Mr. Bill Olner (in the Chair): Just for the record, because I noticed some bemused faces, we are going by the time on the annunciators in the middle of the Chamber, and not by the time on the others, as they are out of synch.
I present the debate with heartfelt sympathy for the Minister, who has been dragged away from his weekly five-a-side football match, in which he excels. Today, he has been given the opportunity to excel in examining a serious problem. I am sure that he takes it in that spirit.
May I say to the Minister and many others who play five-a-side football that this is a serious issue, in terms not just of single events, but of a whole service that is being provided in this country? There is growing antipathy in certain quarters to what is happening to the services that customers and clients get from different companies, such as banks and insurance companies. I shall explain that later.
From the 1970s onwards, it was clear that call centres were here to stay, because of the internet, modern technology and so on, in the sense that it is possible to access information across the globe by pressing a button or two. In the farming industry, technology put people on the dole for ever more and meant that we did not need agricultural workers. Technology moves things forward, but it has its repercussions.
I got involved in the subject because of events at Norwich Union a few months ago. I must hold my hand up and say that I have a deep passion for its workers. Along with Clive Jenkins and Lady Muriel Turner, I helped to organised them into the Association of Scientific, Technical and Managerial Staffs in the heady days of the 1970s, when white-collar trade unionism was on the up and people suddenly realised that working with a pen did not mean that they should not have proper terms and conditions. We know that white-collar trade unionism became very important. After about 55 mergers, the ASTMS has now become Amicus, and things are not finished yet; merger mania is upon us in the trade union movement as well.
My constituency party has a constituency agreement with Amicus. The union there is vibrant and continues to campaign for the terms and conditions of many people, not only in Norwich, but across the country where the Norwich Union is organised. The Norwich Union is not the Norwich Union any more, because it is part of a bigger company, Aviva, which I believe is the fifth largest insurance company in the country.
Some 4,000 job losses were mentioned a few months ago; Norwich will take about 1,000 of thoseI believe the figure is 850and a large percentage of the 4,000 will be offshored.
That causes great consternation and makes one wonder about the future of a company that at one time took every school leaver in Norwich. People intermarried within the company. When I first went to Norwich it was, in a sense, a one-horse town: people played their sport in the wonderful facilities that they had there; they lived, worked and died there, and so on. Their loyalty and service to that organisation was second to none.
I found it disturbing that the union was informed of what was going to happen only a few minutes before the redundancies were announced. I was informed by the chief executive the night before, at a medical writers awards ceremony in the Tate gallery. Some effort was made to talk to people, but it did not meet the requirement set out by the Department of Trade and Industry, which states:
Companies should consider all the implications before taking offshoring decisions. Stakeholders including their customers, employees and trade unions, should be consulted before decisions are made. UK call centres should not compete with offshore contact centres on the basis of low costs, but they can by improving quality, demonstrating a viable alternative to the inherent risks of offshoring. Evidence suggests that there are a large number of hidden and poorly understood costs associated with offshoring, such as the cost of relocating senior management, travel costs, and customer discontent.
I guess that I accuse the firm of flouting that solid advice and of not engaging in good management employee practice. This has happened at a time when the company is not failingthe chief executive gets about £1.3 million a year, which, although peanuts compared with the pay of some chief executives in FTSE companies in the City of London, is still a large sum. Someone makes a lot of money, as usual, but other people lose their jobs and livelihoods, and others wonder what might happen to them.
Offshoring is a phenomenon that has been taking place not just in Norwich Union, but across the country. Banks and insurance companies have different experiences of how it might be carried out, the relative successes and so on. Regulation of employees in the UK is fairly reasonable and well handled. There is not much concern about that, but there is concern about the same company operating in another country and how regulation does or does notas is the case most of the timehappen.
There are many worries besides the generality of regulation. For example, this weekendI am sure as punishment for raising the debateI received six phone calls from New Delhi telling me that the weather was good in Norwich, that we had just beaten Cardiff City, that Delia was happy and had gone to mass again, and everything in the garden was lovely. I received three silent calls as well. I have a lot of toleranceI will even forgive the Minister for missing open goals when playing for the parliamentary football teambut it is stretched a bit when I receive silent calls or when I get people telling me what the weather is like outside my window.
One wonders what it is all about, why it happens and so on, but one gets used to it and lives with it. People
say, Well, thats the way it is. There is nothing much we can do about it. Indeed, there was an amazing discovery in a leaked document highlighted by The Observer, which found that there is a great apathy in the British population about what people can do about the problem. However, that does not mean that they are happy about it.
One thing about such a debate is that we get peppered by papers from all sorts of sources. Norwich Union is a good friend of mine, on and off, and it has told me its position. It is keen on the global economy and its representatives went to the Chancellors meeting at Downing street last week, so it has some significance and importance in terms of moving things forward on the global front. It thinks that there are benefits of offshoring
in terms of increased capability, greater flexibility and reduced cost.
we do not pretend that all aspects of our offshore customer service are yet 100 per cent. as we would like them.
There are devastating effects of moving people out of positions and jobs in the local community. At a time of high employment, I suppose we can get away with it, but some of my constituents come to see me or sit at football matches in Norwichor, rather, they mostly stand, and that is getting quite ridiculous, incidentallyand say, We are about to be made redundant at Norwich Union. So people are worried about what they will have to do. That does not mean that they cannot find the bus fare to go to watch Norwich City.
Offshoring is a problem not just in Norwich or other parts of this country; it also happens in the United States. Hon. Members will know about its car industry, and that became part of a major debate in the 2004 US presidential election. Businesses there were criticised for offshoring jobs and using them not just as offshore jobs but as tax havens. Taking call centres overseas provides not just the generalities to which Norwich Union referred, but access to a low-wage economy. It also affects VAT and customer satisfaction, which may or may not be present.
My answer to the problem of low wages in countries such as India is simple. I would let a union such as Amicusit negotiates with people in Norwichloose in India so that the people there had the pay rates to ensure that call centres worked efficiently. There has been a reaction in India, and it is not just strikes, but there was a strike there not long after the Norwich events. The work came back to Norwich, where people had to field it because the Indian workers had gone on strike.
Other companies are finding that with increasing demand for better living conditions, wages and so on, they can shift work in the global economywould that Chomsky was believedto many other places, but the fact that work can be moved from England to India is
only part of the matter. It can also be moved from India to the Philippines, as some companies have done, or to China, although the Chinese economy is developing. Companies can play the global market, but at the end of the day people who work for them are disbenefited.
Client satisfaction is important and lack of it, as well as political events, may mean that call centres do not have the future that they were thought to have. I am not a protectionist and I do not maintain that jobs must be British. A global company such as Norwich Union must provide customers with the best service, but there are question marks about that, and not just with companies that have brought services back to Britain because they could be provided better here. I shall briefly explain some of the problems, which I am sure other hon. Members will take up.
Evidence has been produced in several newspapersno one has argued against itthat electronic databases can be sold for a fee. I hear sometimes that that is cheap and sometimes that it is expensive. In this country, we have data protection legislation and we are protected, so we do not have those silly phone calls on Sundays, but databases can be sold and that has happened with offshoring.
I said that people go on strike and work forces do not stay around for long, but work forces in India are well educated and many people are graduates. They stay for about two years and then move on. However, they do not have local knowledge, although we have problems enough with that in this country. I know of a case in Norwich when a 999 call was shunted through Cambridge. The ambulance went to someone who had had a heart attack, but it went to the wrong end of the street, where bollards were blocking it, so it had to go all the way round again and the poor chap died. That was an extreme case, but local knowledge is important. It is also important when trying to get train times. There are limitations on what can be put out to offshore companies. It is not impossible, but it is difficult to find a work force with the knowledge that successful call centres in this country have had for some time.
Consumers are becoming dissatisfied and there is talk about regional accents and not understanding what people are saying. I am not too bothered about that because people usually understand when they want to. They may moan a little, but that is not a major feature, although lack of local knowledge is. There is increasing dissatisfactionI referred to the secret document leaked to The Observerover customer service and the information provided. I shall not quote figures because the survey was not particularly great, but, as Norwich Union acknowledged, it showed that many people are dissatisfied with what is happening. I know that there is dissatisfaction because I know people who have left Norwich Union and have not renewed their house insurance and so on. It is not a major boycott at this stage, but that could happen if dissatisfaction increased. It is important to introduce regulations so that people know that they are receiving the best service.
Customers often feel that they are kept waiting deliberately while the meter is running. Call centres based in the UK feature in advertising as the best, and companies such as Direct Line and NatWest say that
their call centres are based in the UK. More and more companies are bringing call centres back to the UK and providing a better service, and I suggest that that will increase. If we want to prevent such practices, we must stop the non-regulation of selling databases and improve the customer service received by clients, which is not always satisfactory, as Norwich Union admits. Our customers deserve the best service and that can happen with call centres. I am not arguing against call centres in principle, but they must operate professionally and give people the best and most accurate information.
Enforcement of regulations is also important. People may be apathetic at times, but they perceive call centres as tax havens. That rankles when they see companies taking jobs away from places such as Norwich and putting them elsewhere for monetary reasons. Companies argue that that saves money, but they are subtle. They may say that they are taking 1,000 jobs away but creating them in another area. Norwich Union bought up the RAC and provided call centre jobs there. That may look good for work in Norwich, but I believe that offshoring call centres may increase and that more and more jobs will disappear. That has happened two or three times in Norwich and it is slow attrition. No longer can every school leaver expect a job.
I do not think that the world should stay still, but I am not sure that Norwich Unions policy on where it is going and how it will keep its high profile in the community in Norwich is clear to the public. It may build football stands and so on and contribute to charitiesthat is very welcomebut there are questions about its provision of jobs and training.
I referred to data protection legislation, and there is a lot of evidence that data including names and telephone numbers are being transmitted, as well as credit card details. There is also evidence of financial swindles, money being misappropriated from accounts and so on. That happens everywhere in the world, and I am not saying that it happens in one place and not another, but companies should not consider offshoring without considering how to block such problems. There will always be a few Nick Leesons, and I am happy with that as long as we catch them, but I do not want 100 Nick Leesons. The media have picked up on the subject, and they are starting to push it forward. Many people get their information from the media, and fraud and credit card swindles have been documented on programmes such as Dispatches.
If the same company employs people in India, why cannot data protection law be applied to that country? Do we just allow events to happen without negotiation? Norwich Unions position is that it provides a better service, and that there are few such episodes, but we are opening a Pandoras box of more swindle as less regulation is put on the system.
The cost of labour is an issue in developing countries. With the Governments position of helping countries in the developing world, it does not do us any good to make poverty history and then to make poverty by creating in other countries the situations that I described. The regulations and legislation must be analysed, and union interaction with the company
should be at its best. The Department for Trade and Industrys best position was put forward in 2003, and it seems to be slipping away.
I am cynical and old enough to know that companies do not really care; they will do what they can. In the House later today, we will discuss Enron and the absolute swindles that take place. There are also minor swindles. The more we stamp them out, the better the world will be. It means dealing not only with the problem in our country, but with our relationships with other countries. I welcome those relationships and the interchange of professionals, but a company cannot behave one way in one country and a different way in another.
We do not have regulation, but self-regulation, and it does not work. The problem will grow because of the lack of regulation. As long as there is money and transactions, the Nick Leeson society will be with us, and it takes a lot of time and energy to prevent it. Many companies that go down the road of offshoring come back again, because they find that it does not have the advantage of saving costs. If we are not to go down that same road, we must address the problem now.
There have been many debates in the Chamber about the problem, and things have been done about telephone numbers and so on. I am not saying that the Government have failed to recognise the problems, but we need a serious inquiry and examination into what is happening. We want to ensure that employees do not learn on local radio that they are going to be made redundant, as happened in Norwich, and that proper consultation takes place. It may be that we can effect an arrangement that makes people want to work in another country, because the terms and conditions, including pensions, are not maligned by pursuing that path.
We are on the edge of the precipice, and I ask the Minister to set up an inquiry to prevent any further disillusionment among the public about the services that they receive, be they from a bank or from an insurance company.
The debate is particularly important given that Norwich Union, which is close to the hon. Gentlemans heart, has shed 4,000 jobs. While I was doing some research for this debate, I was intrigued to discover that on 24 September The Observer considered whether overseas sourcing of call centres resulted in a cheaper product for the customerthe justification that many organisations such as Norwich Union, or Aviva as it is now known, produce. Interestingly, The Observer discovered that on car insurance, Norwich Union was three times more expensive than the cheapest company, Direct Line, which has all its call centres in the United Kingdom. It is questionable whether cost savings translate into better customer service.