BIS Sheffield/Government Departments outside London

Nick Clegg Excerpts

Monday 9th May 2016 Commons Chamber

[Mr Nick Clegg (Sheffield, Hallam) (LD)]

I, too, am very grateful to the hon. Member for Sheffield Central (Paul Blomfield) for securing this debate, and I strongly support him—albeit from a different constituency in Sheffield and across party lines—in his and our shared endeavour to have the National Audit Office look at a decision that remains wholly unjustified and entirely opaque in the way it has been reached.

I am grateful to the Minister for being here. To be fair to her, she will not be in a position to undo the origins of this eccentric and unjustified decision. In the time since that decision was originally announced, what happened has become more obvious. In the Whitehall scrum that takes place, in which the Treasury cracks the whip and demands lots of savings and obliging Departments are told to jump ever higher and to cut ever deeper—I discovered that for myself over the five years I was in government—BIS took the political decision, the wrong decision in my view, to offer up far, far greater cuts than was either justified or necessary compared with other Whitehall Departments. That decision affected not only many of my constituents who work in the BIS office in Sheffield, but many other BIS projects that have been cancelled in this cull.

Once that high-level decision was taken that BIS should offer up far greater sacrifices in the Whitehall race to make savings for the Treasury, the Department then lurched, as the hon. Gentleman has said, into a panicky and lazy response to create the impression that a number of savings had been made. That duly had the political effect of creating noise, anguish and controversy, but, as we are discovering, the Department did not produce any material savings whatsoever. It is important that we understand the genesis of all of this as we seek now to ask the NAO to cast an expert light on the decision.

What is the evidence for that analysis of what has gone on? First, it is worth comparing the savings that BIS has offered up to the Treasury in this Parliament with those that it offered up in the last one. In the last Parliament, over that five-year period, the BIS savings amounted to about 18%—I remember well that they were an agonising 18%—of the total departmental budget, which meant that BIS was roughly in the middle of the table of Departments offering up savings to the Treasury. What is striking is that that 18% has gone up to 26% in this Parliament, which means that BIS now leaps from mid-table for savings offered up to the Treasury to enduring the second largest cut of well over £4 billion. That was a choice taken by BIS and accepted by the Treasury. It was an extremely unwise choice given BIS’s important role in trying to foster dynamism and investment in our private sector to support our challenged manufacturing sector, and to reform and support further education and higher education, which are so important to the long-term prosperity of our nation. It was that decision that led to this rather desperate attempt to try to gather together lots of savings in a hurry to meet that headline and somewhat draconian cut of 26%, which in turn led to the announced closure of the Sheffield office.

The hon. Member for Sheffield Central quite rightly referred to the opacity of the Government’s pronouncement on exactly how much this closure will save. In response to a parliamentary question on 14 April 2016, the Department estimated that the current annual cost of the Sheffield office is as follows: £500,000 on travel; £890,000 on rent; and £150,000 on hotel stays. It said:

“These savings would be independent of any decision on headcount reductions, on which we are still consulting.”

The only concrete saving figure that I have been able to get is £1.54 million—a risible, almost microscopically invisible, amount when it is set against total Government expenditure. It is about 0.005% of BIS’s annual expenditure and, by my rough calculations, it is 0.0002% of total Government spending. It is a tiny amount given the loss of expertise, the disruption that will be incurred and the other relocation costs that have not been factored into those figures.

When I was walking through Portcullis House, I asked, by way of comparison, how much the fig trees cost. I was told that renting 12 fig trees costs £32,500. By my reckoning, what BIS is saving is the equivalent of renting just over 550 fig trees. That is such a piffling saving compared with the cost to BIS’s expertise in a very, very important area of policy.

The decision also flies very directly in the face of stated Government policy, and very recently stated policy. As the Bridge report of 2 February 2016 has confirmed, the London-based nature of the civil service fast stream, emphasised by much of the fast stream literature featuring London landmarks, is a deterrent for many students from lower socio-economic backgrounds. The Budget document of 2016 stated that the Government are working on an

“ambitious strategy to move civil servants out of expensive Whitehall accommodation and into the suburbs of London, delivering substantial savings for the taxpayer”.

This decision therefore has at its origin an excessive zeal on the part of BIS to satisfy Treasury demands in this somewhat self-harming manner at the time of the comprehensive spending round of last year. All the evidence that has been presented to the House so far suggests that the savings, if there are any savings, are of an almost invisible nature and that the decision is damaging not only to my constituents, but to the knowhow and expertise and collective memory of BIS. The decision flies in the face of the Government’s stated affection for the northern powerhouse agenda and other stated policies. When we bear all of that in mind, the least that this House can do—and the least that the Minister who is busy chatting from a sedentary position can do—is seriously reflect on what is an uncontroversial request that the NAO cast an objective and dispassionate eye on this decision.