Hull Official Receiver’S Office

Part of the debate – in the House of Commons at 8:52 pm on 13th May 2014.

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Photo of Jennifer Willott Jennifer Willott The Parliamentary Under-Secretary of State for Women and Equalities, Assistant Whip (HM Treasury), The Parliamentary Under-Secretary of State for Business, Innovation and Skills 8:52 pm, 13th May 2014

I trust that we will not detain you for too much longer, Madam Deputy Speaker.

I thank Diana Johnson for securing the debate. I recognise the interest that she has shown in the relocation of the Insolvency Service’s office in Hull. As she said, we met last week to discuss the issue, along with other Hull Members, and I entirely understand why she is concerned about the potential impact on her constituents and is representing their views this evening.

Let me put the position in context. The Insolvency Service is an executive agency of the Department for Business, Innovation and Skills. It has about 1,800 employees, who operate from locations throughout the country. They deal with a wide range of insolvency matters, such as administering bankruptcies and liquidations —which includes realising assets and distributing them to creditors—dealing with corporate malpractice and misconduct by investigating companies and individuals abusing the system, and managing payments to employees who are made redundant. The administering of insolvencies is funded by fees charged against the assets of insolvents. It is obviously very important to the creditors involved for the costs to be kept as low as possible, while still providing for an effective and fair service.

As the hon. Lady acknowledged, the past five years have seen a sharp drop in the number of insolvencies handled by official receivers’ offices, from about 80,000 cases in 2009 to nearer 25,000 today. That is largely because of a sharp fall in the number of debtor petition bankruptcy cases following the winding back of high levels of lending. To date, it has led to a reduction of about a third in the staff of the Insolvency Service, which has been achieved through a programme of voluntary exits.

As for the question of where offices need to be, for the purposes of official receiver work in particular, the Insolvency Service needs to be able to interview insolvents within a reasonable distance of their homes. We would therefore usually choose city or town centre locations close to transport hubs. The Insolvency Service reviewed its network of local offices in the context of customer demand and the reduced number of employees, and estimated that the estate was about a third too large. It therefore embarked on a programme of estate rationalisation, which also accords with the Government’s wider agenda of minimising the costs of their own estate.

The hon. Lady asked about the estate in London and the south-east. In the past two years the Insolvency Service has been looking at its estate across the country, and in London it has relocated to cheaper buildings in surplus Government estate in both London and Croydon. It decided to close its Watford and St Albans offices as well. It has therefore made such decisions across the UK, including in London and the south-east; it has not targeted other areas.

Individual offices need to be of sufficient size to be sustainable both as a management unit and to provide development opportunities for staff, as well as to be able to offer the necessary flexibility as workloads change. The skills needed for the different areas of work in the Insolvency Service are often similar, so in the last few years several hundred staff transferred from working on bankruptcies to investigation work as the number of cases dropped. This type of work is especially located in the larger metropolitan areas.

As a result of the review, five relocations and five closures took place in 2013-14 and a further 10 closures will take place over the coming financial year. The Insolvency Service has worked closely with the trade unions throughout this process. All employees in the affected offices have been offered the opportunity to relocate to another office or take voluntary exit terms. The Insolvency Service offers excess fares to staff for a three-year period after a move. It also discusses flexible working arrangements to try and find ways to make a move possible for employees.

The Insolvency Service is proud of its customer service, recently coming second out of 53 Government Departments and agencies, with customer satisfaction levels of 96%, which is extremely high. Around 250 face-to-face interviews arise from cases in the Hull office. That is not a large number in the context of the total number of bankruptcy interviews across the country, but in order to maintain high levels of customer service, interview facilities will be set up in other Government buildings in Hull, at minimal cost and with flexible arrangements, to be available for meetings. Replacing an office with an interview facility makes no difference from the point of view of customer experience.

Turning to the specific concerns with respect to the Insolvency Service in Hull, there are 43 permanent employees in the Hull office and the prime purpose of the office is to carry out the duties of the official receiver. Case numbers in the area served by the Hull office have seen an even greater decline than the fall in caseload nationally, with a drop in workload of 79% since 2009, which is a huge drop. Staffing levels in Hull, however, have only fallen by 43%, so there is a mismatch there.

The office was kept busy over the last two years by taking cases in from other offices. The Insolvency Service prefers for each official receiver’s office to deal with the cases that arise within its area. As the hon. Lady said, that local knowledge is important. Also, with the general declining workload there is less surplus work to be transferred between offices. As a result, the Hull office is increasingly difficult to sustain from an operational perspective.

The hon. Lady mentioned the number of company director disqualifications achieved in Hull. The total number of disqualifications in 2013-14 was 27, and that was a great result by the staff in Hull and reflects very well upon their commitment and expertise. To put the figure in context, there were 1,273 company director disqualifications in 2013-14. There is significant value in disqualifications, but the disqualification work carried out by Hull will not be lost, but will be transferred to other locations, including Leeds, so disqualifications will continue.

On 27 March the Insolvency Service announced that its office in Hull would close, with its work and employees being relocated to Leeds in November 2014. This decision will both help the service reduce the number of offices and also improve long-term resilience in the face of reduced case numbers. Consolidating in Leeds allows the Insolvency Service to use its work force more flexibly, and in the longer term to offer a wider range of career opportunities to staff.