Department for Business, Innovation and Skills Office: Sheffield

George Howarth Excerpts

Wednesday 24th February 2016 Westminster Hall

[Paul Blomfield]

I look forward to the answer. The civil servants whose jobs are on the line as a result of the decision are familiar with the concept of making savings for the public purse. They are engaged in that very pursuit in delivering the Government’s agenda on apprenticeships and further and higher education. They work within strict financial constraints, but were they to make a proposal without any evidence of the budgetary implications, the Minister would agree that they were not doing their jobs properly. Why are the Government, elected on the back of a promise to supposedly balance the books, so reluctant to publish the business case for the decision? I fear, from my exchange with the permanent secretary during his appearance before the Select Committee, that it is because there is no such document and no such business case. Will the Minister clarify the basis on which the decision was made, if not to save money?

In the documents that have been published, the proposed “combined regional footprint” that will remain—this is mentioned in the restructuring proposal form—

“the FE funding centre (location yet to be decided)”,

the HE funding centre and

“possibly a regulation centre in Birmingham”

are all part of the new vision. How much will all those things cost? We do not know. We do not know because the Department does not know, but how on earth can they be less expensive?

The Government’s own estate strategy, which was published in 2014, points out that the cost of space in Whitehall is expensive. It cites the Ministry of Defence main building at a cost of £35,000 a year a person, compared with the Home Office buildings in Croydon at £3,000 a person. That is less than a tenth of the cost, and Sheffield is less expensive still, and that is before we take account of central London weighting and the extra staffing costs involved. The decision, which has huge consequences for my constituents, the city and the region, has been made on the basis of so little fact and evidence.

There is a wider issue, which my right hon. Friend the Member for Rother Valley alluded to, about the way that this country is run. There is real value in locating policy making in the regions and nations of Britain. That is why successive Governments have moved Departments out of London. I remember when the Conservatives under Margaret Thatcher moved the Manpower Services Commission to Sheffield in 1981, and such moves continued under Labour. That policy stalled under the coalition and is now thrown into reverse. Before the Minister wheels out the line that more BIS jobs are based outside London, let me remind him that the focus of this debate is on the highly skilled policy jobs that are at the centre of the decision.

Too many decisions in this country are made through the prism of the personal experience of people who live, work and bring their families up in London. The rest of the country is different. We need more people who live their lives, like most of the population, outside London bringing their experience into policy making. The Department for Education carried out its own review of its estate. The review stated:

“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.”

If that is important for the DFE, why does it not apply to BIS? The Minister risks his own goals if he loses some of his most experienced staff just as he embarks on an ambitious programme in higher education. My right hon. Friend the Member for Rother Valley cited the special adviser of the Minister’s predecessor, David Willetts. His special adviser, respected by all parties in Parliament, described the move as

“a genuine tragedy for good public policymaking.”

Is the Minister not concerned about the loss of talent? I hope he will come back on that point. What assessment has he made of the loss of jobs on the successful delivery of the policy agenda for higher education, further education and apprenticeships?

There is another issue about creating a diverse civil service. Earlier this month, Cabinet Office Ministers launched the Bridge report to achieve the Government’s stated aim of creating,

“a public sector that reflects the diverse nature of the UK”.

They launched it with a fanfare, and the head of the civil service, Sir Jeremy Heywood, said:

“The Bridge Group report offers potential nuggets of gold, not just for the civil service but for the UK...The problem is that talent is everywhere but opportunity is not.”

One of the plans arising from that report to address inequality in the public sector states that we need

“new terms in place which make it easier for civil servants to live outside London.”

How on earth can the Government square that circle? Where is the joined-up thinking?

The Bridge report also found that the number of people in the civil service from poorer backgrounds is shockingly low, with only 4.4% of successful applicants coming from working-class backgrounds. Does the Minister think this move will increase that figure? What equality impact assessment has been made of the decision? It cannot be right that we restrict opportunities to those who can afford to live and work in London, and who have the option to do so without commitments elsewhere. The Government could massively reduce the talent pool from which they recruit with this move, so why are they narrowing their options?

Staff in Sheffield have been told by BIS board members that the reason for the move is because Ministers want them close by. I do not believe that. I think Ministers are more open-minded and more innovative than that. It runs counter to the Government’s own estate strategy, published in October 2014, which stated:

“Civil servants should be able to work flexibly across locations at times that are convenient to them and their managers”.

It went on:

“Some parts of the civil service and the private sector still have an inflexible, command-and-control model where people are managed more by their presence than by achievement.”

The decision seems to confirm that that is how BIS wants to continue to run itself.

The killer blow to the rationale for this decision is at the bottom of page 11 of that document:

“With modern IT, officials no longer necessarily need to be physically present, for example to brief ministers.”

I am sure the Minister will concur with that point. Has this decision been taken behind closed doors because somebody had the bright idea that it might be easier for Ministers if they sit on the floor above their policy people rather than pick up the phone, use the video link or plan meetings in advance? No assessment has been made of the expertise and experience lost; of the impact on access to and diversity in the civil service; or of the way in which decisions are made in this country, never mind the cost to the public purse.

Finally, let me reflect on the thoughts of the Department’s most senior civil servant, the permanent secretary Martin Donnelly. It is good to see him here. Almost a year ago to the day, he published a blog post on his experience after the Department had undergone huge change back in 2011. The title of the piece is, “Leadership Statement: Talk less, listen more”. I have a copy that the Minister might want to share afterwards. Mr Donnelly writes that,

“people felt that the process has been done to them not by them.”

He was right. It was a problem then, and it is a problem the Department is on the brink of repeating now. But it is not too late. I urge Mr Donnelly and the Minister to listen to the hugely talented civil servants based in Sheffield. I urge them to listen to the head of the civil service, whose statement, made less than a month ago, I make no apology for repeating:

“Talent is everywhere but opportunity is not.”

I hope that the Minister will confirm today that the Government will publish the papers that have informed this decision and I hope he will commit to reviewing it. Is that really too much to ask?

[Mr George Howarth (in the Chair)]

Order. To accommodate everyone who has indicated that they want to speak, I am imposing a seven-minute time limit on speeches.

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[Louise Haigh (Sheffield, Heeley) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I, too, congratulate my right hon. Friend the Member for Rother Valley (Kevin Barron) on securing the debate.

It is good to see the Minister in his place. This is the second time that a Minister has had to be dragged before Labour MPs to account for the decision on the Sheffield BIS office after the shoddy, shocking way in which the announcement was made. There was no consultation or wider strategy; just the permanent secretary turning up on a Thursday morning and a low-key press release on the Government website later that day. So far, we have heard a good deal of rhetoric from Ministers but not a lot of genuine debate.

I hope that today will change things, that the Minister will reflect on this decision, and that we can have a thoughtful conversation, because the workers at risk of being laid off, who I know will be watching closely today, see a plan that, I am sorry to say, seems to be based on assumptions and tired thinking not fit for a Department that is supposed to be preparing us for a century of innovation and change. They see a decision that, as we have heard, is not backed up by a business case that looks at the decision to close the Sheffield BIS office alone and what the office brings. After all, it differs significantly from local offices throughout the country—something Ministers do not seem to have grasped entirely when they signed off the BIS 2020 plan.

As my hon. Friend the Member for Sheffield Central (Paul Blomfield) asked for during the Business, Innovation and Skills Committee hearing, after his request for a comprehensive document was rebuffed, any scrap of paper will do—any shred of evidence or jottings on the back of a fag packet. It is clear that nothing has been forthcoming, because we have received nothing at all. As my hon. Friend asked: how much money will this decision save? It is hard to see it saving a single penny of taxpayers’ money, not least because the lease for the office will still be held by the Department for Education, as my hon. Friend the Member for Rotherham (Sarah Champion) said.

This is a serious problem. If the Government are to demonstrate any genuine commitment at all to the northern powerhouse, they will have to move away from the lazy assumptions that underlie the justifications for keeping policy making in London Departments, move away from the belief that London water-cooler conversations matter because they take place in close proximity to Ministers, and move away from the belief that the intangible benefits far outweigh historic knowledge of an area and a different perspective on investment in a northern hub.

The Government have shown wanton disrespect for the workforce at the Sheffield office, giving flimsy justifications. First, they were told that the decision was based on saving money, which, as we have heard, will be next to impossible. Then, it was about policy. At a later meeting, it was because the phones and computers did not work properly—this at the Department responsible for innovation, in the 21st century.

The decision reveals tired 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: a centralised command and control HQ, based in London, where all employees are within eyesight and earshot and fresh perspective is discouraged. When devolution of power and resources is supposed to top the agenda, the Department cannot seriously take a Kremlinesque approach to policy and decision making.

How can we expect a centralised HQ issuing orders from London to have the same insight and perspective on regional investment as we currently enjoy in Sheffield? That perspective has been built over years of working and living in the community and comes with an historic understanding of what works and why our northern regions are so very different from London. It betrays the Government’s thinking. When push comes to shove, they have instinctively retreated into their comfort zone, insulating themselves in a London bubble. It says a lot about where the northern powerhouse comes on their agenda that they would prefer civil servants to be close to Ministers rather than providing a distinct perspective on investment in Sheffield.

The water-cooler conversations at BIS must be pretty good, because this decision is so at odds with the supposed direction of travel across Government. The estates report mentioned by my hon. Friend the Member for Sheffield Central not only found that the cost of space per individual is in Croydon a tenth of what it is in Whitehall, but that the cost of each individual is about 27% higher in London than in other areas of the country, and that the previous Labour Government saved around £2 billion by moving 20,000 civil servants out of London.

Six years after the Smith report said that ministerial behaviour was crucial in overcoming what it termed the “London magnet” and relocating Whitehall, we now have a BIS Secretary doing the exact opposite. The report, which was published just before Labour left power, had at its heart a direction of travel that would move civil servants out of Whitehall to bring the Government closer to the people and stimulate economic vibrancy.

Senior officials categorically admitted to Sheffield employees that they did not even think about the effect on the local economy when they were making their decision, an oversight that flies in the face of years of Government policy, in which the move to cities and regions outside London was supposed to be a standard-bearer for businesses to follow. If the Minister thinks that the author of that report, Ian Smith, was not talking about types of policy roles such as those in Sheffield when he spoke about “ending the London magnet”, he is wrong. In fact, Mr Smith argued that

“power and career opportunities will only truly move out of London when significant parts of the core policy departments are moved.”

Senior BIS officials must have great hopes for the benefits of these water-cooler conversations if they are to override the clear direction of travel of Government; if they outweigh the huge costs, not only per individual employee but of the loss of historic knowledge and perspective in Sheffield; and if they outweigh the terrible message that this sends about concentrating power in London to businesses hoping to locate to a region that BIS is supposed to be helping to grow.

I imagine that even the Minister agrees that the business justification for the Sheffield closure is flimsy, so I want now to turn to why it is so important that we do not lose these jobs in Sheffield. In the near six weeks since the decision was announced there has been no acceptance of the unique position of this northern policy centre. The Sheffield BIS office is unique. It is part of the headquarters—the only office outside London carrying out the high-level policy functions that civil servants in Whitehall also carry-out, such as analysis of evidence, project management and stakeholder engagement.

In trying to justify the decision, the BIS Secretary was adamant that his plan will continue the existing arrangement where more of his civil servants will be outside of London than inside. I am sorry to say that he either does not get it or is being disingenuous. The description of his Department in an internal advert tells the truth. It says:

“the vast majority of the 2,300 directly employed staff at the Department of Business, Innovation and Skills are based in London”.

That was written before the Sheffield closure was announced. The vast majority—96.7%, as I discovered in a recent parliamentary question—of the Department’s senior civil servants are based in London, as are almost all of the core BIS office staff. If you think I am leaping to—

[Mr George Howarth (in the Chair)]

Order. I call Deirdre Brock.

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[Mr George Howarth (in the Chair)]

Order. Before I call the Front-Bench speakers, I ask them to bear in mind that I hope there will be time at the end for the right hon. Member for Rother Valley (Kevin Barron) to conclude the debate.

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[Mr Betts]

The northern powerhouse is about private investment, and that is important, but so is the symbol that the Government give about their commitment. We cannot get precise figures about the savings for the Department in moving these staff, but does the Minister agree that his permanent secretary could scope out an alternative model of how the Government would operate—with all the changes and the policy streams, but with staff remaining in Sheffield—to see what the difference is, and would he publish that, so that we can have an open and transparent consultation?

[Mr George Howarth (in the Chair)]

Order. There is great strength of feeling here. I hope the Minister will leave time for the right hon. Member for Rother Valley (Kevin Barron).

[Joseph Johnson]

Thank you, Mr Howarth. I want lastly to address this false picture—[Hon. Members: “Answer the question!”]—that is being presented of jobs being sucked into the economy in the south. The north of England is one of the fastest-growing regions of the country in terms of jobs growth and employment. The north-east and north-west are seeing very strong employment growth. We are confident that our long-term economic plan will continue to deliver jobs and opportunities for all the people in the area.

This has obviously been a very difficult decision for the Department. We are listening closely to staff to see how we can improve the support available to them and we will be listening closely to them in the weeks and months ahead. I will leave time for the right hon. Member for Rother Valley to conclude.