BIS Sheffield/Government Departments outside London

Alex Cunningham Excerpts

Monday 9th May 2016 Commons Chamber

[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.

--- Later in debate ---

[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.