Hull Official Receiver’S Office

Part of the debate – in the House of Commons at 8:37 pm on 13th May 2014.

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Photo of Diana R. Johnson Diana R. Johnson Shadow Minister (Home Affairs) 8:37 pm, 13th May 2014

I am pleased to speak about the proposed closure of the official receiver’s office in Hull, and I thank the Minister for meeting me and other Hull MPs to discuss this issue on 6 May—I note that she has had busy day in the Chamber today. The proposal is to close the Hull office and relocate more than 40 staff to Leeds. The claim is that that will produce a saving of about £289,000 over five years, which rather pales by comparison with the bill of £353,000 for tea and biscuits in the Minister’s Department in 2012.

I accept that nationally the work of the Insolvency Service has declined considerably across the country over the last few years, and we are seeing fewer cases coming forward overall. However, the argument is not about reducing the number of staff employed in the service, but about concentrating work in certain locations, and that is where I want to focus my contribution this evening.

The decision to close the office in Hull undermines the efforts of all those who are working to create a more prosperous city. Hull needs an additional 7,000 jobs to get to the national level of employment, and while we have had welcome news about Siemens coming to the city—something won by local effort—we have been hit hard by the recession and three years of flatlining.

We know that the closure will take around £1 million out of the local economy, at a time when Hull has hardly any Government jobs. The Department for Business, Innovation and Skills is supposed to be committed to economic regeneration of the regions, but how does this policy help with that aim? The Government are also supposed to have a policy of distributing Government and civil service jobs around the country. What consideration was given to the relative number of civil service jobs in Hull and Leeds when making this decision?

Hull has exceptionally few Government jobs: 10 Departments, including the Minister’s own Department for Business, Innovation and Skills, have no staff in Hull. Departments that do have staff in Hull, like the Ministry of Justice, tend to be front-line delivery staff. As I said, the plan is to move the Insolvency Service jobs to Leeds, where there are already more than 9,000 civil service jobs and where office rents are far more expensive. I have observed a similar pattern repeated across the country: the insolvency office in Stoke, where rents are very cheap, is being closed and moved to Manchester where rents are higher. Previous Governments have had a clear policy of distributing Government jobs around the country—do this Government still have that policy?

I heard the Deputy Prime Minister this morning waxing lyrical on the Floor of the House saying:

“I am always open, as are the Government, to proposals on moving further parts of the public sector from Whitehall and London to other parts of the country. Sheffield”— where his constituency is—

“has benefited enormously from that, with the Department for Work and Pensions and the business bank being established there.”

It seems to me that we have a Government who are certainly not looking at spreading Government jobs fairly across the regions and are in fact now taking them away from East Yorkshire.

It appears that civil servants based in London have decided that it is a good idea to close offices in Hull. I imagine them in their offices in Whitehall with a map of the UK, and, almost as happened in the second world war, moving around people they think can be distributed around the country, with no thought for the effect on communities.

The business case says that this closure programme is being driven by the Cabinet Office’s Government property unit, which aims to reduce the number of properties in the central civil estate. It seems that there is a desire to centralise jobs in a few places, with little consideration given to the wider economic consequences or even to the fact that in some cities rents will be much higher than in other parts of the country. What similar cost savings have been made by the Minister’s Department in London? The plans being put forward for Hull are about saving £289,000 over five years, which is a drop in the ocean compared with the cost of renting or occupying office space in central London. How many posts have been moved out of London since 2010, and at what saving to the taxpayer? How much office space has been freed up at the Department for Business, Innovation and Skills in London and, in particular, in the head office on Victoria street?

Another of my concerns is about the consequences for the economy of the closure of the Insolvency Service for the Humber region. Through the establishment of the local enterprise partnership, the Humber is seeking to forge a path as a separate economic region with a distinct identity. The Insolvency Service has developed specialist knowledge of the region which, if these plans go ahead, will be subsumed by the wider Yorkshire region based in Leeds. Hull staff have more than 600 years of collective insolvency experience. Last year, that saved the economy more than £2.5 million, as they disqualified 20 directors. There is a particular value to having local knowledge about what is going on in an area. As we know, unfortunately many people the Insolvency Service deals with are repeat offenders. Of 17 local official receiver offices, Hull is joint fifth in terms of the number of disqualification reports—that is quite high.

An example of the good work that has been done is the fact that local knowledge in the Hull office stopped German bankruptcy tourism in the Hull county court. The limited liability partnership provided false addresses to German residents but that has been wound up thanks to the local knowledge and work of the Hull office. Without local knowledge of the places referred to, it is unlikely that that fraud would have been stopped, so will the Minister give me her view of the assessment undertaken by the Insolvency Service of moving direct regional centres to larger autonomous units in terms of the detection of fraud?

Following our meeting on 6 May, the Minister promised that she would provide the business case to me and to other Hull MPs. However, the information contained in the business case that I have been given is limited solely to the Hull, Leeds and Sheffield offices. It does not give a comparison between Hull and other offices of a similar size that have not been closed.

The savings identified are mainly saved office costs offset by £125,000 in train fares for three years for staff who relocate to Leeds. That is good news for First TransPennine Express, the local train operator, and it may be that it can use that money to provide some much needed investment on the Hull-Leeds line instead of sending trains south. There is, however, much that is missing from the costing in the limited business plan. The first thing is redundancy costs.

The staff in the Hull office are exceptionally experienced: collectively, they have more than 600 years of experience. Having spent their lives working in Hull, however, many do not want to travel to Leeds and all have been offered redundancy payments. From union sources, I understand that redundancy costs could be as high as £1 million. Where is that allocated in the business plan? The saving of £289,000 over five years is relatively small, yet redundancies could cost £1 million. I appreciate that that is provided for by a different budget directly funded by the Treasury, but it all boils down to taxpayers' money, and the Government should be acting in a more joined-up way when looking at the closure costs of this office.

On training new staff, it is accepted by the Insolvency Service that the staff in the Hull office are required to meet the necessary case load not just of work from Hull but other areas of the country. The business case blithely presumes that all Hull staff will move to Leeds. As I said, I think there are questions about the numbers of staff who will choose to take redundancy. It takes three years to train a level 3 examiner before qualifying, but the costs of recruiting and training staff do not seem to be included in the business plan.

Bizarrely, in the very brief consideration given in the business case for moving the Leeds office, which as I said has 9,000 civil servants, to Hull, which has very few civil servants based in the city, the presumption that 30 staff would not move across is included, along with associated costs of recruiting, training and the short-term loss of capacity. Will the Minister explain why she has presumed that Leeds staff will not move to Hull, but all Hull staff will move to Leeds?

A further concern is about the way the consultation with the trade unions has been conducted. The Minister has consistently maintained that the Insolvency Service has been attempting to work with the Hull office to find a way of keeping the office open. In answer to a recent parliamentary question, the Minister wrote:

“The trade unions were made aware on 25 February 2014 that the future of the Hull office was being considered, and were invited to provide any views they wished.”—[Hansard, 6 May 2014; Vol. 580, c. 93W.]

This was not, however, the impression given to the trade union, Prospect. Prospect told me

“that the Service would be running exit schemes and then closing offices. There was never discussion on whether an office closure was justifiable as we had not been provided with the financial justification and despite requests by the Trade Unions, the Service would not release the business cases for the closures.”

Consultation with the trade unions only commenced when the decision to close the Hull office was made on the basis of a statutory 90-day consultation. Will the Minister outline exactly when the trade unions were involved, and what opportunities they were given to inform the closure plans? The Hull office was told on the 25 February that the future of the office was under review and that the review would take six months. In the meantime, it looked at ways of reducing its costs, including preliminary discussions on new premises that would reduce the rent by approximately £90,000 per annum. Obviously, office rent is one of the key issues in this whole business. Two weeks later, however, the service informed the Hull office that it would be closed, and showed no willingness to work with the office in seeking alternatives to closure. It is clear from the business case that no consideration was given to cost reductions within the current structures, as identified by the team working in Hull.

The savings from the closure of the Hull office appear to me to be uncertain, but the £1 million cost per year to Hull’s local economy would be all too certain. We know that, owing to decisions made in Whitehall by the coalition Government, Hull city council suffered one of the heaviest funding cuts in the United Kingdom—despite being the UK’s 10th most deprived area—and there are worries about not just Hull’s insolvency office but its land registry office, whose future is currently under review.

The coalition frequently claims to support the idea of “rebalancing the economy”, north and south. As I said earlier, one way of doing that would be moving Government Departments and agency civil servants’ jobs to places such as Hull rather than taking them away. This debate may be about saving only 40-odd jobs in Hull, but every job matters in a town where so many people chase each job vacancy and so many jobs are low paid and low skilled.

I think that, provided that the service is needed and can be run efficiently, we should fight to save every job in Hull that is under threat, and I think that there is a strong case for keeping the official receiver’s office open. That would be consistent with what the Government say their policy is—but too often what they say and what they do are different things, especially when it comes to the treatment of northern cities such as Hull. It seems to me that devolved jobs are going the same way as Lord Heseltine’s devolved funding, and that, yet again, Hull is not getting a fair deal from this Government.