HC Deb 08 July 2003 vol 408 cc201-7WH

11 am

Mr. Gordon Prentice (Pendle)

I want to speak about an issue of grave concern in my constituency and others throughout the land. Next July, the Government intend to hand over to the private sector responsibility for the management and storage of millions of files held by the Department for Work and Pensions, which contain personal and confidential data on millions of citizens. At the moment those files are kept in secure locations until they need to be worked on by local offices, when they are sent away.

Some 56 file stores are dotted around the country employing about 900 staff, who mostly earn around£12,000 a year. The file stores vary in size; the largest, in Willand, Devon, employs 140 people. The sensitive records include information on attendance allowance, disability living allowance, mobility allowance and so on.

I believe that sensitive records on citizens should be held by the state. That is a very unfashionable view in some quarters, but I would prefer my files to be the responsibility of a civil servant rather than some casual worker employed on the minimum wage by a private sector company. Other things being equal, I would prefer my records to be held by a Government Department than by, say, Virgin records. However, there is to be no in-house bid, in spite of the experience of the civil servants who run the system and make it work.

The matter is of concern in Pendle, where there is a large file store in a converted mill. The Nelson file store is the main repository for attendance allowance and DLA files. There must be about 9 million files there; it is huge, and I have never seen so many files in my life. There is an astonishing number, with shelf after shelf extending as far as the eye can see. All the files are kept in a warm, air-conditioned environment. It is quiet, like a library, with the staff going about their work in a purposeful way. The file store has more than 48 miles of shelving. The main storage area covers the same area as the pitch at Wembley stadium, which gives an idea of how big the operation is.

There are 124,000 requisitions for files every month, meaning that the turnaround is nearly 6,000 files a day, and 120 staff make the process work. Like the rest of the public sector, they have to work to targets. We insist on that. Staff turn around 90 per cent. of non-priority requests within 24 hours. They turn around 100 per cent. of such requests within 48 hours. They turn round 100 per cent. of priority fax requests within one hour of receipt, since people's money depends on the file being sent to a local office.

I have a copy of a fax that went from the disability benefits centre in Surrey to the file store in Nelson. Under the heading "Great service!" it states: Well done file store team! You found my file in six minutes! Great service! Are you on roller skates? That is what they think in Surrey about the file store in my constituency.

Mr. Nigel Evans (Ribble Valley)

The hon. Member for Pendle (Mr. Prentice) will know that there is also one of those stores in my constituency, at Primrose mill in Clitheroe. I have visited it and seen its amazing array of boxes. I have talked to people there, and I have seen how quickly they are able to retrieve any information and their professionalism and commitment. I am at a loss to think how it can possibly be improved. With security and terrorism to the fore, is it not better to have the information dispersed rather than kept in very large, central stores, which could provide a threat of terrorism in the future?

Mr. Prentice

The hon. Member for Ribble Valley (Mr. Evans) makes a good point. The file stores are in secure locations staffed by dedicated people who want to remain civil servants. They do not want to work for any old private sector company; they are proud of being civil servants.

Why is that being changed? We can all recite by heart the new Labour mantra, "We do what works", but there is a flip side to that coin: the mantra should be, "If it ain't broke, don't fix it". If the structure needs to be tweaked or reconfigured, I have no problem with that. People with expertise and professionalism in the Department can handle that, but they are not going to be asked to turn their attention to the matter.

Like the chair of the Labour Party, my right hon. Friend the Minister without Portfolio, I believe that we cannot modernise Government without taking public service employees with us. I have read his speech on 8 March on Labour and the unions and the new deal. He said: We will modernise better, if we do it in partnership with the unions drawing upon the skills, experience and commitment of public sector workers and giving them shared responsibilities for promoting quality and innovation. Yet there will be no shared responsibility, because the whole shooting match will be transferred lock, stock and barrel, with the staff, to the private sector.

A project group was set up last June, which met the Public and Commercial Services union, the one that organises in file stores. The union was told that the preferred option was to outsource to the private sector in 2004. The Minister told me in a letter yesterday, after I had raised the issue in business questions on Thursday, that consideration was given to inviting a bid from the existing in-house operation but it was decided this would not be a viable option given that the fragmentation of the current service does not provide a basis for development into the new service the Department requires. With respect to my good Friend the Minister, I find it astonishing that it is possible to go out to tender for a private sector provider without checking that against the costs and service standards of retaining the operation in house.

We are told that the predicted financial savings of going private are considerable. Last year, the cost of running document retention and retrieval at the file stores was in the order of £30 million. I am told that savings of between £10 million and £20 million are forecast, and that one of the latest estimates—the Minister will be able to elaborate on this—of the cost of a private provider is £5 million. I am also told that the private sector bidders include Hays, Hayden and TNT.

Jim Dobbin (Heywood and Middleton)

Is my hon. Friend aware that the Department for Work and Pensions has a file store at Heywood? It takes care of working families tax credit, invalid care allowance and the majority of filing for veterans, and is also part of the departmental review. Up to now, the service has been deemed to be good value for money and of high quality, factors that privatisation experiments throughout the UK have failed to deliver.

My hon. Friend the Member for Pendle (Mr. Prentice) mentioned the private company Hays, which is based in Heywood. It currently works from lorry containers that have neither heat nor light. That raises concerns about security, the damage that could be done to the documents and the private sector's ability to reach the required high standards. I also understand that the private service is more expensive. Does my hon. Friend agree that the Department must examine retaining the service in the public sector or giving civil servants an opportunity to prepare and submit an in-house bid?

Mr. Prentice

Indeed, that is my view, as I hope I have made clear. My hon. Friend the Member for Heywood and Middleton (Mr. Dobbin) mentioned lorry containers where files are stored without heat and light, circumstances in which paper files can decay and rot. I have heard horror stories about the operation at Heywood, with which I need not detain hon. Members. The Minister will want to give weight to my hon. Friend's informed criticism about the private sector operation run by Hays.

There will, of course, be consequences when the work transfers to the private sector. I have already mentioned that the transferred staff will no longer be civil servants. That matters in a constituency such as mine where civil service jobs are seen as being secure. The people employed in the file store take pride in their jobs and in delivering a public service. When people are transferred to the private sector, their terms and conditions will be protected under the Transfer of Undertakings (Protection of Employment) Regulations 1981, but what will happen further down the line? The Minister cannot possibly guarantee to safeguard terms and conditions five or 10 years from now.

In the Minister's letter, he also said that staff will be redeployed where possible within the Department provided we have vacancies and they can be released without affecting the future operation of services. Redeployment may be an option in some areas but not in Nelson, where there are few civil service jobs. Ominously, he went on to say: It is not possible to guarantee that despite these efforts, some may not be transferred against their wishes nor that their new employer may need fewer staff to undertake the work in the future. That is the nub of the matter. The number of jobs could reduce; indeed, the number of file stores could reduce. I have seen the minutes of a meeting held on 18 June at which it was suggested that there could conceivably—not probably, but conceivably—be as few as one file store for the country, which touches on the point raised by the hon. Member for Ribble Valley. There could be one gigantic file store holding the records of everyone in the country. In any event, the minutes state that there would definitely be a greatly reduced number of sites. The staffing cost of running the current operation is about £11 million, which covers 900 staff on an average salary of £12,000. If a private sector provider could do the work for £5 million, which has been suggested, the job losses could be in excess of 60 per cent. of the work force, or 550 to 600 jobs. People are clearly fearful when they hear those estimates. People are also upset that the decision to go private was taken by the permanent secretary with the "agreement of Ministers" rather than by the Secretary of State for Work and Pensions. People are mystified that such an important decision can be taken by a senior civil servant rather than by a Minister who is accountable to the House of Commons. I do not know whether the decision to transfer the estate of the former Employment Service—for example, job centres—to Land Securities Trillium without an open competition among private sector bidders was also taken by senior civil servants on the grounds that it was merely an extension of an existing contract, given that Trillium handled the old Department of Social Security estate.

There is also concern that what is happening runs directly counter to previous ministerial assurances. I have seen another letter—I do not mean to sound like Inspector Clouseau—from the Department, which is dated 23 June. It states that the previous commitments provided by the Benefits Agency were given in good faith and took account of the business environment of the time". However, sadly, the Benefits Agency no longer exists and new services are now being delivered by new businesses as part of a much larger Department. Well, that is all right, then. If central Government can be reconfigured, the assurances given to employees may be set aside and will count for nothing.

I conclude with several questions that I hope the Minister will address. Why do not the Government consider an in-house bid? What guarantees are there that most of the file stores will not close? How will quality of service be maintained when the stores are transferred to the private sector? For example, it is vitally important that files can be quickly retrieved and sent to offices around the country. What will happen if the private sector contractor fails, and what remedies do the Government have? What guarantees are there that the files will be as secure and as confidential as they are now? That point was made by my hon. Friend the Member for Heywood and Middleton. Finally, why was this very important decision taken by a senior civil servant and not by my hon. Friend the Minister or the Secretary of State?

11.18 am
The Minister for Work (Mr. Desmond Browne)

I congratulate my hon. Friend the Member for Pendle (Mr. Prentice) on securing the debate. He introduced it by saying that the issue is important—although he may have used more extravagant adjectives—and I agree with that. I am grateful for this opportunity to record the reasons for the decision to seek a private sector solution to the future file storage needs of the Department for Work and Pensions, and to provide some of the reassurance that he seeks, particularly for employees who work in the service in the Department, about their value to us and their future prospects. I recognise my hon. Friend's long-standing interest in the matter and pay tribute to the way in which he has pursued it. He asked several questions to which I shall seek to reply.

Services provided by the DWP touch the lives, from birth to death, of every citizen. That is why there are so many paper files and why the records storage need is vast. New technology gives us opportunities to hold records in much more efficient ways in future, but the Department inherited 50 million paper-based files from the organisations that came together to form it and, therefore, a need to store and, if necessary, retrieve those files as efficiently and effectively as possible.

My hon. Friend referred to correspondence about changes in the way in which we deliver our services. Such changes are important. For example, because of the creation of much more customer-focused workplace environments in Jobcentre Plus offices and pensions centres, we need increasingly to hold customer records away from our operational offices to create additional space to allow us to provide services in modern and effective ways. The services that we provide to our customer base are changing as, for example, we look for opportunities to provide all those of working age with employment options.

There are some misunderstandings—I do not suggest that my hon. Friends the Members for Pendle and for Heywood and Middleton (Jim Dcbbin) and the hon. Member for Ribble Valley (Mr. Evans) misunderstand—about the current file storage and retrieval services, which are provided by a mixture of in-house and commercially managed operations. Around 30 per cent. of the provision of services to the Department is provided from commercially managed operations. They are already privatised, and they were inherited in that form.

I heard the informed criticisms of my hon. Friend the Member for Heywood and Middleton about the company in his constituency. My understanding is that the lorry containers to which he referred are a temporary and short-term solution as the process of building capacity continues. My information is that that private provision of storage and retrieval has not turned out to be more expensive, although I do not have detailed information. If my hon. Friend wishes, I am sure that I can find it for him. I am not aware of any horror stories, although I must say that I have been in the Department for only three weeks. If my hon. Friend knows of any, he should let me or my Department know so that we can investigate them.

Throughout the country, there are 50 stores, ranging from some with only a few staff to others, such as that in the constituency of my hon. Friend the Member for Pendle, where well over 100 people are employed. Those stores have grown up in response to local or regional needs, with a variety of operating practices and widely different levels of efficiency. This is n at an issue of public versus private. Some sites that we operate are very efficient, and I am happy to pay tribute to the dedication and effectiveness of our staff. By the same token, the private sector has shown that it is fully capable of managing those services and that, in particular, it can ensure that the confidentiality of sensitive records of individual customers is fully respected. My hon. Friends and hon. Members will be aware of that.

A significant amount of the core work of the DWP is provided by people operating in the private sector. It could not be otherwise because of the number of doctors who would need to be employed to carry out the medical examinations necessary to inform decisions and decision makers. Even when we are successful in moving people into the labour market, the process and necessary support is provided by the private, community or voluntary sectors, which provide services to address specific barriers to employment. My Department, in its present shape and previous manifestations, has a long history of working closely with people outwith the public sector to deliver services and to support our customer base. There is no evidence to suggest that, except in isolated cases, any of that information has leaked out or been treated other than confidentially. The Department has significant experience in dealing with people beyond the public sector, enforcing confidentiality agreements and having contractors respect those agreements. Otherwise, stories of confidentiality being breached would be legion, and they are not.

I do not accept that the only way in which services can be provided to the DWP's customer base must be through the public sector if the need to protecting people's confidentiality is important. Nor do I accept that is necessary to have a proliferation of small sites providing storage and retrieval services in order to protect against the possibility of some terrorist attack in the future. It seems perfectly possible to concentrate that work in fewer sites than we do at present and still build in protection for files from the possibility of destruction in any fashion, including the rather serious risk of a terrorist attack suggested by the hon. Member for Ribble Valley.

However, the needs of the DWP are not simply those of the aggregation of the organisations that came together in 2002. It is not just a question of taking 50 distinct providers and aggregating them. We have new objectives, new priorities and new ways of meeting them. The services that supported previous operations are not always well placed to do the same in the future. That is true of our file storage and retrieval service, as it is of much of the support that we hope to provide for our customer base. Our current arrangements are simply not capable of meeting future needs.

We have looked at alternative ways of delivering such services, and it is clear that there is a willing market available to compete to do it, and that a single operating system—not necessarily a single operating site—which uses modern systems of records management could do so more efficiently and effectively, and at greatly reduced cost. In comparison with existing costs, we estimate that we should save a significant amount of taxpayers' money over, say, the life of a 10-year contract. To cite one aspect for my hon. Friend the Member of Pendle, I can say that the savings in estates costs alone are estimated at £4 million a year. There will be other savings, but some are more difficult to calculate. For example, someone may provide storage and retrieval services on a DWP site as well as on others. We would not necessarily intend to redeploy that person out of that site, even if the stored files left.

It must be right to look at the best way of acquiring services that meet our needs, and that will provide us with value for money gains. The scope for DWP teams currently delivering the service being able to mount a bid has been fully considered. My hon. Friend was right to refer to my letter of yesterday, which I sent to inform his contribution to the debate. We expect future service to be delivered very differently, from a greatly reduced number of sites and supported by a single, proven, modern information-handling system. Creating an in-house bidding capability is simply not practical in these circumstances. However, as a matter of overall policy, the Department is committed to looking for in-house solutions and to examining the scope for in-house bids as part of any future review of support services case by case before considering bids solely from the private sector.

Mr. Prentice

rose—

Mr. Browne

I will allow my hon. Friend to intervene, but it may mean that not all of his questions will be answered. They can, of course, be answered by other means.

Mr. Prentice

I just wanted the Minister to expand on his point about rejecting the possibility of any in-house bids. What did the Department do to explore the option of an in-house bid? It is not enough to say that it is not practical.

Mr. Browne

The Department had significant experience of existing services and their capabilities. I will be happy to expand on that in correspondence. The Department concluded that in relation to the expectation of the modern service, it would not be possible to reconfigure in such a way as to allow existing services to compete to provide that service.

It is important to record that the Department recognises the valuable service provided by the staff who run the file stores. Where possible, we shall find them other positions, and I am determined that we must do that; those are not simply words. We already have experience of closing two file stores and moving the records to a central site, and we found alternative posts for the staff. That will be more difficult at some sites, and I do not underestimate the problems in sites such as Nelson, in my hon. Friend's constituency.

Mr. Deputy Speaker (Mr. Frank Cook)

Order. Time is up.

Sitting suspended until Two o'clock