Shared Services Connected Ltd

Debate between Jessica Morden and Paul Blomfield

Wednesday 9th April 2014 Westminster Hall

[Paul Blomfield (Sheffield Central) (Lab)]

It is a pleasure to open this debate with you in the Chair, Mr Owen.

I sought this debate on behalf of 239 Department for Work and Pensions staff at the Kings Court offices in the heart of my constituency, although the issue affects civil service staff more broadly.

I begin by citing the Prime Minister. Back in January, speaking at the World Economic Forum at Davos, he said that Britain had the potential to become the “reshore nation”. Talking about UK jobs lost abroad, through offshoring, he said,

“there is now an opportunity for the reverse…an opportunity for some of those jobs to come back.”

Should not the Government be taking a lead on this, setting the example through its own employment policies? Last week I received a letter from the Minister for the Cabinet Office and Paymaster General all but confirming that the work lost in my constituency was to be offshored to India, as I understand it.

Let me explain the background. Shared services are those parts of individual civil service departments, arm’s length bodies and agencies that provide corporate services for IT, human resources management, pay and payroll, procurement and finance to deliver their business outputs. In December 2012, the Cabinet Office set out its next generation shared services strategic plan to create five shared service centres. Two independent shared services centres, ISSC1 and ISSC2, would be formed for a number of departments and arm’s length bodies. The three remaining were to be stand-alone centres, based on the Ministry of Justice, the Ministry of Defence and Her Majesty’s Revenue and Customs.

The first of these independent shared service centres, ISSC1, based on the Department for Transport in Swansea, was outsourced to German multinational Arvato in June 2013. The Public and Commercial Services Union, representing the majority of staff, engaged positively in the transfer process to secure the best possible outcome. The consultation led to agreements, including one on no compulsory redundancy for at least a year and an agreement that staff would retain their civil service status.

ISSC2, which affects Sheffield, was to consist initially of the shared services functions of the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Environment Agency. This was turned into a joint venture company called Shared Services Connected Ltd, in which the Government retained 25% of the shares, with the French multinational Steria’s UK subsidiary owning and controlling 75%. The creation of SSCL involved civil service shared services sites in York, Alnwick, Cardiff, Blackpool and Newcastle, as well as the one in my constituency in Sheffield. SSCL became live in November 2013 and 1,000 civil servants were privatised and TUPE-ed over.

The PCS secured agreements with the Government on this process, including a six-month no compulsory redundancy agreement and a one-year guarantee of no site closures. However, on 4 March 2014, SSCL announced 500 job cuts, office closures and the offshoring of work, quite cynically timed to the minute the one-year guarantee against site closures ran out.

As well as the closure in Sheffield, by October 2014, the DWP office in Cardiff will close, with a loss of 105 staff, and the Environment Agency office in Leeds will close, with a loss of 68 staff.

[Jessica Morden (Newport East) (Lab)]

Can my hon. Friend understand the anxiety felt by staff at the Newport MOJ shared services centre—the situation is similar to the one in Sheffield that he is explaining—who understood that that was to be a stand-alone site, although it is now being considered for outsourcing to Arvato or Steria?

[Paul Blomfield]

I can indeed, and I will come to that issue. Closer to Newport than Sheffield, I met some staff from Cardiff last week. Like the staff in Sheffield, these are loyal civil servants who have contributed years of public service and, frankly, they feel betrayed by the decision and by the way that the decisions are being executed.

As well as job losses in Sheffield and Cardiff, 122 staff will go in SSCL offices in Blackpool, Newcastle, Peterborough and York. The DEFRA site in Alnwick has a temporary reprieve, but only until June 2015. The Government have not conducted economic impact assessments of the closure of these offices, although the loss of jobs will have a significant impact on local communities and economies. Indeed, in June 2013, Lynn Phillips, head of service improvement for DEFRA, wrote to the then Minister, the hon. Member for Somerton and Frome (Mr Heath), highlighting the plan’s

“incompatibility with UK growth objectives”

because of the

“loss of jobs in regional locations”.

Will the Minister assure us and say that the Government will conduct an economic impact assessment and, if so, when that is likely to happen?

[Paul Blomfield]

My hon. Friend is right. I am coming to that point. Clearly, this issue has led to concerns being raised, even at Cabinet level. Yet, extraordinarily, the offshoring is being rushed through.

The speed at which SSCL intends to cut the 500 jobs is unprecedented. It aims to have all redundancies dealt with by the end of October. This does not allow enough time for staff to be re-employed or reinstated back into the civil service and means that compulsory redundancies are likely. Indeed, staff in Sheffield and in Cardiff, whom I met last week, told me that the redeployment opportunities have been limited, because there is no joined-up approach across Government. I find it extraordinary that most other Departments are not offering vacancies to those loyal civil servants who are losing their jobs. Do the Government think that this is the right way to treat any staff, particularly those who have given decades of public service? It sets a bad standard for employers throughout the country. I should like the Minister to reassure us on this issue. Will the Government commit to providing redeployment opportunities across all Departments? That would provide a lifeline for at least some staff. The limited opportunities that have been made available to date are inaccessible to many of those in Sheffield, and those at other sites, too.

SSCL is not acting in accordance with the special commitments given to staff before transfer, which stated that transformation would take place over two years and that everything would be done to avoid compulsory redundancies. The Government have a 25% stake in SSCL. At the very least, should they not use that position to challenge the speed of job cuts, to allow a thorough, ongoing programme of redeployment of staff? I should like the Minister to respond to that question.

There is also the issue of the data being handled. These sites handle the personal data of tens of thousands of civil servants. They also deal with commercially sensitive information relating to Government contracts and tendering. Despite the sensitivity of the data, when the Cabinet Office advertised for bidders to become majority partners in SSCL in April 2013, the selected bidders all had a significant element of offshoring functions as part of their bid.

Concerns about offshoring are not restricted to Opposition Members or their staff; they have, as my hon. Friend the Member for North Tyneside (Mrs Glindon) pointed out, been expressed at Cabinet level. The Secretary of State for Environment, Food and Rural Affairs wrote to the Minister for the Cabinet Office last July, expressing concerns about DEFRA joining ISSC2 and a “possible staff exodus”. The Secretary of State asked specifically for a standstill period on “estates and off-shoring” and expressed concerns about data security. The head of service improvement for DEFRA wrote in her letter to the hon. Member for Somerton and Frome that the DEFRA executive committee considered

“significant (or any) element of off-shoring”

to be unacceptable and that there was a

“significantly increased risk to service continuity from loss of current expertise”

on transfer. She also raised concerns about

“employee and detailed financial data transmitted, stored and processed outside the UK”.

Why are the Government sanctioning the offshoring of sensitive personal data and commercially sensitive information, on which objections have been raised at the highest level of the civil service and by members of the Cabinet?

[Jessica Morden]

Does my hon. Friend agree that it is breathtaking hypocrisy for the Prime Minister to have been talking just weeks ago about Britain becoming the reshoring nation while the Cabinet Office pursues contracts that are explicitly relaxed about offshoring jobs, such as those at the shared services centre in Newport?

[Paul Blomfield]

My hon. Friend is absolutely right and again anticipates a point I will make. Before I do, I make one point about the remaining three shared service centres. Originally, they were to stand alone, but I understand that the strategic plan has been fundamentally revised. Peter Swann, who heads the Crown oversight function of the shared services agenda, has confirmed that the Ministry of Justice is considering transferring its shared services to one of the outsourced ISSCs instead.

I understand the concerns of the staff involved. If the MOJ was to join one of the already outsourced ISSC contracts, the sensitive data the staff handle, including criminal records and details of the police, the judiciary and security service personnel, could also be privatised and offshored. Why has the strategic plan been changed?

Finally, taking on board the point made by my hon. Friend the Member for Newport East (Jessica Morden), I return to my opening point. What makes the cuts so much harder for the staff to swallow is that so much of the work for the three sites under threat of closure has been earmarked for offshoring. Indeed, the PCS told me that SSCL has explicitly said that a determining factor in deciding which sites are to close is the potential for the work to be offshored. Offshoring is the driver for decisions on closure and job losses.

As my hon. Friend said, how does that fit in with the Prime Minister’s assertion at the World Economic Forum that he wants the UK to become “the reshoring nation”? At Davos, he underlined that ambition by announcing the establishment of a new body, Reshore UK, which will sit within the Department for Business, Innovation and Skills. The Prime Minister clearly places great weight on that body in developing his reshoring strategy. Will the Minister commit to arranging for Reshore UK to meet with SSCL and the Cabinet Office with the aim of considering how the jobs they plan to offshore can stay in the UK? If not, does he accept that the Prime Minister’s statement at Davos will be seen as nothing more than empty words?