CSC: Redundancies

Mark Hendrick Excerpts

Tuesday 28th February 2017 Westminster Hall

[Mr Mark Hendrick (Preston) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Chesterfield (Toby Perkins) on securing this debate, which is particularly important given the number of jobs involved throughout the country at many different sites.

The CSC office in my constituency is located opposite my parliamentary office. I am concerned that many local people known to me who work there could well be out of a job soon. There are 79 jobs in Preston—four managerial, 28 professional and 47 technical—and around 500 jobs in central Lancashire as a whole. My staff have noticed that the signage on the CSC building on Marsh Lane in Preston was removed some weeks ago. None of the staff were told why, and we had heard recently about the extra job losses. That leads me to believe that the company management have known about them for some time, and are perhaps already setting about dismantling the Preston facilities, without bothering to tell the staff still working there.

As my hon. Friend said, CSC is responsible for many critical IT systems. In my constituency, we have BAE Systems at Warton and Samlesbury, civil nuclear power rod production at Westinghouse near Springfields and, like everybody else in the country, NHS facilities. All of those important employers, facilities and public services operating on behalf of Government or indirectly on Government contracts depend on the work of CSC. The redundancies announced are bound to have an impact on their ability to provide those services.

A recent announcement mentioned 1,100 redundancies, in addition to the 499 announced in December. That is roughly 1,500 redundancies announced over the last few months. We know that CSC has made 2,355 people redundant in this financial year alone, which is more than 20% of its staff. As my hon. Friend the Member for Chesterfield said, the company will merge with Hewlett Packard. We have already lost Hewlett Packard jobs in and around Preston in recent years, and that company is carrying out similar manoeuvres, we believe to exercise its share price in a way that keeps shareholders happy, as well as companies that might want to merge with it in future. HP has just announced 785 redundancies UK-wide, and has not given its workforce a pay rise for four years.

Many of us feel that the redundancies are being made as a knee-jerk reaction following disappointing financial figures for CSC, in order to prop up its share price before a merger with HP. I am sure that when the merger takes place, many managers will exercise their share options to ensure that they make a good deal of money. Meanwhile, the workforce producing the goods and services is being sold down the river by selfish management.

I have three quick questions for the Minister. Can she look into the impact, quality and delivery time of the Government contracts, whether NHS or Ministry of Defence orders from BAE, that might be affected by CSC’s provision of services either to the Government directly, to Government agencies or through companies such as BAE? Secondly—this is important in relation not just to CSC but to other companies providing outsourced services for Government—are staff and expertise being lost that could be critical in future to the maintenance and possible modification of those systems if and when change is required? As legislation changes, such as for DWP projects, software must clearly change. In order for software to be maintained, expertise must be kept close at hand, and often in house.

Finally, a related matter—also mentioned by my colleagues—is the question of offshoring. If we are losing staff at UK companies providing services for Government contracts, and if those jobs are disappearing offshore, that has implications for the deliverability and maintenance of those projects, which in many cases are critical to the country’s defence, as with BAE; to the country’s power, as with Westinghouse; or to the health of the nation, as with the NHS.

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[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Chesterfield (Toby Perkins) on securing the debate and on the detailed knowledge he has accumulated, despite the fact that the company does not seem to be in contact with him. Given the number of people it employs in his constituency, I must say that that is a surprise.

Business change is an inevitable consequence of modern competitive markets, and commercial and economic opportunities mean that companies will need to reorganise, merge, expand, and sometimes contract, in response. But what we have heard today is, indeed, a worrying picture, and I will do my best to respond to the key points about the security of the public sector contracts and the way in which the Government support people faced with redundancy. I will also try to address some of the corporate governance issues that have been raised.

Employers should want to implement changes as swiftly and efficiently as possible, to limit the impact on productivity and morale. Businesses need the flexibility to respond to the particular circumstances of their restructuring situation, but the number of rounds of redundancies that this company has engaged in causes one to ask in whose interest it is working. At the same time, employees will want to know how the changes are likely to affect them in this very fast-moving picture, and what their options are for the future. It is therefore vital that there is effective consultation with employees about the potential for collective redundancies.

I shall just remind right hon. and hon. Members what our legal obligations are. Collective redundancy legislation strikes a balance between the needs of the business and those of the employees. Collective redundancy occurs when 20 or more employees may be made redundant at one establishment within a 90-day period. In that situation, employers are under a statutory duty to consult employee representatives about the proposed redundancies. The length of a consultation period prior to the first dismissal depends on the total number of proposed redundancies. The consultation must be with the employees’ trade union representatives, or other elected employee representatives where there is no recognised trade union in place, and it must be completed before any dismissal notices can take effect. Importantly, it must be undertaken with a view to reaching agreement, even though sometimes agreement may not be possible. Therefore, any consultation should include consideration of ways of avoiding dismissals, reducing the numbers to be made redundant and mitigating the effect of the dismissals.

There are also a number of obligations on employers, including a requirement to notify the Secretary of State for Business, Energy and Industrial Strategy of the proposed collective redundancies before the start of statutory consultation. Employees who feel their rights have been denied may complain to an employment tribunal, which may make a protective award of up to 90 days’ pay to each of those affected. The ACAS helpline can provide advice to employees on their individual situation. ACAS has also produced a guide for employers on handling large-scale redundancies.

Government support is available for the many employees who have been made redundant or are likely to be faced with redundancy. Throughout the redundancy process, employers still have obligations to their employees and should be thinking about the help they can offer. First, employees with two years’ service under notice of redundancy have the right to reasonable time off to look for a new job or to arrange training. Employers in redundancy situations should contact Jobcentre Plus as soon as possible to discuss appropriate support that can be delivered locally. Jobcentre Plus has, indeed, made contact with CSC in this case to provide support, and that includes support for staff who work remotely, as may be the case with the constituent of the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). The Jobcentre Plus rapid response service is delivered in partnership with a range of national and local partners, including Her Majesty’s Revenue and Customs. Where no partner support is available, dedicated funding may be used to fill gaps in provision.

All decisions about appropriate support are made locally. That is because a decision that is based on the specific redundancy situation, in particular on an individual’s own transferable skills and experience and the availability of jobs in the local area, is more likely to be the right decision and in the interests of the individual concerned.

[Mr Hendrick]

The Minister is giving an excellent exposition of the rights of employees and employers in the handling of the redundancy process, but will she try—and if she cannot, will she write to me later—to address the points I raised about ensuring that the services provided to Departments are maintained and are still deliverable? Her current contribution looks like she is talking about what employers and employees can or cannot do under legislation, rather than about how we address the problem of losing jobs that are of value to the Government.

[Margot James]

I thank the hon. Gentleman for his intervention. I will come on to talk about the effect on the public sector contracts that the company has contracted to provide. I mentioned that at the beginning. I first just wanted to cover the rights of the employees in these circumstances and the support that the Government are trying to offer through Jobcentre Plus. I will, indeed, come on to the important matter that the hon. Gentleman just raised.

To conclude on the employment support that we are able to provide, I am hopeful that the rapid response service will be able to assist those workers who have been made redundant in finding alternative employment. Officials at the Department for International Trade have also contacted CSC and are in close contact with Jobcentre Plus.

I will now move on to the potential impact on public services that various right hon. and hon. Members have mentioned. CSC has undertaken numerous contracts with vital services such as, as we have heard, Royal Mail, the police, civil nuclear and the NHS, and it is indeed of concern to us all that the skills and the contractual obligations given by CSC are honoured. Given the situation, I can well understand right hon. and hon. Members’ concerns about the future. The Cabinet Office has assumed responsibility in Government for dealing with CSC on these matters, and is in regular contact with the company about the viability of the contracts it has assumed. It has been given every assurance that the business will be ongoing and unaffected.