Companies: Outsourcing (Hansard, 13 January 2004)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the Government have no plans to impose a levy on companies that outsource their work to foreign companies to take advantage of cheap labour. We take seriously concerns raised about recent off-shoring announcements but recognise that those are commercial matters for the companies concerned, who are operating in an increasingly competitive world economy. To help to identify the right policy responses, my right honourable friend the Secretary of State for Trade and Industry has published a consultation document and will host a round-table seminar in early February.

§ Lord Ahmed
My Lords, I thank the Minister for his reply. Is he aware that, in the past two years, 50,000 jobs have been outsourced by 28 firms, many in the financial sector, but that there are good companies, such as Nationwide building society, which is providing jobs in the UK? It reopened its call centre in Swindon yesterday and will open a new centre in 458 Sheffield shortly. Does he agree that, when the Government talk about rights and responsibilities for individual citizens, there is a responsibility on companies that make profits here in the UK to provide jobs here, too? Can he assure the House that local authorities and government departments will be discouraged from outsourcing council tax. housing benefits, pensions and other services abroad?

§ Lord Sainsbury of Turville
My Lords, there are no clear statistics on the number of jobs that have been outsourced to other countries, nor on those that have flowed into the UK from abroad, but the figure that the noble Lord gives is probably correct. There are also cases where companies have brought back jobs from abroad because the service levels that they have achieved have not been good enough. We recognise that those are commercial decisions to be taken by companies, but equally we feel that there is too much emphasis simply on cost reduction rather than the service given to customers. There may already be a realisation that the British public does not feel that it is getting a good service from call centres abroad.
Those are commercial decisions to be taken by companies. So far as local authorities and government are concerned, it would be very difficult, in view of our international obligations, to take a position where services bought in the marketplace were not subject to competition from other countries. As a country with a large balance of trade favourable to us in services, and as the second largest service exporter in the world, it is not clear that protectionist measures would be very sensible.

§ Earl Attlee
My Lords, how does the Minister measure the effect of regulation on UK labour costs?

§ Lord Sainsbury of Turville
My Lords, that is a very interesting question that has nothing to do with the subject in hand. Any number of international comparisons show that we are extremely attractive as a country, recognised around the world for the amount of overheads compared with other countries.

§ Lord Razzall
My Lords, will the Minister take this opportunity to confirm that Her Majesty's Government's policy is firmly to reject any protectionist policy for industry? In doing so—I am sure that he will—will he confirm that there is a problem in certain areas of the country, particularly where there is one employer who decides to relocate overseas? Will he confirm the Government's intention to work closely with regional development agencies in those areas to ensure the minimum disruption to the workforce? Is he prepared to confirm that he thinks that, in certain cases, employers have not carried out adequate consultation, and that the social and corporate responsibility of industries should reflect those obligations for consultation in those circumstances?

§ Lord Sainsbury of Turville
My Lords, I will confirm what I said in my original Answer; that is, that we are clearly against any kind of protectionist policies here. 459 We have a comprehensive package of support for those facing redundancy, including the rapid-response service operated by Jobcentre Plus. We are always keen to encourage consultation over and above that required by legislation.

§ Lord Campbell of Alloway
My Lords, is the noble Lord aware that the intervention from this Front Bench had very little to do with the substance of the Question, which concerns the quality of service, and that his reply addressed that intervention? In the end, the quality of service required in this country will be the market provided by this country.

§ Lord Sainsbury of Turville
My Lords, I pointed out that the question was not entirely relevant to the Question on the Order Paper, but I am afraid that my natural politeness made me answer it at the same time. I apologise for that. It is always true that the quality of service will determine essentially the whole issue.

§ Lord Wedderburn of Charlton
My Lords, I congratulate my noble friend on the pleasure that his answers give to the Conservative Benches, which is not altogether shared by everyone on these Benches. Could he give us the merest hint, in his usual far-reaching view of these matters, how the element that he referred to in his first Answer—the responsibility to look at things apart from the question of reducing cost and thereby increasing profit—will be reflected in the forthcoming government review of legal responsibilities on public company directors, on which he has issued a consultative document?

§ Lord Sainsbury of Turville
My Lords, nothing is to be gained by ignoring the issue or pretending that we will introduce protectionist policies to deal with it. As my right honourable friend the Secretary of State has pointed out in the consultation document, the only way that we will deal with it is by raising the performance of our call centres so that we can compete effectively against competition from abroad. The quality of legal directors elsewhere is a different question.

§ The Earl of Northesk
My Lords, does the Minister agree that, much though we may be tempted to agonise about outsourcing, it is a potentially beneficial effect of technological advance and globalisation with which we must learn to live?

§ Lord Sainsbury of Turville
My Lords, obviously that is a commercial decision. In some cases it will be advantageous for low-level back-office facilities, such as data entry, to be transferred abroad. That will obviously increase competitiveness. It may be often found that customer-facing activities are best dealt with in this country. I am sure that customers are already aware of that.