The Department for Business, Innovation and Skills (BIS) is to close 90% of its sites over the course of the parliament, business secretary Sajid Javid has said, as his most senior official Martin Donnelly was questioned on the rationale for shutting the department's Sheffield office.
It was announced last month that BIS – which has already reduced its estate from 180 buildings to around 80 over the last five years – would close its Sheffield site by 2018.
The move is part of the “BIS 2020” strategy, with the department planning to rationalise its estate to create a “combined central HQ and policy centre” in London as well as six regional business centres. More than 240 staff currently work at St Paul's Place site, which focuses on policy and corporate services for BIS, and the department has not ruled out redundancies.
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Unions and the opposition Labour party have already criticised the move, warning it could undermine the government's plans to promote economic growth beyond the south east of England.
Facing questions from MPs on the BIS select committee on Wednesday, Javid made clear that a big programme of office closures was still to be announced as the department seeks to deliver the 17% cuts to its day-to-day spending agreed at November's government-wide Spending Review.
"We will [...] be looking at all the different estates," the business secretary said. "And that brings us back to the Sheffield announcement recently. We have some 82 locations at the moment that BIS and its partner organisations operate out of. And I would hope that over the next five years we can bring that down to around seven or eight – so a significant reduction in that."
BIS is also in line for a reduction in headcount of 30-40%, Javid said – although permanent secretary Martin Donnelly made clear that those reductions would focus on the "11-12,000" staff that were not part of trading funds or BIS organisations in line for privatisation, such as the Green Investment Bank.
Javid, who also reiterated plans for BIS to close "about half" of its 45 partner organisations by 2020, said making staff redundant was "one of the hardest decisions" facing a department.
"It's never, ever an easy decision and it certainly has not been for us," he said.
"We are very much aware, and I'm personally aware, that whenever we make a decision like the recent announcement made in Sheffield there are people's lives, livelihoods and families that are affected by that. So they're never easy decisions.
"But we have to step back and decide what's the best for the taxpayer. Are we getting the best value for money from all that money that's coming in through taxes? We looked at the organisation, how it's set up, and we do think this kind of rationalisation is possible and is the best result, all things taken into account, for the people we ultimately represent."
"One of the most difficult things I've ever had to do"
Meanwhile, Donnelly (pictured) was repeatedly pressed by committee member Paul Blomfield – the Labour MP who represents Sheffield Central – to justify BIS's decision to shutter its Sheffield site.
The opposition, including shadow Cabinet Office minister and fellow Sheffield MP Louise Haigh, have been pushing the government to release the business case for the closure, while a petition against the move has gathered more than 4,000 signatures.
Blomfield asked the perm sec: "Last Tuesday a member of your BIS board visited the staff in Sheffield and said that the decision was based on the vision for the department, [that] it was not a decision that would save money and there had been no cost-benefit analysis. That clearly conflicts with the point the secretary of state has just made for us. Who was right?"
Responding, Donnelly said the closure of the Sheffield site – which he announced personally on a visit to the site – was "one of the most difficult things I've ever had to do, professionally".
But he said the Sheffield closure was based upon "a clear, new business model for all of the department", rather than "disaggregated business cases for each of the 80-odd offices that we now have".
"I absolutely share the sentiments the secretary of state has stated," he added. "We have professional, hardworking teams in Sheffield. And this very difficult news – we will of course do everything we can to support those people.
"But just stepping back, what we've done is, very consciously, together as a board and working with ministers, set out a model that we believe works for the whole department over the next five years, which is a great simplification in how we do things, is leaving space to get more digital, is focusing our expertise in specific areas.
"And one of those has got to be our headquarters and policy function. We came very clearly to the conclusion that, within that strategic vision, it did make sense to have all of the people doing our policy, headquarters work, in one place close to ministers, that that was better for our delivery."
He stressed that the BIS Sheffield announcement was "no criticism of how well people have been working" under the existing model, and pointed out that the "vast majority" of the organisation's staff would remain outside of London.
"But as we go forward, as we have to become more flexible, as we have to move people around more quickly, it did seem very clearly to us that the right strategic model as to have all of our central people based close to ministers here in London, while recognising that the vast majority of the BIS group will continue to be working all around the country," he added.
Blomfield said he believed it would be "difficult for most people to understand how moving 247 jobs from Sheffield to London, with the additional salary costs and the additional office costs" would result in savings.
After Donnelly was asked whether BIS would release any documents justifying the decision – with the perm sec saying he did not believe there was any "single paper that it would be helpful to give" the committee – Javid stepped in to make clear that any "decision on what we share and what we don't share" would ultimately be for him.
"I've listened to you carefully and I will go away and consider what further information we can provide," Javid told Blomfield, adding:
"There will be some things that we don't to put out into the public and share because it could compromise future decision-making and that wouldn't be in anyone's best interest. But there probably is more information we can provide and I will certainly look at that."
Last week, the Cabinet Office announced a major, government-wide programme of office closures, saying departments would vacate 75% of sites by 2023. That plan will see the total number of buildings occupied by departments falling from 800 to under 200.
HM Revenue & Customs last year kicked off its own estate reduction plan, meanwhile, saying it would cut its network of 170 offices to just 13 regional centres over the next decade.