Clive Betts
Main Page: Clive Betts (Labour - Sheffield South East)BIS Sheffield/Government Departments outside London
Clive Betts Excerpts
David Mowat (Warrington South) (Con)
It is a pleasure to follow the hon. Member for Sheffield Central (Paul Blomfield). He made a coherent speech, and I congratulate him on leading the charge on this whole issue.
Unlike the hon. Gentleman, I do not have a direct constituency interest in the matter. My interest came about because I was involved in the Public Accounts Committee’s questioning of the permanent secretary, and it struck me that the logic and reasons given for the decision were, unlike the speech we just heard, less than coherent and that they raised several potential issues about contradictory Government policy.
I am not against “BIS 2020” at all, but I do not think that we need this Sheffield closure to bring about its benefits. There are, however, potential contradictions between how “BIS 2020” is being rolled out and talked about, and the devolution, northern powerhouse and Government estate strategies. The latter came out most recently, in 2014, as a piece of analysis further to the Lyons strategy and all the rest of it, with the general intention, apparently, of trying to get civil service jobs out of London. Since 2010, we have, unfortunately, found that the civil service has become more concentrated in London than it was previously.
I am addressing my remarks not only to you and the House, Madam Deputy Speaker, but to the BIS board, who have yet to make this decision, to Mr Donnelly, who has a chance to row back from some aspects of this, and to Mr Manzoni and Mr Heywood, both of whom have responsibility for consistency of the design principles of some of these initiatives across the civil service. As we have heard, some elements of what is happening in “BIS 2020” do not make sense vis-à-vis what is happening in the Department for Education, the Ministry of Justice and other Departments. If that is not an issue for Mr Manzoni and Mr Heywood, I am not sure what their jobs are.
On “BIS 2020”, I support the need to rationalise; Ministers have been given a target on saving money and if money can be saved, we should do it, if that does not affect efficiency and effectiveness. I have heard that there are 80 BIS sites across the country and that number is to be rationalised to eight, and I have no difficulty with the principle of that. We will come on to understand whether that figure of eight should be nine or seven, and the logic behind how that decision has been made. There are 45 partnership bodies in BIS, and there is clearly a need to change. As we heard in the previous speech, the permanent secretary often says that BIS is quite a distributed Department, and I accept that. I am sure the Minister will have statistics that allow her to discuss how much of BIS is outside London currently, but that is not a logical reason to bring more of it into London in response.
The permanent secretary used a phrase when he was talking about this, saying that a “hub and spoke” strategy is being implemented in “BIS 2020”. The principle of that strategy is that all policy has to be in one place—the hub—with all the other bits being the spokes. Apparently, we have one hub, in London, where the Ministers are—perhaps that is fair enough—and these seven or eight spokes, which is what the focus is going to be on. When I first heard that, I thought, “Okay, we are going to have all the policy in one place. There could be some logic in that. Does that mean 10 people doing policy and they all have to be in London, working together? That might be reasonable. Even 20 or 50 might be reasonable.” Apparently, the number of people who need to be in one place to do policy is 1,600, and that is not a rational approach, although the question is raised as to what is meant by “policy” and by “strategy”. This is based on the advice that McKinsey has given the Department, apparently based on a relatively small amount of input. I know that you don’t get an awful lot of days out of McKinsey for £200,000, and I accept that this is a BIS strategy and not a McKinsey strategy, and that the accountability for it lies with BIS, although the phrase “hub and spoke” does come from McKinsey. We will come back to that issue and to policy.
We have talked about the northern powerhouse and the need for devolution. There is a need in our country to bring gross value added per head up to the same level—as best as we can—as it is in London. If we were able to do that, it would be great. The difficulty is that no region in the UK has more Government spending per capita than London, apart from Northern Ireland, where historical reasons are involved. We see that in the sort of decision that has been made here, and it is why we end up with a great concentration of civil servants in London and all that goes with that. At other times and in other places, we face the same issue in respect of the concentration of transport spend in London, which is partially due to London-centric thinking, resulting from the fact that so many of the civil service and top policy makers are here.
It is also true to say that cuts have been made right across the civil service since 2010. As I say, I do not oppose that, but 9% of those cuts have occurred in London whereas 20% have occurred in the regions, according to the Institute for Government. The consequence is that 18% of the civil service is now in London whereas the figure was 16% six years ago, according to the IFG, and I do not think that is acceptable. I do not think that is the right answer.
Mr Clive Betts (Sheffield South East) (Lab)
The hon. Gentleman is making a very coherent case. When my constituents hear the phrase “northern powerhouse”, they ask what it means. We tell them that it means transferring powers, responsibilities and decision making out of London and to the regions, but they then say, “But why are you taking all these jobs from Sheffield and transferring them to London?” Is that not completely inconsistent with what the Government claim their objectives are?
David Mowat
It is not for me to answer that intervention, but I would say that the answer is yes. In all fairness, the northern powerhouse is about more than public sector investment and civil service jobs; it is also about private sector investment. When the time comes to say whether the northern powerhouse has worked, the judge and jury will be whether or not the gap in GVA per head has closed—we will see. Let me make a point in defence of Mr Donnelly’s position: he might well accept the analysis that we just heard from the hon. Member for Sheffield Central about cost, but his point would be that he gets more efficiency from having all these policy makers in one place. If he were here, he would make that point—indeed, that is what he did say to the Public Accounts Committee—but it is not a view shared by other permanent secretaries. The argument runs away when he is talking about 1,600 policy makers being in that one place as opposed to 100 of them—it does not bear thinking about.
We have talked about the estate strategy, which was published quite recently, in 2014. It contained a lot of sexy examples of how the Government are saving money through Departments rationalising and moving things out of the capital. It talks about the Ministry of Justice as a case study and about what is happening at the Ministry of Defence; one startling statistic was that the accommodation costs for somebody in Whitehall were £35,000 per annum whereas if we were talking about Croydon, which is still a relatively busy place, the cost would have been £3,000 per annum—goodness knows what the figure would be for Sheffield. Clearly, what we are talking about today is contradictory to that space strategy, which is another reason why Messrs Heywood, Manzoni and Donnelly need to get their act together on this.
I want to discuss three things in a little more detail. The first is the hub and spoke strategy and the need to have all 1,600 people in one place. Mr Donnelly has said, “Well, that is what Vodafone do.” He said that to the Public Accounts Committee. He has said, “That is what Google do.” I am surprised if that is the case. I accept what he says, but I can give other examples of organisations that do not take that approach—Accenture, Shell and many others. Many of these companies would take the view that having people who are doing strategy in different geographic locations helps formulate that strategy, particularly if it is being applied across those locations. I do not feel that the argument being put forward is coherent. But if that is the policy of the civil service, why does it apply only to BIS? Why does strategy in the Department for Education not all have to be in one place, whereas in BIS it apparently does? Why does strategy in the Ministry of Justice not have to be in one place, whereas it does in BIS? At the very least it would be reasonable if the people charged with running the civil service would address that question and tell us the answer, because I have some difficulty in seeing it.
In addition, a design principle is involved there, because lots and lots of civil service rationalisation is coming up in the next decade. If a considered position of the civil service is that all policy is done in one place, let us make sure that everybody knows that when they are doing this. If that is the position, the Department for Education is doing it wrong and the Ministry of Justice is doing it wrong, and I think Her Majesty’s Revenue and Customs may be doing it wrong, too.
We have heard a great dealing about the costing of this proposal. Let us remember that “BIS 2020” has not been published and is not in the public domain. I am not going to charge, as McKinsey did, a couple of hundred thousand pounds for what I am about to say, but I am going to say that although the hub and spoke strategy may well be worth thinking about, there is a Mowat variation to it—it is the double hub and spoke strategy. It could be a model, in the same way as all these consultants have models. Given that we have a starting point with all these people in another hub, it does seem rather odd that, in the context of reducing the size of everything anyway, we have to impose this single hub strategy on the whole thing. Therefore, if the BIS board do get a chance to go through Hansard, I would like it to think about the double hub and spoke strategy and reflect on the fact that, almost certainly given the analysis that we have just heard from the hon. Member for Sheffield Central, it will save money as well as being equally effective.
Finally, there is a policy point about the civil service and the role of London. We have mentioned the fact that it is the major location of civil servants, especially the more senior ones. It is not an entire coincidence that the consequence of that is that current public spending in London is significantly higher per capita than any other region of the UK. This sort of decision will exacerbate that issue. As I said in the Public Accounts Committee, it just does not smell right.
I say to the BIS board that, before it signs off this proposal, it should ensure that it has asked some of the same questions that have been asked today and that will be asked later on this afternoon. Similarly, I say to Mr Manzoni and Mr Heywood that there are points of coherence in BIS vis–à–vis other Departments here and that they need to satisfy themselves that they are happy that rational decisions are being made across the wider civil service. Mr Donnelly, who is the owner of all of this in terms of the civil service, needs to reflect on whether the hub and spoke system is worth dying in a ditch for, or whether a double hub and spoke strategy, which would save money, would be a much more sensible system. If, in order to achieve design purity, we have to go through a NAO audit of costs and sensibleness, then so be it.
Mr Clive Betts (Sheffield South East) (Lab)
I, too, begin by congratulating my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing this debate and on his introductory comments. Unfortunately, I only heard the second half of those comments because I was chairing a Select Committee at the time. I apologise to you, Madam Deputy Speaker, and to him for my lateness in arriving at the debate.
I want to concentrate on devolution. The Communities and Local Government Committee recently produced a report in which, on a cross-party basis, we welcomed the Government’s commitment and general approach to devolution. We might have had certain reservations on detail or on the pace at which devolution is going, but nevertheless recognised that it is a key aspect of Government policy that we welcome. We said that devolution is a matter not just for the Department for Communities and Local Government but for all Government Departments, and we want to see all Departments signed up to the policy and contributing to it. It is welcome that economic development and skills are an integral part of the devolution deals in cities such as Manchester and my own city of Sheffield. Key responsibilities of BIS are part of these devolution deals.
We then move on to the use of the term “northern powerhouse” to cover the totality of devolution proposals for our northern cities. It leads to complete incredulity among my constituents and those of the wider Sheffield city region when the Government talk about the northern powerhouse over and again and then take a decision to move civil service jobs out of Sheffield and back to London which seems completely contradictory to their own policy on devolution. People just do not get it. I mentioned this in an intervention on the hon. Member for Warrington South (David Mowat). It was good to hear his excellent and well-thought-out contribution, which shows that there is real cross-party concern across the House about this aspect of Government policy, where it is going, and how it does not really fit in with the overall Government approach on devolution that we would want to see.
As the hon. Gentleman rightly said, the location of civil service jobs is not the only reason for a totality of approach through the northern powerhouse. Indeed, it is probably not even the main reason. The main reason is to try to secure a growth in GDP per head in our northern cities to get them up towards the national average, because currently not one single northern city has a GDP per head that is equivalent to the national average, and that is a matter of concern. It is also about trying to ensure that decision making takes place nearer to those who are affected by it, and that we recognise that different approaches and policies will be formed in different areas as part of the process of trying to improve public services and their delivery and to get the increase in GDP per head that we want to see. This approach is going to change the way in which our country is governed if we carry it through and onwards in the next few years.
What people see on the ground in terms of this policy is the Government talking about a grand design with the northern powerhouse but saying one thing and doing another. People do not understand the general direction of Government travel. They hear Ministers talking about the northern powerhouse and then see the reality of jobs being moved out of their home city and transferred down to London without, as far as they can tell, any good reason. If the Minister is intent on pursuing a policy that seems, at least at face value, to be contradictory to the overall thrust of Government devolution policy, there has to be a very good, explicit and clear reason why that policy is going to be carried through. The Minister has to be able to justify this to the House, as well as to my constituents.
Is the policy being followed through because of clear, demonstrable and provable cost benefits, with figures that can be laid before the House to show what those benefits are, or because Ministers can demonstrate that there is a clear policy benefit—that policy will be unequivocally better and Ministers will be better advised—to having all their civil servants located in one place? Could it not work just as well with two hubs as with one, if Ministers want a concentration of policy making? If Ministers cannot demonstrate that there will be either a clear and explicit cost saving or demonstrable benefits in policy advice to Ministers, why on earth are they pursuing a policy that seems completely contradictory to the overall thrust of Government devolution policy?
The Government have been given a challenge: produce the McKinsey report, the McKinsey papers or the McKinsey input into decision making—whatever it is—or produce some cost-benefit analysis. Ministers must have such analysis at their disposal. They cannot have taken this decision, or be about to take this decision, without having any figures before them. Will they share those figures with the House, or at least commit to making all the information available to the NAO so that it can conduct an audit into the decision? That would enable the NAO at least to advise Members of the House about whether Ministers have taken this decision, or will take this decision—I hope that it has not yet been made—on clear and credible facts and figures about the financial benefits of their proposals.