DEFRA Office (Alnwick)

Lord Beith Excerpts

Wednesday 20th November 2013 Commons Chamber

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I am glad to have the opportunity to raise a matter that is of great concern in Alnwick in my constituency, particularly as the Minister responding is the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson), who knows a thing or two about the problems of rural areas, as he represents one himself. We have already met to discuss the problem, and he of course has come to it after all the key decisions have been taken, but I still hope that he will use his good offices to try to improve the situation for the staff at Alnwick.

Lion House, which has been rebuilt in recent years, has been in Alnwick since long before the first of my many years in this House. The reason we are considering this issue, which involves 40 jobs, is the Cabinet Office’s shared service centre initiative, which began in 2004 under the then Labour Government and was refashioned in 2011 by the present Government, and which has been subjected to severe criticism by the National Audit Office throughout for not delivering the savings it promised.

The office has a long history. About 30 years ago it ceased to be the regional office of the Department for Environment, Food and Rural Affairs, because the Department gave up its network of regional offices. I went to see the then Agriculture Minister, Peter Walker, who was the kind of Tory we do not see many of these days. He was extremely helpful. I suggested to him that he find other work for the office from the central work of the Department, and he did: library functions were transferred to Alnwick and in subsequent years the staff moved on to other work, in particular the handling of civil servants’ expenses. They could have given a lesson or two to the House authorities and the Independent Parliamentary Standards Authority on the efficiency with which they managed their operations. Indeed, I am going to suggest to IPSA that it might move its work from central London to DEFRA’s Alnwick office. I will come back to that. The staff earned a very good reputation, and not just in DEFRA—they provided a service to several Departments.

What is to happen? A company has been formed, 75% of which is owned by a French company called Steria and 25% by the Government. That immediately prompts the question: what do the Government intend to do with their ownership and board membership of the company? Will they use them to good effect?

My hon. Friend the Minister has indicated to me that the work is likely to remain at Alnwick for 20 months while the company considers how it will be handled in the future. That raises the question how likely it is that the work will be offshored, perhaps to India or who knows where. There are different views on the matter. The unions are fairly convinced that the work will be offshored and Steria seems to have a commitment to offshoring as a major part of its operation. Of course, there are other sites involved, not just Alnwick. The Cabinet Office’s position is that non-customer-facing jobs will be offshored. I am not sure what that means when we are talking about civil servants and their personal expense claims. I think that they are customers of the service, so in that respect it is a customer-facing service.

What does the period of 20 months really mean? I was concerned to receive a letter from my hon. Friend in which he wrote that the company would

“continue to occupy accommodation at Alnwick (Lion House)”.

Does that mean that the work will continue for 20 months or that the company will just pay the rent of an increasingly empty building—which is already a matter of concern—for 20 months? Some rather unhelpful phraseology has crept in.

The situation is very worrying for staff. Let us consider their position under TUPE and the transfer arrangements. The unions have negotiated an agreement that is referred to as TUPE-plus. There seems to be some acceptance that, as these things go, it is not a bad agreement, but I would be interested to hear my hon. Friend the Minister explain what will be available to staff. During or after the 20-month period, will some of them be offered other civil service posts? It has been suggested that they will, but the trouble is that many of the posts may be down in Tyneside or even much further away, perhaps over in Carlisle, where the Rural Payments Agency is situated. What did the Department’s equality impact assessment have to say about the situation and about people with caring responsibilities who cannot easily move? They do very good work in the Alnwick office, but they would not be able to continue to provide a good service to the Government if they were told that they had to move a long distance away. That raises a question about what the Department will do, if outsourcing goes ahead, to seek other work for its staff. It seems to me that if there is a period in which the new company reviews what it does, that period should be used to look for other work that could be done at the Alnwick office, as Peter Walker did 30 years ago.

After all, this is the Department for Environment, Food and Rural Affairs, and it exists to promote the health of rural communities, so it must not be in the business of relocating jobs from rural to urban areas. When change has to happen in particular functions, the natural response of the Department ought to be to see how far it can relocate work from urban to rural areas. Of the urban centres, I am thinking particularly about central London, where the Department still carries out activities that need to be considered for out-posting to its rural centres, of which Alnwick is one.

Other questions have been asked about the changes. The Public and Commercial Services union has asked about the tax status of the new company. The Minister for the Cabinet Office and Paymaster General said in a letter to me that the joint venture

“will promote UK growth as a UK based taxpayer”.

What assessment has been made of the overall tax impact, which obviously includes VAT, and the impact of any offshoring, as well as of the domicile in France of the majority owner of the new company, Steria, which is a French company? The union has also asked about the handling of civil servants’ personal data if there is outsourcing to a country that does not have the rigorous data protection regime of this country. Ministers must address that question.

I will sum up the questions that the Minister must answer, and if there are any that he cannot answer tonight, I hope that he will do so by letter. What use will the Government make of their 25% ownership? Will they use it to encourage keeping jobs local, where that is an efficient outcome? I do not expect the Department to do so if there will not be a good outcome and value for money for the taxpayer, but there is pretty good evidence that Alnwick provides good value for money. I want the Government to use their participation in the company structure to encourage sourcing jobs locally wherever possible.

How committed is the new company to outsourcing? I am meeting people from it shortly, and I will put the same question to them, but the Government must have formed a view. What will happen in the 20 months? Will the work stay at Alnwick during that period, or will the office be virtually emptied with the work leaving earlier? Will the office be viable for the small number of remaining staff if most jobs go? What will the company and the Department do to seek other work if the Alnwick office loses its current work to outsourcing, and will alternative public service jobs be offered? What is the equality impact assessment in respect of carers, especially women? What is the tax impact, and what is the situation in relation to personal data?

Above all, does DEFRA recognise that it is the Department for rural affairs and is supposed to be committed to that role? How is it going to demonstrate that commitment to the people of the Alnwick area? Forty jobs may not seem many in the London context, but they have a big impact in a small rural community such as Alnwick, where there are not many such professional jobs and where the quality of locally available staff has been clearly demonstrated.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

I pay tribute to my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) not just for how he is currently representing his constituents as regards the Alnwick office, but for how he has done so, as we have heard, over many years—going back to the era when Peter Walker was the Secretary of State. I am sure that they are very grateful for and well aware of all that he has done to support them.

My right hon. Friend has set out the issues from his perspective. I will set out the Government’s point of view on the office in Alnwick and its history. The building is owned by the Department on a freehold basis. There are three occupants: DEFRA, Northumberland county council and the newly created joint venture organisation that we have heard about, Shared Services Connected Ltd. I will take each of those in turn.

The DEFRA network has a large estate spanning England and Wales that supports the delivery of its business. That includes officers, operational depots and scientific sites. The cost of the estate has come down significantly since 2011. By 2015, the savings from exiting properties and reducing the amount of space that we use will reach about £53 million per annum. However, the annual cost will still be about £113 million. We will look for ways to reduce that further. In Alnwick, DEFRA occupies office space for about 24 full-time equivalent staff who are focused on the management of information and providing warehouse facilities for archiving. There are also two full-time equivalent members of staff from the Rural Payments Agency.

Northumberland county council occupies 2,000 square feet of the Alnwick site. That lease expires on 2 February 2017, although a mutual break is available with 12 months’ notice from February 2015. However, there is no indication that Northumberland county council is looking to vacate the site.

Stimulating economic growth is a top priority for the Government. We want rural areas to contribute to and benefit from that growth. As my right hon. Friend kindly pointed out, I represent a rural area, although it is perhaps not as far flung and widely set as his area. None the less, it is a rural area and it faces many similar challenges. The Government have introduced a wide range of policies and initiatives to promote business and deliver growth in urban and rural areas, including new infrastructure, raising skill levels and supporting business, particularly small and medium-sized enterprises, which make up a significant element of the rural economy, as my right hon. Friend knows.

The roll-out of superfast broadband infrastructure is vital to sustainable economic growth and the creation of jobs in rural areas. Online small businesses, whether rural or urban, grow four to eight times faster than their offline counterparts. The Government are investing £530 million in rural broadband up to 2015, which, through match funding, will result in up to £1.2 billion of public funds. The pace of progress is accelerating, with 42 of the 44 local projects contracted, including all of those in the south-west. Across the UK, 10,000 rural properties are being connected each week. As was announced in the spending review, a further £250 million will be available from 2015 to extend superfast broadband to 95% of UK premises by 2017.

I am setting out these policies to establish that the Government are very much committed to seeing rural areas share in the economic growth that we are delivering, in contrast to the position that we inherited.

[Sir Alan Beith]

I am pleased that my hon. Friend has responsibility for this area, not least because Northumberland is way ahead of the field in its work on rural broadband. However, if small businesses can operate from rural locations, so can the Department for Environment, Food and Rural Affairs.

[Dan Rogerson]

Absolutely, we can. I have set out the history of the office. As my right hon. Friend has pointed out, it has shown that it can be a very efficient place from which to operate. We want to get to the position where the new company recognises that. What is being delivered there must be so competitive that it is attractive on a continuing basis. We would welcome that, but it must be a matter for the new shared venture company.

We are taking other action to support the rural economy, including improving competitiveness and skills, investing in rural tourism, and supporting new micro-enterprises and those that have aspirations to grow. We have established five pilot rural growth networks, which aim to tackle the barriers to economic growth in rural areas, such as the shortage of work premises, slow internet connectivity, which I have mentioned, and fragmented business networks.

DEFRA’s rural development programme for England has, to date, invested more than £400 million in projects to grow the rural economy. Completed projects have created more than 8,500 new jobs and safeguarded a further 9,700. The next seven-year rural development programme is a major opportunity to continue to invest in rural growth and the environment. We are working together with interested groups to design a programme that makes a measurable contribution to improving the environment and economic growth, while providing real value for money. The civil service is moving to being faster, smaller and more unified, and sharing services is a central part of that. The next generation shared services strategy sets out a new model to share human resources, procurement, finance and payroll functions with five centres, instead of the current eight, to deliver more efficient and cost-effective services.

As my right hon. Friend pointed out, the Government signed an agreement on 1 November 2013 with Steria Ltd to create a joint venture partnership with Government. The new company, Shared Services Connected Ltd, has been formed initially from a consolidation of some existing shared service centres: the Department for Work and Pensions, DEFRA and the Environment Agency, with in-scope services from UK Shared Business Services Ltd expected to become part of SSCL by 2015. All DEFRA staff previously engaged in the delivery of shared services transferred to the new organisation from 1 November 2013. Services to existing customers are being maintained and delivered out of DEFRA offices in Alnwick and York.

The creation of SSCL is a key part of the civil service reform plan, which will harness industry best practice to deliver Government back-office functions more efficiently. Transforming back-office operations across Government could help to deliver between £400 million and £600 million in savings for the taxpayer, freeing up scarce resources to be better spent on front-line services. Economies of scale will enable Steria to drive down costs and improve service levels by sharing expertise across customers, adopting common processes and systems and investing in new tools. To be a competitive and viable business, SSCL needs to be in line with other companies of this kind, which see some non-customer-facing transactional roles being sourced offshore. As longer term transformation plans are agreed, SSCL will consult staff and representatives. Assistance will be provided to any affected staff, including reinstatement and redeployment opportunities.

Over time, the objective is to establish SSCL as the pre-eminent provider of shared services to UK central Government and the wider public sector. By migrating clients to a low-cost shared service model, it is estimated that total benefits delivered by SSCL will be in excess of £l billion. It is expected that in the course of the next couple of years there will be some site consolidation from the nine existing delivery sites, and we expect some staff reductions. Steria has made a number of commitments on behalf of SSCL, including: no compulsory redundancies in the first six months, an intent to minimise the need for compulsory redundancies through work force planning, and a series of redundancy avoidance measures during the transformation period. Steria has also agreed that any final decisions on location will not be made for six months. That will be a business-based decision. My right hon. Friend will be well aware that this is a key point. There will be a chance to demonstrate office efficiency, given the low cost of locating in the base, the ownership of the premises and so on, so there is a good case to be made to Steria for the Alnwick office. However, the decision will ultimately be based on what it aims to deliver to Government and the taxpayer.

With regard to shared services staff currently based in DEFRA’s Alnwick office, we have an agreement that SSCL will continue to occupy accommodation at Alnwick Lion House for a period of 20 months. That is an update on the minimum 12-month commitment that was previously communicated. That represents progress in the right direction, and my right hon. Friend’s efforts to focus attention on what has been achieved at Alnwick have played a part in that. The Department is well aware of what it has delivered over many years.

[Sir Alan Beith]

May I press my hon. Friend on the 20-month period? The phrase “occupy accommodation” is unpersuasive. I had understood him to anticipate that in the 20-month period the work would be likely to remain there, although that would not involve an absolute guarantee on the number of jobs that would remain during that period. Will he clarify that for me?

[Dan Rogerson]

I understand my right hon. Friend’s concern about that. He is right that, in a period of transition, members of staff might look to the future and decide whether to look for other opportunities, while others will stay on. The agreement is as described, which is to say that the accommodation will continue to be occupied. The company’s plans for carrying out the activity there is essentially a matter that he will have to take up with the company itself, but he has certainly put his concerns on the record tonight. I am happy to take those concerns back, so that we can get a little more clarity for him and his constituents about what that might mean.

My right hon. Friend asked what staff could expect. There is an expectation that other opportunities for staff will be put forward first, so that options for redeployment can be explored. I have a great deal of sympathy generally for his view about Government jobs in rural areas. The tax office in my constituency went during the last Government drive to narrow the HMRC estate, which was a matter of great sadness. As a Government, we need to ensure that we explore all the options for keeping jobs in rural areas. He was generous enough to point out that I am relatively new to my responsibilities, but I know that previous Ministers will have made the case for keeping as many jobs as possible in rural areas, and I am keen to do so too, alongside ensuring the private sector investment that we are stimulating in the ways that I have set out.

The company’s tax position is clearly not a matter for DEFRA, but my right hon. Friend asked that I seek further information for him, and I am happy to do so. He also made a fair point about how the Government will use their stake in the new organisation. Clearly we will want to ensure that lessons are learned and that the objectives of the original project to make efficiencies are met, but there might also be opportunities to ensure that the company takes into consideration some of the points he has raised this evening. Again, I can feed his concerns about that through to ministerial colleagues in the Cabinet Office.

The shape of what will happen at the office has not been decided—that is a matter for the new organisation to take forward. I welcome the fact that my right hon. Friend is in discussions with the company, which is a sensible way for him to proceed. I thank him for the diligent way in which he has pursued this matter. Having been in this role for about a month, I have heard from him on several occasions—through parliamentary questions, in discussions with officials and, now, on the Floor of the House. I know that he will continue to ensure that his constituents get the very best service as the transformation project moves forward.

I hope I have given my right hon. Friend a little reassurance that we recognise the huge achievements of people at the Alnwick office, who will be well placed to make the case for how efficient they have been in the duties they have discharged. The commitment to continue to occupy the accommodation in Alnwick for 20 months goes much further than the original 12 months. Some of the questions he has raised tonight will be considered during that period and the answers will come forward. I am happy to remain in contact with him about this matter, and in particular about the questions he has posed that I have been unable to answer without reference to ministerial colleagues.

Question put and agreed to.