had simple measures such as properly implemented exclusion zones in high-hazard areas been taken, all three incidents could have been prevented. That shows why it is so important that construction workers should feel free to raise health and safety issues without fear of retribution.

--- Later in debate ---

[David Hanson (Delyn) (Lab)]

I will just make a couple of very quick comments. I did not intend to speak in detail, but given that there is time, I will do so. I happen to be the Member of Parliament for six members of the Shrewsbury 24. I know, even today, how they live with the consequences of that blacklisting. One of my constituents has been the Labour mayor of the town I live in, has been a Labour councillor and sat on the police authority. However, even today he cannot travel to the United States because of that conviction and because of the investigation into a whole range of matters to do with health and safety in the workplace and the allegations that were made.

The Government still need to address the information they hold that they could publish about the records of the Shrewsbury 24 at that time. I ask the Minister to look at that issue in general terms, and to revisit what was visited very strongly in this Chamber in the last Parliament: the consequences of the Government not releasing information to do with the Shrewsbury 24, which they promised to release, but which they have failed to release.

The main reason I stand is to say that I was approached in the last few weeks by my constituent, Alan Wainwright, who is a victim of blacklisting and who was part of the whistleblowing in the blacklisting exposure that is taking place. There was a Guardian article last Tuesday that detailed his experiences, and he has also produced a detailed report of his experiences of his dealings with trade unions and with business, which he has submitted to the Minister’s Department for her to examine. He has also submitted it to the general secretary of Unite, Mr Len McCluskey, who has himself ordered an inquiry into this matter within the Unite union. Mr Wainwright asked me to ask the Minister if she will confirm that she has received that report, consider the evidence and look at a possible inquiry into all the allegations he has made, in addition to the points made very ably by my hon. Friend the Member for Streatham (Chuka Umunna).

Opel/Vauxhall: Sale to PSA Group

Lord Hanson of Flint Excerpts

Monday 6th March 2017 Commons Chamber

[Greg Clark]

We could not have been clearer: we have said that all companies that are part of the UK automotive sector will be able to enjoy all the benefits of that in terms of research and development, trading and the expansion of the supply chain that we will see through the industrial strategy.

[Mr David Hanson (Delyn) (Lab)]

Hundreds in the excellent workforce at Vauxhall’s Ellesmere Port and many in its supply chain reside over the border in north-east Wales. Will the Secretary of State ensure that he liaises with the Welsh Government on one of their primary objectives, which is to ensure that we have tariff-free access to mainland European Union markets?

[Greg Clark]

I will work with our colleagues in Wales through the Secretary of State here and the Welsh Assembly Government. I and my Ministers will shortly meet Ministers in Wales to discuss the industrial strategy, and I imagine that Ken Skates and others will want to have those conversations with them.

CSC: Redundancies

Lord Hanson of Flint Excerpts

Tuesday 28th February 2017 Westminster Hall

[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?

--- Later in debate ---

[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.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 31st January 2017 Commons Chamber

[Margot James]

The British Business Bank has created the business finance guide, which is widely distributed and offers comprehensive information about the financing options available to businesses, including alternative sources of finance. The Financial Conduct Authority regulates peer-to-peer lending platforms and is currently reviewing its regulatory regime to ensure that it is robust and up to date.

[Mr David Hanson (Delyn) (Lab)]

What assessment has the Minister made of the impact of bank closures in town centres on the availability of business finance, to ensure that those such as my local one in Holywell, which is potentially losing three banks this year, will still have access to business finance and will still be positive town centres?

[Margot James]

The impact of bank closures is, to some extent, ameliorated by the Post Office’s announcement a few weeks ago that it will be enabling both personal and SME banking customers to have a massive increase in face-to-face banking services across the country.