4 The Economic Impact of the Proposed
Closure
Job Losses
31. 28.5% of Newport residents are employed in the
public sector, "above the UK average"[33]
of 25.0%. This figure is the seventh highest within the 22 Welsh
Local Authorities. The Newport Passport Office is the second largest
employer in the city centre.
32. The Minister estimated that direct job losses
in the Newport Passport Office would be two hundred and fifty
people,[34] while the
retention of a customer counter service would mean the retention
of between "30 to 45" jobs,[35]
based on a requirement for 32 full-time equivalent staff.[36]
33. Witnesses described the economic impact of the
closure of the passport application processing centre as "huge".[37]
Newport City Council estimated that potential job losses in the
South East Wales region caused by the closure of the office could
be nearer 500 jobs:
Our assessment demonstrates that taking into account
the immediate spend of customers (and those who accompany them)
as well as staff, the impact is far wider, for example such spend
supports local retailers who in turn purchase other goods. This
significantly impacts the viability of the local retail offer.[38]
34. Sarah Rapson, Chief Executive of IPS, set out
what plans were in place to help staff to find alternative employment:
… we will, over the next period of months, provide
training and support in terms of CV writing, in terms of job application
completion and interview practice—some practical support
for people. We will also provide a counselling service, so emotional
support for people who are going through the change. I have some
HR professionals who will work in the local area with other Government
Departments or local employers to see what opportunities there
might be for people to be redeployed into.[39]
35. Despite this, many witnesses expressed concern
that it would not be possible for those losing their jobs to find
alternative employment due to the current weakness of the local
economy. PCS commented that it would be "virtually impossible"
to redeploy staff to other Government departments in the current
environment with all departments expected to make budget cuts
following the Comprehensive Spending Review: [40]
Virtually all other public sector workplaces in South
Wales will also be facing 'downsizing'—if not outright closure—and
the prospects for redeployment or alternative employment in the
area are slim indeed. The result will be impoverishment for members
of staff who lose their jobs. IPS management—and, by extension,
the Government—are showing scant regard for the well-being
of their own employees.[41]
36. We also received evidence that, in the short
term at least, the private sector would not be able to soak up
the loss of jobs from the public sector, with Newport currently
experiencing "difficult trading conditions".[42]
Within the city centre, major businesses such as Marks and Spencer,
Monsoon and Next have recently announced plans to relocate from
Newport. Newport City Council stated that, "The argument
that the private sector will step in to provide replacement jobs
is incorrect, as the private sector is already shrinking".[43]
In oral evidence to the Committee, Councillor Matthew Evans, Leader
of Newport City Council commented that:
I think one of the economic arguments […] is
that you are likely to outplace fairly highly skilled workers
with high levels of unemployment who will end up claiming benefits
and potentially, economically, that has not been considered.[44]
Economic Impact Assessment
37. Witnesses expressed concern that no Economic
Impact Assessment had been carried out on the effect of the job
losses in Newport.[45]
Alan Brown, IPS Group Secretary for PCS commented that "the
economic impact study, the equality impact study and a whole range
of other studies should have been done before there was any decision
taken. I think it is absolutely back to front the way the whole
process has gone".[46]
On 25 October 2010, the Minister told the House of Commons acknowledged
that an economic impact assessment would be produced shortly:
… the IPS will be producing a full impact assessment,
which will include an assessment of the economic impact of the
loss of approximately 250 jobs. Home Office economists will support
the IPS with that analysis.[47]
Wider Implications
38. The Welsh Assembly Government expressed concern
for the long-term future of Newport, which was already "showing
clear signs of being vulnerable to economic decline".[48]
Newport City Council agreed that the impact of the job losses
were "deeper and longer term" than had been considered
by the Government.[49]
39. Other witnesses commented that the positive effects
of the Ryder Cup, held in Newport, could be negated by the job
losses and damage the potential for inward investment in the City.
Newport City Council believed that:
The closure of the current operation would […]
be a set back for a City which had until a few weeks ago been
riding high on the success of hosting the Ryder Cup, staging a
very successful event on a global stage with an economic legacy
of tangible value within their sights. The work of this City in
marketing itself for inward investment on that international stage
took years to achieve and can be undone by this proposal.[50]
It continued:
Such a decision will unsettle market confidence in
Newport just at the time Newport is seeking a high quality developer
for its multimillion pound city centre retail scheme. Such inward
investment is vital to the city's future from both private and
public sectors. The IPS closure of the current operation and opening
of a smaller customer-service centre would undermine also the
marketing campaign to attract more government department relocations
to the City on the model of the hugely successful move to the
area of the Office for National Statistics …[51]
40. The Welsh Assembly Government agreed that the
closure of the passport application processing centre could impact
upon the "confidence and sense of well-being within the local
community which is then liable to become 'depressed' in the psychological
as well as the financial sense. Such loss of confidence can also
make the area less attractive to future inward investment".[52]
41. The closure
of the passport application processing centre at Newport would
have a significant economic impact on the city. We find it extraordinary
that neither an economic impact assessment nor an equality impact
assessment was undertaken before the decision was announced. We
strongly recommend that the Government publish its Economic Impact
Assessment and Equality Impact Assessment before a final decision
is made and that its findings are fully considered.
42. Wales has
recently suffered from the cancellation of several key strategic
projects which would have brought investment and jobs to Wales,
such as the cancellation of the project to develop the military
training facility at St Athan. In addition, uncertainty remains
about the electrification of the main train line between Swansea
and London. The closure of the passport application processing
centre would be a further blow for the Welsh economy.
33 Ev 39 Back
34
Q 85 Back
35
Q 118 Back
36
Ev 48 Back
37
Ev 17 Back
38
Ev 34 Back
39
Q 103 Back
40
Ev 17 Back
41
Ibid. Back
42
Ev 39 Back
43
Ev 34 Back
44
Q 39 Back
45
Q 25 Back
46
Q 60 Back
47
HC Deb, 25 October 2010, col 137 Back
48
Ev 39 Back
49
Ev 34 Back
50
Ibid. Back
51
Ibid. Back
52
Ev 39 Back
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