The future of the Newport Passport Office - Welsh Affairs Committee Contents


Written evidence submitted by the Welsh Assembly Government

SUMMARY

  1. The labour market in Newport has performed relatively poorly in recent years with the latest data showing (ILO) unemployment at 9.9%, compared to the average for Wales of 8.4%.
  2. There is also a relatively high claimant count rate in Newport, at 4.7% of the 16-64 population, above the Wales rate of 3.7%.
  3. There is a relatively high dependence on public sector employment, estimated at 28.5% of residents (compared to a figure for the UK of 25.0%); and
  4. Taken together, these factors suggest that the local economy is particularly vulnerable going forward, given the pressure on the public sector.
  5. In addition, specific issues arise in connection with the prospective loss of jobs in Newport city centre, which is currently experiencing severe difficulties, with closure or relocation of prominent "anchor" retailers.
  6. The loss of jobs at the Passport Office (especially if coupled with the loss of customer facing / attracting services) could compound such effects, with potentially severe consequences for the city centre.
  7. To close the Newport Passport Office leaves Wales as the only nation within the United Kingdom and the only "national region" within the European Union not to have its own Passport Office.
  8. The proposal raises questions about the UK Government's commitment to the quality of service to the bilingual population of Wales.
  9. The majority of central Government civil service jobs in Wales are in non-devolved Whitehall Departments. Proposals and actions by individual UK Government Departments risk having an unintended cumulative negative impact in Wales.

PURPOSE

1.  The Committee has said it wishes to examine this issue in line with its remit for those issues which affect the people of Wales. This document outlines the potential impact on the people and communities of the Newport area arising from the proposed closure of the Newport Passport office as part of the UK Government's fiscal consolidation measures.

2.  The approach is to employ the overall spending cuts outlined in Budget 2010 and the subsequent Comprehensive Spending Review (CSR). The figures used are in advance of any refinement on the implications of the spending review at UK level and the completion of the Welsh budget setting process. These, it is expected, will yield more detail on the nature and location of effects.

3.  This document does not repeat the detailed arguments set out in The Case for Newport, the written submission from Newport City Council. However, our own separate analysis fully bears out the points made in that submission.

PUBLIC SECTOR EMPLOYMENT REDUCTION IN WALES

4.  Office of Budget Responsibility estimates, made for the UK as whole, suggest that public sector employment losses in Wales could account for some 5,000 posts in 2011-12 rising to around 30,000 by 2014-15. This would represent about 0.5% and 2.5% of Welsh employment respectively. Taking into account multiplier effects, these numbers might increase to around 8,000 in 2011-12 and 51,000 by 2014-15, representing around 0.5% and 3.0% of Welsh employment.

5.  The area covered by Newport Local Authority is presently towards the higher end of reliance upon public sector employment at 28.5%, it is around the seventh highest within the 22 Welsh Local Authorities, and is well above the UK average.

6.  In the recent past, the devolved Welsh Assembly Government has been able to offer transfer opportunities to civil servants from non-devolved organisations (such as the Passport Office); this has saved the considerable cost of redundancy - some £34,000 per individual - to the taxpayer and has helped maintain levels of economic activity. The impact of the UK Government's fiscal consolidation is upon devolved as well as non devolved jobs and now makes any assistance of this sort improbable in the foreseeable future.

7.  In addition, other employers within the devolved Welsh public services are equally impacted and face considerable job-loss themselves going forward. This includes the Local Authority in Newport and other organisations including in the Health and Education sectors. Together they currently employ some 12,000 to 15,000 people within the Newport area.

8.  Apart from the Passport office, other major, non-devolved UK Government employers with offices in the area include the Department of Work and Pensions/Job Centre Plus (DWP/JCP), the Office for National Statistics (ONS) and the Intellectual Property Office (IPO). Together, these currently employ over 2,900 local residents and, in common with the rest of the public sector, all anticipate reductions in permanent jobs over the next four years.

WIDER IMPLICATIONS

9.  Over Wales as whole, non-devolved, central government civil servants represent some 12% of all public sector employment. The majority of these jobs are in sizeable organisations such as DVLA in Swansea and Companies House in Cardiff. But there is also a widespread DWP/JCP presence as well as a smaller - but in areas with few career options, important - dispersal of bodies such as the Ministry of Justice and the Ministry of Defence. The implications for the well being of Welsh people and the Welsh economy from any precedent set in Newport is now a major issue for the Welsh Assembly Government.

10.  Wales is a bilingual nation. The Newport Passport office currently promotes the full accommodation of the requirements to comply with the Welsh Language Act (1993), particularly the principle that Welsh and English should be treated on the basis of equality in the conduct of public business and the administration of justice. Closing the Passport Office has implications for one of the most distinctive signifiers of national culture and identity across the UK, the living Welsh language.

11.  The closure of the Passport Office would leave Wales as the only nation within the UK without its own Passport Office and this point is also made by Newport City Council in its evidence to the Committee. This matters; not least for reasons of economy, language and identity noted above but also because it would leave Wales as the only EU "national region" without a Passport Office, which raises fundamental questions about the broader commitment of the UK Government.

VULNERABILITY OF NEWPORT

12.  Taken together, vulnerability can be expected to be greater where the public sector accounts for a high share of employment, the labour market is relatively weak and Job Seekers Allowance recipients form a higher share of the population. This is broadly the situation found in Newport with:

  1. an employment rate of 66.3%;
  2. an estimated public sector employment rate of residents of 28.5%; and
  3. an ILO unemployment rate of 9.9%.

13.  The importance of Newport to Wales and the challenges the city faces were recognised by the Welsh Assembly Government and Newport City Council when they established the Urban Regeneration Company Newport Unlimited in 2003. With a mission to work with the public and private sectors, the company's aim is regeneration; it had an instrumental role in the hosting of the Ryder Cup 2010. But such efforts by the Welsh Assembly Government to lift an already economically challenged area face major risks from unforeseen impact where the welfare of Wales is not the first consideration. The loss of jobs from the Passport Office is a case in point.

14.  As noted above, Newport city centre is currently experiencing difficult trading conditions which are likely to be exacerbated by the loss of a major employer and customer-facing service provider. Recent and prospective closures in the main shopping area have included major chains which provide relatively well paid work at the quality end of the retail trade. This is being followed by moves away by other major "anchor" retailers who are looking to relocate to a retail park at the edge of the city.

15.  Although difficult to quantify, the loss of well paid, satisfying employment in public and private sectors is likely to 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 makes the area less attractive to future inward investment.

CONCLUSION

16.  Newport, particularly the city of Newport, is showing clear signs of being vulnerable to economic decline. It is more dependent than most cities upon public sector employment and has a high claimant count and ILO unemployment rate. Without any immediate signs that there is growth within the private sector locally (in fact the opposite picture appears to be emerging) the risk looks significantly higher going forward. The loss of 300 relatively well paid, high value jobs with the closure of the Passport Office could compound such effects, tipping the city centre into a period of decline which will be difficult to reverse.

17.  In addition, the proposed closure raises serious issues about the commitment of the UK Government to Wales, its people, culture and economic sustainability going forward.

November 2010



 
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