Civil servants working at the Department for Business, Innovation and Skills (BIS) could go on strike over plans to close the BIS Sheffield office, as the department's most senior official – Martin Donnelly – faced a tough round of questions from MPs over the move.
The Public and Commercial Services Union (PCS) has announced that it is to ballot members following Donnelly's announcement earlier this year that BIS is to vacate the St Paul's Place site – which focuses on policy and corporate services for BIS – in favour of a combined headquarters and policy centre in London.
The move – which potentially puts more than 240 jobs at risk – is part of a wider estate strategy by BIS to cut its number of buildings from 80 to seven or eight "centres of excellence" over the course of the parliament, as it delivers the tight financial settlement agreed with the Treasury at last year's Spending Review.
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BIS estate to shrink from 80 sites to "seven or eight", says minister Sajid Javid – as perm sec Martin Donnelly is pressed on Sheffield closure
Ministry of Justice relocation plans will mean "hundreds" not "thousands" of officials in Whitehall – MoJ perm sec Richard Heaton
But PCS – the largest of the civil service unions – argues that the move undermines a wider government commitment to decentralising power, with general secretary Mark Serwotka saying BIS appeared to be "retreating from towns and cities across the country".
"This planned move from Sheffield to central London is the exact reverse of what the government claims to want for the civil service and makes a mockery of its northern powerhouse rhetoric," he said.
The union is now preparing a strike ballot of its Sheffield members, as well as those at smaller BIS offices around the country, and has said it will hold a rally in the city on April 9.
The plans have already proved controversial with local MPs, and the public accounts committee this week pressed Donnelly – who has already described the decision as "one of the most difficult" of his career – on the specifics of the closure.
The BIS perm sec told the committee that of the 20,000 staff paid for by BIS, "a good 18,000" worked outside of London, and vowed that this would continue.
Explaining the move, he said: "Essentially, we have to save £350m of our operating costs. To do that, last summer we stepped back and said we are going to have to change our operating model to make it simpler and cheaper.
"And that means we have to focus on a set of business centres, one of which, headquarters, will be in London. For us, that is how we can make policy work more cost-effectively. But we will keep a regional footprint of BIS Local on the ground."
"There will be budgetary cover for redundancy payments should we need them"
The move away from the Sheffield site – leased by BIS from the Department for Education, which will remain in the building and take on around 15 of the BIS staff – is expected to mean that all of Donnelly's policy officials are based in the capital. At present, around 90% of BIS policy staff work in the capital.
Donnelly said the department had not yet calculated the cost of any redundancies stemming from the Sheffield decision, but he said "about a third" of the roles at Sheffield would "not be permanently in London".
"It's clear that our numbers are coming down and there will be budgetary cover for redundancy payments should we need them," he told the committee.
He added: "We are reducing the total number of policy jobs over time. It's not a straight line because we have a lot of legislative and policy responsibilities at present.
"And some people we will want to encourage to stay on until the beginning of 2018 or late 2017. So there's still a lot uncertainty about the precise timings. But what is clear is the number of policy staff will shrink significantly by 2020 as we move to more flexible working."
"Whitehall could be a bit more Shoreditch"
The perm sec was also quizzed on the department's view that bringing policy staff closer to ministers in London would lead to more effective government.
PAC chair Meg Hillier (pictured) asked why BIS could not maintain a presence in Sheffield and make use of IT to maintain contact between ministers and officials in the regions.
"I have to say, speaking as a Shoreditch MP, perhaps Whitehall could be a bit more Shoreditch, where most people don't have a set desk, they're work peripatetically – they use new technology to speak to each other," she said.
Donnelly replied: "Of course you can do it. And I have a spider phone in my office which we use regularly. But If you look at a company like Vodafone, they have centralised their headquarters staff in a large, single office in Newbury.
"Other organisations, often very IT-enabled, are doing the same thing. You have to look at the business need and that is the case that we have been looking at very carefully."
The BIS perm sec also pointed out that the department currently spends £150,000 per year on putting officials up in central London hotels, as well as half a million pounds a year on train travel to move people between Sheffield and the capital.
"That's not really sustainable," he said. "And it's a tribute to our hard-working staff in Sheffield and elsewhere that people are willing to get up very early in the morning and get back late at night. But as we get smaller it's not the most cost-effective way of doing it."
The case for centralising BIS policy staff was supported by Department for Education perm sec Chris Wormald, who said that while the DfE showed it was possible to "do policy from outside of London", it was "quite difficult" to run small policy teams outside of the capital because of the need to get economies of scale.
"I can see that having a situation where you have 90% of your policy staff in one place and 10% in another – that is a very different model and much more difficult to where DfE is, where we have six centres," Wormald said.
Under questioning from Labour's Caroline Flint, Donnelly also confirmed that BIS was not planning to place one of its "main centres" in Yorkshire when it leaves Sheffield.
The department would, he said, have a "business-facing centre" in South Wales; a research and institutional funding centre in Swindon; split its higher education student finance presence between Glasgow and Darlington; and then "probably" focus its regulation operations in Birmingham and its further education centre in Coventry.
Asked by Flint whether that meant "nothing in Yorkshire", Donnelly replied: "We have a regional footprint and we have people based in Gateshead."
But that answer failed to placate Flint, who told the perm sec: "My husband's from the North East and I don't think he'd describe Gateshead as Yorkshire".
"BIS still cannot provide a convincing answer"
Responding to Donnelly's PAC evidence, shadow civil service minister Louise Haigh (pictured) – who has been pressing ministers for more detail on the case for the closure – said BIS "still cannot produce a shred of evidence on how moving expert policy posts from Sheffield to London saves money".
"Questioned on why policy staff all need to be in London, the top official at BIS still cannot provide a convincing answer," she told CSW.
"The fact is this is a decision based on the whim of senior officials with an almost evangelical belief that policy making is, by rights, better if it takes place inside the Whitehall bubble. If the government were serious about the Northern Powerhouse agenda they would know how offensive that belief is to people across the North and particularly to the dedicated staff in Sheffield who have performed brilliantly over decades.”
BIS's decision to reorganise its estate comes as the government as a whole looks to close 75% of its offices over the next decade, with departments increasingly moving to shared space.
The Ministry of Justice's perm sec Richard Heaton told the same committee of MPs last week that the Ministry of Justice's Whitehall headquarters would soon be home to "hundreds" rather than "thousands" of civil servants under relocation plans outlined in this month's Budget, and said "only jobs that need to be done in central London" would remain in the capital.
According to the latest data from the Office for National Statistics, 18% of the total civil service workforce is now based in London, up from 16% in 2010. London is the English region with the highest number of civil servants, with around 79,000 employees, while the lowest is the East Midlands with 20,083 officials.
The ONS data shows that, between 2014-15, there were increases in the number of civil servants working London, Yorkshire and the Humber, the West Midlands and overseas, but all other regions saw decreases.