Department for Business, Innovation and Skills Office: Sheffield

Lord Johnson of Marylebone Excerpts

Wednesday 24th February 2016 Westminster Hall

[Paul Blomfield (Sheffield Central) (Lab)]

It is a pleasure to contribute to this debate with you in the Chair, Mr Howarth. I congratulate and thank my right hon. Friend the Member for Rother Valley (Kevin Barron) for securing this debate on the closure of the office. The office is in my constituency, but the closure has a far wider impact, and that is reflected by the Members here from across the region. It is a blow not just for Sheffield, but for a region that has been trying to engage positively with the Government on the northern powerhouse. I hope that the Minister will engage positively with us on the concerns that are being expressed.

I have some sympathy with the Minister; the decision seems to have been driven by senior managers—I am delighted to see the permanent secretary here—but it is falling apart under scrutiny. Ministers have been put in a difficult position. They have been briefed, and when my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) asked her urgent question, Members were told that the decision has been taken to save money. Meanwhile, staff in the office in Sheffield have been told that there has been no cost-benefit analysis. Under questioning at the Business, Innovation and Skills Committee on 10 February, the permanent secretary as much as admitted that there was no business case for the decision. It is not too late, however. The Minister is a thoughtful man, and I hope that he will approach the issue in the same way as he has his Green Paper on higher education—we have discussed it on many occasions—listening to concerns, sharing them with his colleagues and agreeing to an open discussion of the options.

The House of Commons Library’s briefing for the debate described the Sheffield office as one of a number of regional offices and somehow mixed it up with the network of 80 offices. I have raised that issue with the Library, but for the record, we must be clear that the Sheffield office has a head office function that happens to be taking place in Sheffield, and for good reason. I have spoken to a number of the staff in the office, and they are shocked not simply that their jobs are being taken away, but that those jobs are going without a single good argument being advanced in defence of the decision. They are senior policy staff, and they help make Government decisions. They are used to looking at evidence, evaluating it carefully and advising Ministers, and they are shocked that the rules about effective and responsible decision making have not been applied to them.

The staff have many questions, and I will start with four that I would like the Minister to answer. First, why does the 90-day consultation period not include consultation on the rationale to close the Sheffield office? Secondly, why does it not give those affected the chance to examine the business case and discuss alternatives? Thirdly, why does it not invite alternative proposals for other models that would work well for Government and provide best value for taxpayers? I have some more questions later, but the final one for this cluster is: why does the documentation state that the 90-day consultation closes on 2 May 2016 when it also states that a final decision on the closure of the Sheffield site is planned by the end of March? That is five weeks before the consultation closes.

People in the office and more widely in the region are genuinely bewildered. This Government talk about the northern powerhouse, are supposedly committed to a diverse civil service and regularly talk about value for money, but in the case of the Department for Business, Innovation and Skills, apparently they want all their policy jobs to be based in the most expensive city in the country because—this may not be the case, and the Minister can clarify things, but it is what staff have been told by senior managers—Ministers cannot be supported by people based elsewhere. Frankly, it just does not add up.

On the business case, I recognise that the Minister is in a difficult position, because the permanent secretary was unable to share any facts on which the decision was based. The first line of the restructuring proposal form, which was sent to all staff on 17 February, makes the case for the decision. It states:

“BIS is required to make significant savings by 2020.”

I have a simple question for the Minister—I hope he can succeed where the permanent secretary failed at the Select Committee— which is this: how much money will the proposal to move all policy jobs to London save? If he wishes, he can intervene on me now.

[The Minister for Universities and Science (Joseph Johnson)]

I will come back later.

[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?

--- Later in debate ---

[The Minister for Universities and Science (Joseph Johnson)]

It is a pleasure to serve under you, Mr Howarth.

I congratulate the right hon. Member for Rother Valley (Kevin Barron) on securing this important debate, the second on the subject in recent weeks. I commend all right hon. and hon. Members for being present in strength and for speaking on behalf of their constituents.

As right hon. and hon. Members are aware, the Department for Business, Innovation and Skills is committed to delivering efficiency savings and to contributing to the Government’s overall deficit reduction target to clear the deficit by 2019-20. To achieve that, we developed the “BIS 2020” programme to modernise how the Department works.

[Paul Blomfield]

I apologise if I am intervening prematurely—the Minister might be about to tell us this—but will he explain for the first time how much money will be saved by moving 247 jobs from Sheffield to London? It is a simple question.

[Joseph Johnson]

I will come to savings shortly, so if the hon. Gentleman bears with me for a few seconds, I will get to his question.

The BIS programme will reduce operating costs by 30% to 40% and deliver a simpler, smaller Department that is more flexible in delivery and more responsive to stakeholders. As part of those plans, as right hon. and hon. Members know, the Department has announced its intention to close the BIS office at St Paul’s Place in Sheffield by January 2018. Such decisions are never taken lightly, and providing the right support for and communications with staff has been a priority for the permanent secretary and the entire senior team of the Department. All staff and departmental trade unions were informed of the decision on 28 January and the statutory 90-day consultation process began shortly afterwards. All staff affected by the decision have been fully briefed.

The hon. Member for Rotherham (Sarah Champion), who is no longer in her place, asked what support had been made available to affected staff. I will give the House some detail on that important matter. We are providing comprehensive support to all those facing a potential change or loss of job, including: professional, external careers advice; professional outplacement support; a jobs fair in partnership with the Department for Work and Pensions; time out of the office for job-search activities; and financial advice workshops. In addition, we are exploring all routes to avoid compulsory redundancies, including voluntary exit schemes. There will be no compulsory redundancies before May 2017 as a result of the proposed closure of the Sheffield site.

Many staff will be listening to the debate or watching it on television. The BIS senior leadership wants to ensure that the package of support is comprehensive. If there are things that the Department could be doing, or ways in which we could enhance the support I have outlined, we want to know about it. We want the staff affected to let us know what more the Department can do to support them at this time. We have set up a dedicated email address for them to use, and they have already used the system to make valuable suggestions about ways in which we can enhance the support available. We have been asked by the staff to ensure that updates are regular and frequent. We will be ensuring that that happens. We have already established a dedicated section on the Department’s intranet which includes a comprehensive overview of all “BIS 2020”-related matters. We have set out exactly when our Department’s senior leadership team will be in Sheffield, so that affected staff may discuss their concerns directly.

[Chris Stephens]

The Minister has talked about consultation with staff. Will he tell us, first, how many meetings there have been with the trade unions affected? Secondly, will he outline how a responsive Department can be responsive when it closes offices, leading to a lack of local knowledge and no understanding of local areas?

[Joseph Johnson]

I will happily touch on part of that question. We are now in the 90-day consultation period. The consultation is on a range of issues, including the future of the staff in Sheffield, so—in response to an earlier question from Opposition Members—the future of staff in the city is only one of the issues being consulted upon. Legally, we may confirm the decision on closure before the end of the consultation, but I am happy to confirm that we will wait until the end of the full 90-day period before making a final decision. In response to the hon. Gentleman’s specific question, we have had regular meetings with trade union officials.

To continue, the Department needed to be restructured in line with its new business model under the “BIS 2020” framework. In answer to the question from the hon. Member for Sheffield Central (Paul Blomfield), that will deliver savings of £350 million by 2020, of which approximately £100 million will fall in the administration budgets.

[Paul Blomfield]

With the greatest respect, the Minister did not answer my question. I presume that the matter has been looked at in considerable detail, because I am sure that no such decision would be made in any less responsible way. My question was: how much money is saved specifically by moving 247 policy jobs from Sheffield to London?

[Joseph Johnson]

I would fall back on the response that the permanent secretary gave to the Select Committee on that point: it is difficult to disaggregate a specific item in an overall programme change. The overall “BIS 2020” programme is an holistic system change of working for the Department that will deliver savings of 30% to 40%, worth £350 million overall.

[Mr Betts]

May I ask the question a different way around? If the Department pursued its restructuring and the “BIS 2020” programme, but left the jobs in Sheffield, how much more would that cost the Department?

[Joseph Johnson]

Again, I am unable to provide a disaggregated breakdown of that figure because we are talking about a system change. We must bear in mind that the Department’s current locations are legacy locations, which are the result of legacy decisions and ad hoc organisational changes over a long period of time. We are moving to a more system-based way of looking at all the various ways in which the Department works. In future, our structures need to be, and will be, designed in a more streamlined and efficient way.

To support that effort, we will be bringing down the number of locations from which we operate from about 80 to approximately seven centres of excellence, supported by a regional footprint for work at a local level. Each centre will focus on a key business activity and bring together expertise and help to build up capability. That does not mean a London-centric Department, as has been suggested by Members. Even with the movement of policy roles to London, our overall London footprint will decrease by 2020. We have, and will continue to have, many more people based outside than inside London.

[Louise Haigh]

I am grateful to the Minister for giving way; he is being generous. The point we were making was exactly that the Sheffield BIS office is not like other local and regional offices throughout the country; they are the only headquarters outside London where policy decision making is done. Does he not accept that this closure is a serious blow to the Government’s northern powerhouse and to devolution, which exposes that all as empty rhetoric?

[Joseph Johnson]

Clearly I disagree with that. We will not be losing the capabilities. We will be moving a number of the jobs, and some jobs will become available in London, so the policy expertise that resides in Sheffield at present will not be lost.

The hon. Member for Sheffield Central asked about equality. BIS is recognised across Whitehall as a leader in its support and determination to embed diversity across the Department’s workforce, and that will continue to be the case in the years ahead, notwithstanding these changes. The Department employs about 18,000 staff outside of London and just over 2,000 are based in the No. 1 Victoria Street headquarters in London.

[Paul Blomfield]

Will the Minister give way on that point?

[Joseph Johnson]

I will make a bit of progress, if I may.

We are certain that that footprint, and our BIS local capability in particular, will ensure that BIS will maintain a nationwide perspective on policy issues. The hon. Gentleman who just tried to intervene—I am responding to his earlier intervention—was concerned about our ability to maintain policy capability in the light of the expertise that resides in Sheffield. As I said, there will be opportunities for people from Sheffield to move to London and other places, and we are confident that we will be able to maintain the high quality of work in the higher education and other policy directorates.

As the Minister for Universities and Science, since last May I have been working closely with higher education officials in Sheffield, and I am very happy with the work that they have done. They have consistently provided excellent support, and I want to thank them very much for their work. I reiterate that the Department’s decision was not taken lightly, but I am confident that our higher education policy making capability will remain as strong as ever.

In response to the points made by the hon. Member for Sheffield, Heeley (Louise Haigh) on the northern powerhouse, the Government are completely committed to Sheffield and its surrounding area as part of the northern powerhouse. The Department for Business, Innovation and Skills, along with the Department for Communities and Local Government, has been working closely with the local council and the local enterprise partnership to produce an enhanced, landmark devolution deal, which will see a Sheffield city region mayor elected for the first time next year by voters across South Yorkshire. The mayor will have transport budgets, franchised bus services and strategic planning, plus additional devolved powers for the area’s combined authority. The mayor will also get control of an investment fund worth £30 million a year for 30 years.

[Mr Clegg]

I have a really friendly suggestion for how the Minister can honour the stirring rhetoric about the Government’s commitment to the northern powerhouse and to the long-term vibrancy of the Sheffield economy in particular. Will he undertake to all of us here now that he will personally make representations to the Secretary of State for Transport, the Chancellor and, if necessary, the Prime Minister to locate the high-speed railway station due to be located in South Yorkshire in—

[Mr Clegg]

—no, not in Meadowhall, but in Sheffield city centre? The northern powerhouse is built around the vibrancy of city centres. Ignore the cacophony of different voices from the Labour party in South Yorkshire and locate the station there and, not all, but quite a lot will be forgiven.

[Joseph Johnson]

I am grateful to the right hon. Gentleman for raising an important point about the new transport connections that will improve the competitiveness of businesses in the north of England and the northern powerhouse area. That highlights the important point that, first of all, the northern powerhouse is about stimulating private sector growth, jobs and economic activity. It is not about preserving in aspic exactly the way things are across the whole of the state and the public sector—that is not what the northern powerhouse is about as an idea. It is about building better transport links, for instance through the creation of the Transport for the North body, and investing in things such as our science base, which we are now able to do thanks to the great science settlement we got in the spending review, which will help great institutions such as the Sir Henry Royce Institute, the Institute for Ageing in Newcastle and the National Graphene Institute in Manchester, which have all been able to come into existence in the north and help to drive productivity up in the area.

--- Later in debate ---

[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.