Martin Donnelly: BIS Sheffield closure could save more than £14m

Donnelly says department is spending £168,000 a year on putting Sheffield and London staff up in hotels – but local MP Paul Blomfield says the BIS perm sec's latest answers give only a "half truth"

By matt.foster

22 Apr 2016

Martin Donnelly, permanent secretary of the Department for Business, Innovation and Skills has said BIS's plan to close its Sheffield site could save over £14m, after two committee chairs accused him of "impeding" their scrutiny of the controversial proposal.

BIS's executive committee will make a formal decision in May on whether to leave its Sheffield site, which would leave the department with a single policy team in its London HQ and potentially put 240 jobs at risk.

The department argues that the move will bring BIS's policy operations closer to ministers, and contribute to its pledge to shear £350m from its running costs over the course of the parliament. But MPs have argued that the move will undermine the government's promise to hand more power away from Whitehall, while civil service union PCS is set to ballot its BIS Sheffield members on potential strike action next week.

BIS Sheffield closure: committee chairs accuse perm sec Martin Donnelly of "impeding" scrutiny
BIS Sheffield closure: PCS union mulls strike as perm sec Martin Donnelly defends plans
Unions attack plans to close Department for Business, Innovation and Skills’ office in Sheffield

Public Accounts Committee chair Meg Hillier and Iain Wright, the fellow Labour MP who chairs parliament's Business, Innovation and Skills (BIS) select committee, this week wrote to the BIS perm sec saying he had provided "wholly unsatisfactory" information on its reorganisation plans, and demanded sight of a leaked BIS internal document showing that the department is considering plans drawn up by consultants McKinsey to cut its workforce by more than 4,000 over the course of the parliament.

They added: "Your refusal to disclose the information we have sought is unhelpful, unjustified and is impeding our ability to fulfil our scrutiny functions."

In his response to the senior MPs – which has been made public on BIS's website – Donnelly stresses that he is "unable to comment on a leaked document". 

But he says BIS's estate closure plans "were not formed on the basis of any individual business case for a single location" and says no formal cost-benefit analysis has been carried out by the department.

"This was not a formal cost benefit analysis, in the terms set out in Treasury guidance" – Martin Donnelly

He adds: "Our internal work uses the annual costs of running the Sheffield office to illustrate the range of permanent, annual savings under different scenarios for staff replacement (including no replacement, ie the maximum potential annual saving). This was not a formal cost benefit analysis, in the terms set out in Treasury guidance. It did not consider the one-off costs of transition including redundancies, which remain subject to decisions following the conclusion of the consultation."

However, Donnelly is able to provide the MPs with "smaller, more detailed costs associated with the proposals", including an estimate that the "maximum permanent savings" achievable by the Sheffield closure are more than £14.5m "if the office is closed and no staff replaced".

That total is reached by adding up £12.8m in staffing costs; £890,000 a year in rent, rates and maintenance for the St Paul's Place site; £460,000 a year in rail costs between London and Sheffield; and £168,000 a year the department says it spends in putting Sheffield and London staff up in hotels. It also includes £249,000 in "relevant IT costs".

“It’s not just how much Sheffield costs, but how much more expensive it will be to move those posts to London," – Sheffield Central MP Paul Blomfield

But Labour MP Paul Blomfield, whose Sheffield Central constituency includes the BIS site, said Donnelly's answers gave only a "half truth".

“It’s not just how much Sheffield costs, but how much more expensive it will be to move those posts to London," he told The Guardian.

"So far we’ve discovered that, in rent, rates and maintenance alone, it’s going to be an extra £1.6m a year. After salary and other costs it could be around £2.5m.

“Ministers said they’re confident that many of the workers will move with the jobs down to London. The costings in Mr Donnelly’s latest letter deliberately disregard this. I will not let them get away with this. I want the whole truth so that I can make my case to keep the jobs in Sheffield.”

Donnelly will face further questioning on the closure plan when he appears before the Public Accounts Committee again next week.

The department has vowed to reduce its overall running costs by £350m during the current parliament, although this month's leaked document suggests that this goes £100m further than the cuts required by the Treasury. BIS has already vowed to shrink its estate from 80 sites to just "seven or eight" in the next few years.

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