BIS Sheffield/Government Departments outside London — House of Commons, 2016-05-09
Topic: Government Operations
David Mowat (Conservative, Centre-right): 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.