Department for Business, Innovation and Skills Office: Sheffield

Louise Haigh Excerpts

Wednesday 24th February 2016 Westminster Hall

[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.

--- Later in debate ---

[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.