Written evidence submitted by Newport
City Council
SUMMARY
- The announced closure by the Identity and Passport
Service (IPS) management of the Newport Passport Office with a
90 day consultation period beginning on 19 October 2010 was completely
unexpected by the workforce, the community of Newport, the City
Council, Newport Unlimited (the publicly funded Urban Regeneration
Company for the city), and the Welsh Assembly Government. The
Council, URC, WAG and other IPS stakeholders had been working
tirelessly behind the scenes over the last three years to assist
IPS in their search for new office space in the area to meet all
the current and future requirements, economically, efficiently
and effectively. This includes vacant space at the former HMRC
Tax Office and also potential empty space at other Newport based
civil service operations, as well as giving consideration to new
and refurbished "fit for purpose" offices in the city
centre.
- Whilst we welcome the commitment by the Rt Hon
Damian Green MP to establish a Customer Service Centre to accommodate
existing customers, we have no clarity as to what the offer
will mean in reality in terms of the impact on staff, customers
or on Newport. Equally, we were not made aware of the criteria
for the IPS operational review and efficiency programme which
seemingly concluded that the application processing function would
be more cost effectively run from elsewhere. Without this information,
it is difficult to be able to counteract such an assessment.
- Although all public services and their budgets
are under pressure in this climate no indication had been given
by the IPS of any threat to the Newport office. Indeed, all indications
had been positive which was not unexpected given the operational
success of the service at Newport. Despite the close working relations
which have grown up between the City Council, the URC and IPS,
the first indication of a threat was the instigation by IPS of
the formal consultation with staff on closure. We thus greatly
welcome the opportunity of the hearings of the Welsh Affairs Committee
to consider the broader adverse economic impact such a closure
of the existing passport application processing office would have
for the people of Newport and the regeneration of the city now
under way.
- It is also an opportunity to outline to central
government and the IPS how retaining the Passport Office with
the full application processing service at Newport will help the
IPS achieve its own business objectives without the costs and
disruption of moving out of the area while also enabling central
government to deliver on its policies of devolving and relocating
key government departments and public services so as to improve
local economic outcomes and reduce worklessness. By closing the
IPS the Government runs the risk of appearing to make savings
on one part of its account whilst actually increasing costs in
another because of the increased welfare payments which will result
from the loss of jobs directly and indirectly arising from this
proposed closure.
- The closure of the current operation would also
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. Newport
has been lifting itself up after decades of decline - and needs
central government decisions to reinforce that effort. Wales itself
needs Newport to succeed economically as the endeavour to raise
the nation's GDP can only succeed if Wales's youngest city achieves
its potential. For Wales to be potentially the only nation in
the UK to lose its Passport Office - delivering equally to a bilingual
nation while providing best-in-class offerings as part of the
overall UK provision - has larger implications even than those
for the economy.
- The Case for Newport
outlines how the City and communities of Newport will be adversely
affected by closure of the current office and how the costs to
IPS will rise while the quality of service to customers in Wales
and beyond may fall. The Case for Newport, however, stresses even
at this stage the desire of the Authority and the URC to work
creatively with IPS to find the right business solution for IPS
itself. We believe that lies in remaining in Newport, providing
the best-in-class services that are provided today.
INTRODUCTION
(1) The unheralded announcement by IPS of the
proposed closure of the Newport Passport Office came as the City,
Wales and the world of golf were celebrating the extraordinary
success of the Ryder Cup. The area was riding high and we all
felt that our efforts to regenerate this great city had received
a great boost. The IPS proposal will set back those efforts and
in particular damage our inward investment objectives which, in
line with UK government policy on devolving government services
and assets, aim to secure more civil service and agency relocations.
Coming after the famous victory at Celtic Manor feels like "one
step forward two steps back".
(2) This is why The Case for Newport set
out here is so important - and important, we submit, not just
for the economy and marketing of Newport and indeed Wales, but
also for the achievement of IPS's own business objectives and
indeed the broad policy objectives of the new UK government. Retention
of the Passport Office at Newport as it operates today is vital
and we will spare no effort in trying to convince those who are
taking the ultimate decision on this proposal that Newport - in
which there are a number of ideal alternative sites if the current
one is no longer deemed appropriate - remains the optimal location
for the full service.
(3) Therefore, this submission will broadly cover
the impact closure would have on:
- The service - losing
highly skilled and experienced public sector workers will impact
adversely on the service, as they have made innovative and significant
contributions to IPS nationally and locally. Their skills, experience,
best practice, and capacity will be lost. Their best-in-class
quality work means they uphold the integrity of the passport office
service and secure the country against fraudulent passport claims.
- Newport - the loss
of well-paid staff with an average salary of £22,000 from
a closure of the application processing function means a reduction
both in overall GDP and in invaluable footfall in the city centre
from service customers which will reduce spend by millions in
the local economy, and affect city centre vibrancy. Newport City
Council together with its partners at Newport Unlimited and WAG
has been focusing all of its efforts over the last five years
on regenerating Newport in terms of its physical environment and
economy and to grow its potential as a regional hub. It has been
successful in attracting over £100m of private and public
investment and created over 1,000 new jobs. With this one closure,
a third of this work will be undone straight away, and our analysis
demonstrates over 500 jobs losses could result in South East Wales
as a direct result. The damage is deeper and longer term than
this however. 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 - a move
which raises question marks over the published rationale of IPS
for exiting the City.
- Wales - the decision
to remove passport application processing from Newport and Wales
as a whole raises fundamental questions about the commitment of
the UK government going forward to maintain existing key offices
in Wales for non-devolved government services let alone relocate
further ones. Economically, Wales, which has seen its GDP decline
in relation to the UK average over the last few years and which
will be seriously impacted by the post-CSR downturn in public
spending, cannot easily absorb this loss of high-value jobs.
THE
SERVICE—A LOYAL
AND CREATIVE
STAFF
(4) Newport Passport Office has always been best
in class. A former passport minister, Meg Hillier, praised the
Newport office staff for their excellent work, their "can-do"
attitude and their exceptional customer care. Newport was the
regional office that always volunteered to do any innovative pilot,
including the fast track system, which has now been rolled out
across the United Kingdom. The exemplary knowledge, expertise
and innovation shown by Newport staff - both in customer service
and application processing - stood out in the IPS by common assent.
This could be wasted - at precisely the time when such loyalty
and creativity will be required by a service under fiscal pressure
- if the Newport Office as it currently operates is closed and
staff are made redundant or dispersed.
(5) The message this sends to civil servants
at this time is the polar opposite of best practice. It says:
the reward for striving for excellence over many years - remembering
many employees have been there all their working lives as there
was little turnover of staff - is the closure of your office and
redundancy. This, moreover, in an area which currently offers
few jobs meeting their skills or salary levels.
(6) There must also be serious concerns over
the security implications of the loss of experienced, high quality
staff from the service. The security of the British Passport -
and thus the safety of UK citizens - is significantly maintained
by the integrity and skills of the staff involved in processing
applications. If the work they do has to be done by fewer - and
less experienced - people, the capacity for error and misjudgement
and therefore security risks must increase as the specialist expertise
that exists in Newport in fraud detection will be lost. Short-term
savings can have long term adverse consequences.
(7) This is a rational concern founded in the
demonstrable success Newport has had in successfully combating
fraudulent passport applications. Newport has been a leader amongst
regional offices in identifying and reducing fraudulent applications.
Having experienced staff with local knowledge - because they are
part of the community - has been at the heart of this success.
Any new approach which over relies on desk research or ICT will
not be as secure as a process which has its basis on staff confidence
that the passport applicant is a genuine one.
(8) We understand the demands currently being
made on agencies and government departments to reduce running
costs and improve efficiency - "more for less". However,
in terms of quality of service and security alone, the proposed
Newport closure in our view will lead just to "less".
We also challenge whether any real savings to the public exchequer
will actually accrue as the net result of the office closure will
be an increased financial burden to the public purse in terms
of unemployment costs and lost productivity (see below). We have
not been made aware of the criteria for the IPS operational review
and efficiency programme which seemingly concluded that the application
processing function would be more cost effectively run from elsewhere.
Without this information, it is difficult to be able to counteract
such an assessment.
(9) It is our view that if the IPS were really
seeking "more for less" from reducing their cost-base,
rationalisation of their property portfolio and modernisation
of customer service and application processing, then that is precisely
why Newport should be the location of choice . Operating costs
- rent and services - are well below UK averages (and radically
lower than London or South East costs) offering great value of
money to the taxpayer. If IPS were looking for better value locations
for more back office processing to reduce overheads, they should
actually be thinking about consolidation in Newport, rather than
retrenchment. That is precisely why other government bodies have
taken advantage of these economic benefits to reduce their service
costs and relocated to Newport such as the Office of National
Statistics (ONS).
(10) The executive office of the UK Statistics
Authority moved its headquarters to Newport, and about 1,300 ONS
staff now live and work in Newport. The Head of Communication
and Planning at the ONS, Dave Sharp, said of the relocation that:
"the government were trying to encourage many civil servants
to leave the South East and we decided this would be a great opportunity
to leave London. So we thought our quality of life has to get
better so we came down here and we found that's exactly what's
happened, we have countryside on our doorstep, we have beaches
down the road and it's fantastic."[6]
Stressing the quality of life that civil servants are currently
able to enjoy in Newport.
(11) We note that the IPS has argued that Newport
is currently operating with an "unsustainable 25 per cent
excess capacity and that detailed analysis found that closing
Newport would result in the greatest reduction of spare capacity
at the lowest cost to the taxpayer". We reject this entire
analysis and the implication that a highly manageable short-term
capacity surplus should have the long term consequences for the
area we have indicated. We also note that this figure may include
Ministry of Justice court service space in the passport office
building that was recently vacated, and as such may not provide
a fair reflection.
(12) The related second error is the assumption
that long-term cost-savings will be made by exiting the City rather
than relocating within the area and indeed locating other more
marginal capacity to Newport. No compelling evidence has been
presented by IPS for this "exit strategy". Nor could
it be, when moving back office staff from England to Newport would
be a much more cost effective way to solve the excess capacity,
as has been successfully shown with the Office of National Statistics
relocation to the area.
(13) In support of this we have data released
by a Freedom of Information request in 2005 comparing the relative
efficiency of the use of space by staff. In terms of "numbers
of staff per m2" of office space, Newport was significantly
ahead of Durham and Glasgow in those terms. Given that in 2008
around 100 staff were made redundant from the Glasgow office,
there is now further excess space there in Glasgow by comparison
with Newport. But it is the latter which is irrationally and inequitably
marked for closure.
(14) Lambert Smith Hampton, commercial property
consultants, have identified Newport as the third best office
location in the UK outside London, in terms of property rental
costs, availability of high quality premises, labour costs, availability
of skilled workforce, and recruitment potential.
(15) There is a wide range of prime office space
available in Newport for the passport office to move into, around
the station, on the outskirts, and new buildings close to the
river, which can cost as little as £8.50-£15.50 a square
foot for grade A office space. The average price for office space
in London's West End - IPS's London office - is around £75
a square foot.
CUSTOMERS—THE
LOSERS
16) We welcome the undertaking to establish a
new Customer Service Centre in Newport. Whilst customers would
still be able to access the passport counter service in Newport
through a new Customer Service Centre in the City, ironically,
there is also evidence that where customers have used Newport
remotely, as it were, by making applications by post, the efficiency
of processing has been such that applications have been turned
around far faster than at other centres. It is hard to see how
customer service for users in Wales and the South West or indeed
outside will actually increase through closure.
(17) Whilst we welcome a commitment to retain
some kind of customer centre in Newport, we stress that Wales
needs its own passport office in order to fully accommodate the
requirements of a bilingual population to comply with the Welsh
Language Act (1993). This states:
"Every public body […] shall prepare
a scheme specifying the measures which it proposes to take, for
the purpose […] of giving effect, so far as is both appropriate
in the circumstances and reasonably practicable, to the principle
that in the conduct of public business and the administration
of justice in Wales the English and Welsh languages should be
treated on a basis of equality."
(18) The IPS would have needed to completely
revise the service's Welsh Language Plan under the Act as Welsh
speaking customers' interests could be endangered with the rapid
downsizing or closure of the Newport passport office, jeopardising
the capacity and the quality of the service they receive in their
own language, given also that the other interview offices in Wales
are marked for closure.
(19) The compassionate application processing
service would be lost from Newport under the proposed closure,
leaving no such processing service within easy reach of Wales
or the South West. The excellent public transport accessibility
currently offered to customers - excellent train and motorway
facilities will be lost to customers with the removal of the processing
service from the building. Customers in Wales and the South West
will lose out on a valued service and this impact could be felt
by applicants across the UK.
NEWPORT—CLOSURE
VERSUS REGENERATION
(20) The closure of the Newport office in its
current location and function (including processing applications)
will have a seriously adverse effect on the economy of the area
at a critical moment in the economic cycle. It will set back the
growth previously worked for and expected from the regeneration
of Newport. We note at this point that, to our knowledge, no economic
impact assessment was undertaken by IPS preceding the decision
to close - an extraordinary fact given the importance of the office
to the area at this time. Indeed, not just the area but the specific
location whose vicinity is the subject of a proposal by Newport
City Council and the publicly funded Urban Regeneration Company
to market the area for a major new retail and mixed use development
which will bring some new economic activity to the town centre.
The presence of the Passport Office with its 300 staff and up
to 800 customers a week (plus the same again who typically accompany
them whilst visiting the area) at the peak was to be an integral
part of that marketing effort.
(21) Based on an assumption that 255-270 net
jobs are to be lost, and some other assumptions around median
salary and passport office customer spend in Newport[7],
we have assessed the potential impact of the job losses for the
South East Wales region. It is important to note that there is
no leakage effect (the impact of the job losses is directly felt
to those who will lose their jobs and it is assumed there will
be no redeployments), and there is no local or regional "displacement"
effect - no other passport office in the region will take on the
work delivered by Newport office. 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. Therefore as Table 1 below demonstrates,
the full effect of the loss of jobs in the passport office could
be 481 jobs.
| Jobs Lost | Sub-region first round multiplier
| Impact of direct job losses | Sub-region second round multiplier
| Final impact of the job losses |
| 255 Passport Office | 1.5
| 383 | 1.15 | 440
|
| 270 Passport Office | 1.5
| 405 | 1.15 | 466
|
| 8.75 Jobs supported by Customers | 1.5
| 13 | 1.15 | 15
|
| Total Impact | |
| | 455-481 jobs
|
* In addition to the passport office staff, an additional
78 subcontractor jobs may be lost that may not be required for
the proposed Customer Service Centre (Steria, Interserve, I.O.N.).
(22) A significant fact here is also the strength of the local
economy. If the local economy was robust with plenty of job opportunities,
then the majority of those who lose their jobs would relatively
soon find their way back into employment. However, if this happens
it will be in the private sector rather than in the public sector
where 490,000 job losses over the next five years have been forecast
by the Office for Budget Responsibility. Given that public sector
employment dependence is higher than the UK average in Newport,
there is less chance of this happening than elsewhere in the UK.
(23) Newport is still recovering from the decline of heavy
industry a decade ago, with the closure of the Llanwern and Ebbw
Vale steel plants and the loss of more than 3,000 jobs. WAG and
the Council have driven regeneration in the area through the urban
regeneration company Newport Unlimited which was set up in 2003
specifically to promote regeneration both in the physical environment
and economy. After five years work, Newport Unlimited in conjunction
with Newport City Council has attracted almost £100 million
of private sector investment into Newport, creating over 1,000
new jobs. Losing the Newport passport office in its current location
and function would undo a third of that work at a stroke. The
Newport economy could potentially yield £100 million from
the Ryder cup and now is the time to maximise that economic legacy.
However, this will be completely undermined by the news of the
passport office partial closure, meaning the momentum of this
opportunity will be lost.
(24) Newport is seeking a quality private sector developer
to take forward its long awaited retail scheme at Friars Walk
for a shopping centre which will bring further investment and
economic growth to the city centre and would be sorely disappointed
with the dramatically reduced footfall. Some key retail anchors
have already announced their intentions not to renew their leases,
such as Marks and Spencer, Next and Monsoon. Newport really needs
to make the scheme work to bring vitality back into the City centre,
and stop the leakage that has been occurring to nearby Cardiff
or Bristol. Market confidence will be further undermined by the
potential closure of the function as it currently operates with
fundamental repercussions for the council on their retail development.
The argument that the private sector will step in to provide replacement
jobs is incorrect, as the private sector is already shrinking.
The private sector in Newport is not crowded out by the presence
of public bodies, they actually rely on that presence.
(25) Newport Unlimited along with Newport City Council has
been striving to bring together the public sector in Newport to
improve efficiency, avoid duplication by joining up services whilst
aiming overall for increased economic growth for Newport. This
does not show public sector solidarity as closure of the current
full function would mean fundamental adverse impacts to all that
Newport Unlimited has been trying to achieve, the investment it
has already put in, and the increased burden on other public sector
in terms of benefits, welfare to work programmes, and reduced
footfall in the city making for a less vibrant city centre.
(26) It has had to work hard at diversifying its economic
base by trying to attract businesses from different sectors to
the area and has been rewarded in its efforts with the arrival
of several major employers with national and international presence
such as Next Generation Data, Cassidian, Yell, and Admiral. Newport
is becoming to be known as a place to come to do business as it
has great transport and accessibility routes (under two hours
from London with trains leaving every half hour, 35 minutes from
the International airport Cardiff) low operating costs, and a
high quality lower cost labour force with no weighted living allowance
requirements.
(27) However, this is a hard fought for and still vulnerable
reputation which could be badly affected by the Passport office
closure of the current function and opening of a Customer Service
Centre, particularly as it was a cornerstone of Newport's portfolio
for attracting other public sector bodies as well as further private
sector businesses to re-locate.
WALES
(28) We understand that the Welsh Assembly Government was
not consulted ahead of the closure announcement, which is behaviour
not likely to strengthen the relationship between the nations
of this "United" Kingdom.
(29) The closure of the full service will negatively impound
the post Ryder-cup effect on Newport itself, and also the surrounding
areas.
(30) The closure announcement came before the Comprehensive
Spending Review, which is itself very challenging for Wales, with
the cancellation of several key strategic projects that would
bring investment and jobs to Wales. For example, the cancellation
of the £14 billion project to centralise the Armed Forces
training at St Athan in the Vale of Glamorgan, the cancellation
of the £1 billion electrification of the South Wales railway
line from London-Swansea, and the prison for North Wales to name
a few. These announcements compound the impact for Wales on the
proposed closure of the passport office with its current functions.
Wales needs some positive investment news from the UK government
and we believe the retention of the passport office in full offers
a realistic example of that. Especially since Newport provides
such a positive environment for relocated government departments
and indeed Wales.
NEXT STEPS
AND RECOMMENDED
ACTIONS—MAKING
THE CASE
FOR NEWPORT
(31) Newport City Council would be keen to present our case
for Newport at a hearing of the Welsh Affairs Committee.
(32) Whilst we have been very robust in our opposition to
closure, Newport City Council and its stakeholders are very keen
to continue to work with the IPS to find the right solution for
IPS in terms of new accommodation, quality service and reduction
of overhead and operating costs and feel confident that Newport
can provide that solution.
(33) Newport offers:
- A strategic location on the M4 motorway ideally positioned
between the cities of Bristol and Cardiff;
- Easy road and rail access to London (in under two hours),
the South East of England and the Midlands;
- Excellent quality of life, on the doorstop of the most beautiful
part of the country such as the Usk and Wye Valleys and Brecon
Beacons;
- Strong heritage, arts and environment and sporting facilities;
- Competitive property prices;
- World leaders in manufacturing, distribution/logistics, financial/business
services and public sector operations are all located here; and
- Flexible and high quality office space at reasonable rents
from £8.50-£15.50 per square foot.
(34) We would wish the Welsh and UK government to consider
in the worst case scenario how it is going to assist Newport to
fill this gap in its economy and ensure the impact on its ambitious
regeneration and inward investment programme is not adversely
affected. It would of course seek support for other public sector
relocations from London or elsewhere in the UK.
(35) We would hope that the Welsh Affairs Committee would
present the evidence given here by Newport City Council to the
Rt Hon Damian Green who has publicly committed to undertake an
impact assessment of this proposed closure. We believe the compelling
case for full retention has been made.
3 November 2010
6
In Newport Unlimited, "Newport - Twenty Four Seven: Open
for business around the clock", p.12. Back
7
A median salary of £22,100, an average customer/visitor spend
of £10 per head and the spend by staff living within 10 miles
of Newport city centre. This spend equates to at least £350,000
and could therefore reasonably be said to equate to 8.75 jobs
being supported in the local area. Back
|
