East Coast Main Line Call Centre

Grahame Morris Excerpts

Thursday 19th May 2011 Commons Chamber

[Ian Mearns]

The accent is regarded as reliable and trustworthy when it comes to providing call centre services, and that is why the north-east has become a centre for call centre operations. Conversely, it is sad to reflect that unfortunately British customers are averse to call centres based offshore.

[Grahame M. Morris (Easington) (Lab)]

I, too, compliment my hon. Friend on securing a debate on this issue, which is important to the north-east and has some national significance. In view of today’s statement on the McNulty report and the arguments being made by Ministers about needing to reduce the public subsidy to the rail industry, is this not another example of false economy if the method of reducing the subsidy is to transfer overseas UK jobs that support the economy, particularly in areas such as the north-east?

[Ian Mearns]

My hon. Friend makes a very good point. At a time when the Government claim that supporting growth in the UK economy is their priority, surely exporting good quality jobs from the north-east to India cannot be defended. There is also the issue of the public’s perception of the level of service they will get as a result.

The Secretary of State denies responsibility for this while passing on millions in public subsidy. The company received £40 million in direct funding from the taxpayer in the nine months to 31 March 2010 by way of a working capital loan facility agreed with the Secretary of State. Given the investment from the UK taxpayer, surely there must be a moral obligation for a state-owned company to retain jobs in the UK. There should at least be some consideration given to those jobs being taken in-house by the operator. That work is not going to go away. It is a much-needed, public-facing aspect of the train service operation and there is no evidence that the transfer will improve the service afforded to the public.

The Government’s stance could be regarded as hypocritical. They declare their commitment to growth and rebalancing the economy, and day after day they preach to private business about the need to help the economy to recover by creating new jobs, but in the case of East Coast—a company that we fully own—they sit back and permit the export of jobs from a company that belongs to the taxpayer. Let me be clear: my primary concern is for the people whose lives are affected by this, but equally important is the impact on industry of exporting real jobs, particularly customer contact jobs, to another country, which represents a retrograde step away from an integrated transport policy. Despite the McNulty report’s failure seriously to consider the benefits of reintegrating the railways under public ownership, many in the House are convinced that the evidence demonstrates that the reason why railways in Europe are cheaper for the taxpayer and the fare payer is that on the whole they are in public ownership and are less fragmented.

There is a wealth of evidence to show that overseas call centres are not the answer for companies that are looking to cut costs. In May 2004, a Department of Trade and Industry study found that work force costs that had not been fully factored into business evaluations of offshoring included the additional costs of employing local law specialists, consultants and accountants, as well as the cost of redundancies, redeployment and reskilling displaced UK workers. It revealed that staff turnover at Indian call centres in particular was about 25% compared with about 15% in the UK, with an average job tenure of about 12 months compared with three years in the UK. Higher attrition rates surely cannot be beneficial to good-quality customer service.

In July 2009, there was a huge outcry when the Association of Train Operating Companies moved 200 National Rail inquiries jobs from the UK to India. Subsequently, it was widely believed that the quality of service to the British travelling public had decreased. At the same time, BT decided to move 2,000 call-centre jobs back from India to the UK as part of a long-term strategy to cut costs by £1 billion and to reduce dependency on third parties. In 2005, the Select Committee on Trade and Industry reported that customer satisfaction surveys found that UK consumers did not like businesses they believed had offshored their services, preferring to deal with call centres in the UK.

In subcontracting jobs abroad, the company has made a narrow, short-term financial decision. No account has been taken of the impact that the loss of skills and jobs will have on the north-east region, its community and the local economy. Nor has any account been taken of the obvious cost to the UK in benefits of whose who will be made redundant as a result or of the reduction in tax revenue for the Exchequer. The McNulty report states that value for money is not just about pounds and pence, but about how the railway realises its wider benefits to society. Through fragmentation and privatisation, those benefits will be lost.

The industry’s most valuable asset is its work force. These redundancies mark a wasteful loss of knowledge and skills that have been honed through years of experience. They damage the shared commitment to the overall service that a proper public service ethos can bring. They impose a hidden cost of increased interfaces in the industry, blur transparency and accountability and de-clarify lines of responsibility, which would be the hallmark of a more efficient railway.

The blow to the economy of the north-east cannot be overestimated. The loss of these jobs to the region is yet another blow to the local economy and to our local communities. Tyneside already suffers a level of unemployment above the national average. The growth in call centre work has been an important factor in providing new employment in the north-east after the decline of manufacturing and, in particular, heavy industry, which arguably was caused mainly by a previous Government of the same nature.

As we all know, the Government are determined to reduce workers’ rights in the UK. They call it removing red tape and are strongly tempted to try to remove the rights of workers through Transfer of Undertakings (Protection of Employment) Regulations. However, TUPE has been rendered irrelevant in this situation. A worker having the right to follow their work to the new company is simply not a realistic or viable option for those at Baron house, who now face the complete closure of their workplace, with a move for a few possibly to Plymouth or the bulk to India of course being impractical.

The awarding of this customer contact centre contract to a company with operations in Mumbai should not be seen in isolation. It is the next stage in trying to make the company more attractive to potential bidders in preparation for the eventual re-privatisation of the franchise in 2013. Already this week we have witnessed the end of a buffet car service on the east coast main line and the direct service from London to Glasgow has already been greatly reduced. Clearly the aim of the game is not customer service, or even value for money.

Despite the overwhelming social, environmental and economic benefits of retaining services from London King’s Cross to Glasgow, the direct services have been dramatically scaled back from 13 trains a day to just two, one in each direction—the 6.50 am service from Glasgow to King’s Cross and the 3 pm service heading in the opposite direction.

In the context of the McNulty report, clearly the east coast main line has a troubled history. I will not go into that now, but it is important that we think about the Government’s responsibility to manage that franchise. They do have a responsibility and they can change this decision.

--- Later in debate ---

[Mrs Villiers]

Absolutely, in the north-east and right across the country.

Before responding to the hon. Member’s questions, I must first clarify and reiterate the relationship between the Government and the east coast main line operator. East Coast Main Line Ltd is wholly owned by Directly Operated Railways Ltd, which is, as he pointed out, owned by the Government. East Coast and DOR are companies registered under the Companies Act and operate in accordance with their own articles of association and governance. This provides a framework for the operation of the franchise as a free-standing entity in readiness for the return of the franchise to the private sector, a return that was envisaged by the previous Government as well as the current one.

[Grahame M. Morris]

I am slightly perplexed by that explanation and tempted to think of the situation with the banks. The Chancellor and the Prime Minister have told us that influence is being exerted on the state-owned banks to ensure that they lend to small and medium-sized enterprises. Is the Minister suggesting that such influence cannot be applied on this company with regard to jobs?

[Mrs Villiers]

I will explain the relationship between East Coast and the Secretary of State. The aim is for that relationship to replicate the arrangements for franchises elsewhere on the network in order to ensure that the principles of private sector operation are embraced and maintained. The reason for that approach is so that the Secretary of State is able to protect the value of the franchise and the taxpayer gets value for money when the franchise returns to the private sector.

If the Department or my right hon. Friend the Secretary of State were to start intervening in the way the operator runs East Coast, for example by overturning decisions based on commercial considerations, they might well have to answer for their decisions in front of the Public Accounts Committee. I am afraid that we do not believe it a viable option to intervene on the basis of political or non-commercial considerations, even if the Secretary of State were minded to do so.

--- Later in debate ---

[Mrs Villiers]

As I have made clear, the coalition Government’s adopted approach, which the previous Labour Government espoused, is that the franchise should be operated on a commercial basis by East Coast Ltd. It should not be the subject of political direction from the Secretary of State.

[Grahame M. Morris]

That is a crucial point if we are arguing about commercial decisions. As my hon. Friend the Member for Gateshead (Ian Mearns) said in an excellent speech, is there not a weight of evidence from banks, insurance companies and various private sector companies that overseas call centres are becoming less and less popular, including with customers, and that therefore any move would damage the potential to sell the franchise to the private sector? Is there not an argument that it would be beneficial to the future sale of the company to keep the call centre at least in the UK, but certainly in the north-east, where it is?

[Mrs Villiers]

The people best placed to make the decision about what is best for the East Coast operation are the specialist practitioners who run East Coast Ltd, not Ministers, not Members. Those practitioners are the best people to make the best decision about what is in the interests of fare payers and taxpayers. East Coast is confident that the new arrangements will deliver better services for passengers and far better value for money.

Oral Answers to Questions

Grahame Morris Excerpts

Thursday 5th May 2011 Commons Chamber

[Grahame M. Morris (Easington) (Lab)]

Will the Secretary of State commit, as the previous Labour Government did, to legislate for a high-speed rail line all the way to the north, and in so doing convince the sceptics that the Government have a credible economic policy that would benefit all the regions?

[Mr Philip Hammond]

As I have said many times at the Dispatch Box, the Government’s programme is for a Y-shaped network that will take the high-speed railway all the way to Manchester and Leeds. I am aware of the scepticism among some Members and others outside the House about our commitment to that programme. I have discussed this matter with Members of all parties interested in securing this programme, and I have given a commitment to find a way of getting into the first hybrid Bill a commitment to the Y-shaped network sufficient to reassure those Members. However, it simply is not practical from a parliamentary point of view to have a single hybrid Bill dealing with the whole line, so it will have to be done as two hybrid Bills. We will ensure that the first Bill contains a commitment sufficient to satisfy the hon. Gentleman and his hon. Friends.

Oral Answers to Questions

Grahame Morris Excerpts

Thursday 27th January 2011 Commons Chamber

[Mrs Villiers]

I know that my hon. Friend has championed this cause, and I enjoyed my visit to the disused rail line. Programmes such as he outlines can confer significant local benefits, but it is primarily for the local authorities to identify the funding to restore railway lines and, importantly, to identify the funding for any ongoing subsidy that is needed. Local authorities may well wish to consider those options in order to enhance economic growth in their areas.

[Grahame M. Morris (Easington) (Lab)]

What assessment has been made of increasing fuel prices and the rising costs of motoring in rural areas, particularly for lower-income households?

[Mr Hammond]

No specific assessment has been made by my Department, but I can tell the hon. Gentleman that independent assessments suggest that between 1997 and 2010 the real cost of motoring has declined by 7%.

Volcanic Ash (Impact on Aviation)

Grahame Morris Excerpts

Thursday 10th June 2010 Westminster Hall

[Gareth Johnson (Dartford) (Con)]

Thank you, Mr. Benton, for giving me the opportunity to make my first speech in Westminster Hall. The issue of the volcanic cloud emanating from Iceland caused huge problems for people travelling abroad and for those trying to get home in April. British airspace was closed for six days, but it was also significant that the disruption lasted much longer than that. The problem also compounded the difficulties that the airline industry has been suffering. The recession hit the industry hard, and the grounding of all flights for days on end simply added to those difficulties.

Estimates vary—the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) quoted some relating to the airport in her constituency—but the EU estimates that the ash crisis cost the airline industry £2 billion. We can all agree that there was significant loss to the industry. We shall probably never know the true figure. About 100,000 flights were cancelled in the relevant period. The industry must accept that running any kind of business will never be risk-free, but we must also recognise that April 2010 was an exceptionally tough month. Not since 11 September 2001 has aviation faced such a challenging time. The right hon. Member for Gordon (Malcolm Bruce) mentioned the surreal experience of looking up at the sky and seeing not a single aeroplane or jet engine trail, for a protracted period; I think that was only the second time that has happened in my lifetime.

I want to mention the difficulties that travellers faced. The uncertainty of the situation meant that not only could people not return home, but they did not know when they would be able to do so. There were Dartford residents who were affected by the travel disruption and could not get home or travel abroad. The ash cloud problems also coincided with the school holidays, and many people who had gone on family holidays could not return home, which had a consequential impact on them. Even my Liberal Democrat opponent in the general election, Mr. James Willis, could not get home until just before the nominations closed. Obviously, I was deeply concerned. He is a decent chap. It was sad that even in the middle of that difficult time for travellers, one airline tried to avoid liability for refunding passenger tickets, which added to the misery, uncertainty and difficulty for those travellers.

My hon. Friend the Member for Stourbridge (Margot James) mentioned leadership, which the country looked for during that period. Clearly, safety had to be the priority for the Government. They needed to ensure that it was safe for people to fly, but we need to consider whether more information on the ash cloud could have been gathered more quickly than it was, and whether flight restrictions could have been removed earlier, reducing the impact on travellers and airlines. The then Government’s initial approach was to claim that any ash in the sky meant that flights could not take place. We now have a new approach. I welcome last month’s rule change to allow flights when there is ash in the atmosphere at the safe level of 2 mg per cubic metre. We need to ensure that that is reviewed, and to consider whether the non-aviation options were properly thought through.

We also need to see whether the contingency plans shaped up. Has the Minister been able to get to the bottom of what happened to the 100 coaches we heard so much about—which were meant to bring stranded British subjects home at the same time that coaches were being used by travel companies, and were at a high premium? As far as I can tell they never materialised, so perhaps lessons can be learned from that. We need to learn such lessons, because we must ascertain whether the decisions that were made were too cautious. I believe it is inevitable that a similar situation will happen again—probably with the same volcano, whose name I shall not even attempt to pronounce. However, we can ensure that if planes can fly safely, they are allowed to do so.

We need also to learn the lessons about the repatriation of passengers, and what practical measures might have been possible to help passengers who were stuck abroad. Will the Minister consider the possibility of temporarily—I emphasise the word “temporarily”—waiving night-time restrictions on flights, to allow people to get home should a similar situation occur in the future?

[Grahame M. Morris (Easington) (Lab)]

On deregulation, I appreciate that the Conservative party is committed to the deregulation Bill, but a fundamental point of passenger safety arises and we cannot allow compromise; it must be paramount. To allow commercial interests to influence our judgment would be a terrible mistake, with potentially dangerous consequences.

It was refreshing to hear the hon. Member for Stourbridge (Margot James) suggest that perhaps the Government at the time were not to blame. Sometimes it is easy to throw rocks, even volcanic ones, at one’s opponents—in this case, the previous Government. A new phrase to use might be “tough on volcanic ash and tough on the causes of volcanic ash”.

On working with the authorities and technical people, the right hon. Member for Gordon (Malcolm Bruce) talked about the technologies—I am not sure whether they are radar or infrared technologies.

[Mr Joe Benton (in the Chair)]

Order. The hon. Gentleman’s intervention is getting rather lengthy and becoming a speech. I invite him to complete it, but he should bear it in mind that interventions should be as brief as possible.

[Grahame M. Morris]

Thank you, Mr Benton; I apologise.

My point is essentially about deregulation and not allowing it to compromise passenger safety. I would hate the drive to deregulation in the broader political environment to impinge on that, because it is vital.

[Gareth Johnson]

I agree with the hon. Gentleman that we must of course ensure that safety is treated as paramount in such situations, but it is also essential to adopt a common-sense approach. We should not enter a blame game, but should learn the lessons that are there to be learned, so that if the same situation arises again, as I believe it will, we shall be better prepared to deal with it, and so that people stranded abroad can be brought home and can fly as soon as it is safe. To learn the lessons, we need to work with the airlines, the Civil Aviation Authority and all the agencies involved, so that there can be proper contingency plans.

I agree that it is easy to look back at the volcanic ash problem with 20:20 hindsight and claim that we have all the answers, and that the previous Government should have done this or that better. That would not be fair in many instances, because at the time we faced a unique situation. However, a Government’s capability can be tested in unique situations. We witness the contingency plans—where they exist—the quality of leadership, and a Government’s adaptability in unpredictable situations and how they interact with different agencies. In the light of that, I hope my right hon. Friend the Minister will confirm that the aviation industry will be able to contribute to the scientific and technological assessments of flying into areas where ash is present in the atmosphere. I hope the technology that some airlines are already using—an issue touched on by my hon. Friend the Member for Stourbridge—will be considered for use in detecting the location of ash clouds and their density. I also hope that we continue to work in partnership with the engine manufacturers, because they understand better than anyone the capabilities of their engine and the circumstances in which it would be unsafe to fly using their engine type.

Yes, ash clouds can be extremely dangerous to aircraft, and the crew and passengers of the 1982 British Airways flight over Indonesia, which was mentioned earlier, can testify to that, but we need common sense to prevail. The zero-tolerance approach was clearly wrong—we know that now—and the repatriation of passengers lacked co-ordination. We need to learn from that and ensure that when this situation happens again, we are better placed to tackle it.