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British Telecom Computer Centre,Portsmouth

Volume 69: debated on Wednesday 5 December 1984

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Peter Lloyd.]

12.1 am

I am fortunate to have the opportunity of this Adjournment debate so soon after the unfortunate occurrence in Portsmouth involving the closure of BT's computer centre.

I have the dubious pleasure—if that is the right word —of being the first Member of Parliament to challenge the consequences of BT's privatisation and the effects on employees, many of whom have given BT very loyal service only to find in the opening days of privatisation that their jobs are at risk and that the centre in Portsmouth will close.

I do not believe that the tragic upheaval and trauma facing those people has been seriously considered by the management of BT. Indeed, I do not believe that the Government considered that prior to privatisation. Anyone reading the Act that allowed BT to change hands, would find it very difficult to discover provisions that gave the House any responsibility. Surely, it should have shown some loyalty to the staff who have worked for so long within BT's organisation.

The closure is a double loss for Portsmouth, which has the worst unemployment of anywhere on the south coast and which is desperately trying to encourage the sort of industry represented by that computer centre. The job prospects of the 150 people working at the centre, and of the young people in the area who have been trained in those sophisticated skills, will be lost. Presumably, as far as BT is concerned, they will be lost for ever.

There has been a complete loss of morale among the staff at the computer centre and a waste of good-will. Indeed, that centre had a marvellous industrial relations record and its employees had given loyal and devoted service in the interests of the Government. The waste of public money alone prompted me to write to the Public Accounts Committee, urging it to investigate the closure. About £20 million of the taxpayers' money will go down the tube when the centre closes. That money was hard-earned in the first instance, and, having had the privilege of seeing round the centre, I agree with the employees there that the money was well spent, too. It will now simply be frittered away.

British Telecommunications has behaved in a most deceitful way. The decision was made before privatisation took effect, but was deliberately suppressed. Indeed, I believe that the management of BT came clean only after my final letter to the regional director in which I suggested that unless I received an answer within 14 days I would raise the matter in the House and ask the Minister to confirm what the future of the site was to be.

The decision was deliberately suppressed before privatisation, and carried out afterwards. Adopting a phrase used recently in the House, I would say that BT is playing bingo with other people's money. The real losers will be the employees at the centre.

The centre was brought into being in 1980 after pressure from local Members of Parliament, the staff sides and the regional management of BT. It was opened in 1981 at an initial cost of £500,000 for the building, a conversion and adaptation cost of £1 million and some £7·5 million for the equipment installed at the time. The site was a disused warehouse, so the centre made use of surplus land in the city. It became a centre of employment offering jobs for over 150 people.

According to BT, the centre is recognised as the most cost-effective centre in the country. BT has itself recognised the fact that the work load at the centre is extremely heavy and that it does a good job. Indeed, despite the closure, BT has agreed to spend nearly another £4 million on enhancing the equipment there and will be taking on about another 100 people. It was a sad reflection on the members of the management of BT that in their recent letter to me they made it clear that anyone taken on after next January to cover the workload would be told that the job would be a very short-term experience. The £4 million is to be added to the colossal amount of money already consumed by the centre. It will simply be thrown away.

The centre's work covers an enormous area. It deals with 3·5 million subscribers' accounts and the ordering and work load of 12 telephone areas. The centre is being closed, apparently, because BT wants to adopt a new concept — the front office concept. To arrive at that decision it has had to dabble in new types of computer and to consider different practices in this country and abroad. For instance, BT bought the Cincinnati-Bell system. BT in fact experimented to the tune of about £17 million of taxpayers' money, which has subsequently been written off because the experiment was a complete failure. If BT has learnt nothing else, it should surely have learnt that the centre in Portsmouth is worth saving. Its equipment has been tried and tested. Its staff has responded to the job given to it.

Because of the establishment of the new districts, the need arises to absorb the existing computer centres within BT's new district organisation. A problem thus arises for three of the existing centres— Portsmouth, Derby and Rochdale. The problem has been alleviated in Derby and Rochdale because BT has suggested that, because those centres are close to the areas that they serve, they can be absorbed. It is ludicrous that a company such as BT, which we are told almost daily is in forefront of new technology, finds it impossible to base a computer centre in Portsmouth to communicate with Brighton, which is only 46 miles in one direction, or Southampton, which is 25 miles in the other.

There must be a better way of doing things. The Minister could use his influence with BT management on at least two. The centre could remain open and meet the needs of the south downs district—the new name for the district in which Portsmouth will be based. The distance from Portsmouth to Brighton, the district headquarters, should not pose a problem. If we can cover the world by satellite I am sure that we can bridge 46 miles. The city has well established data communication links. A precedent for that solution has already been set at Derby and Rochdale. The centre can justify its existence as it can cope with the work load. Indeed the south downs district will represent a slight reduction in its work load.

The second solution is that the centre could remain open and meet the computing requirements of the Southampton district. No decision has been made about the Southampton computer site, so it is not too late for BT to designate Portsmouth as the centre which deals with the Southampton area. Such a solution would use existing expertise and capital investment.

I hope that the Government have the wit to recognise that they have an obligation to the centre's employees and to youngsters who need the type of jobs that the Secretary of State for Education and Science constantly tells us people should train for. Our city needs the jobs. The Government should use their influence with BT management in that regard. What proportion of BT computing staff are employed at Portsmouth? How many jobs are likely to be created in BT computing in 1985 and 1986? What guarantees do Portsmouth employees have that they will be selected for those posts? Why is BT unable to use its data communication technology to retain Portsmouth as a centre for Brighton and Southampton when it currently covers areas as far away as Norwich and Cambridge and has data links with sites as far away as Edinburgh? What proportion of the money that is to be spent in the next four or five years developing the front office concept—the real culprit—is needed to retain the Portsmouth centre?

Finally, what will be the total cost of making staff at Portsmouth redundant and the cost of redeployment throughout BT? BT itself suggests that it will cost about £17,000 per employee to transfer staff to other sites. For th staff, many of whom have given 20 years service at the Portsmouth centres, the most annoying aspect is that they will have to apply for their own jobs. Not one of them has the right to have his own job guaranteed to him. That is a very sick, sad state of affairs.

Under the Act the Secretary of State has specific powers to use his influence to instruct the Director General of Telecommunications as to the way in which the service should be run. He has a specific responsibility, given to him by this House, to promote the interests of consumers, purchasers and users. It cannot be beyond the wit of anyone to see that that responsibility must be used to investigate what I consider to be the scandal of the proposed closure of the Portsmouth centre, the absolute waste of countless millions of pounds of taxpayers' money and the writing off and disregard of the loyalty and integrity of the staff.

I am grateful for the opportunity to bring this matter before the House today and I hope that the response will be an initiative by the Government to see whether there is any way in which they can express their concern and their willingness to try to direct British Telecom to retain the Portsmouth centre.

12.16 am

The Parliamentary Under-Secretary of State for Trade and Industry
(Mr. David Trippier)

The hon. Member for Portsmouth, South (Mr. Hancock) has asked for ministerial intervention in the detailed local affairs of a large private sector company and I have listened carefully to all that he has said. I was a little surprised at the somewhat intemperate language of his harsh and, I believe, unfair criticism of British Telecom. I do not wish for a moment to give the impression that it is not right for him to pursue the interests of his constituents in whatever way he sees fit. Nevertheless, although there may well be value in a public airing of a perceived problem, there is no substitute for direct approaches to the management of the company in a case of this kind.

I can answer many of the points that the hon. Gentleman has raised, but on the extremely detailed matters that he raised in the latter part of his speech, although I am anxious to respond, I am afraid that I shall have to look up the details and reply to him by letter.

The hon. Gentleman has already sought a meeting with my right hon. Friend the Secretary of State in the hope of persuading him to intervene but has been told that there is nothing that Ministers at the Department of Trade and Industry can do. It may be helpful if I clothe that rather bare statement with some more general explanation.

The operations of British Telecom, like those of any large employer, are of interest to a wide range of people — individual and business customers, suppliers and employees. There is also room for interest in its operations from the wider standpoint of the role that the company can play in encouraging growth in the economy through its research and development. Individual Members of Parliament may have points to raise wth a company from any of those standpoints, but it is understandable that the aspect that most are quickest to raise concerns decisions affecting employment. Such decisions, however have to be made in the context of the company's overall objectives. Among these, in the case of British Telecom, the provision of an efficient service to customers rightly, in my view, ranks high.

The hon. Member has, I believe, been in correspondence with British Telecom which will no doubt have told him that the local communications services division, the division with the main direct contact with the public, is at present being re-organised—the hon. Member touched on this—into 24 management districts in place of the former 61 areas. I would not think it useful to debate the merits of the new structure here, except to say that British Telecom is satisfied that it will help to make the company more responsive to its customers. That must be welcome to us all. Similarly, I would not see merit in exchanging views on just why one area headquarters is chosen to be the headquarters of one of the new and larger districts, while another is not. Most of us in such a discussion would stick up for the case of the headquarters in or near our own constituency, although we would recognise that there may be good company reasons for preferring another location. It happens that the British Telecom decision has been to make Brighton the headquarters of the south downs British Telecom district rather than Portsmouth, and it also happens that the proposed rundown of the Portsmouth computer centre is part of a similar reorganisation of the computer back-up that the new reorganisation in districts needs.

It is the right of the hon. Member to seek further explanations from the British Telecom management, who will I am sure take careful note of all that is said in tonight's debate. I understand that the British Telecom director concerned, who would be very happy to see the hon. Member, is Mr. Noel Tappenden, who can be contacted at Telecom Centre, Newgate street. I have, however, no reason to suppose that British Telecom has not weighed carefully the points that have been made about the development of the Portsmouth computer centre and the capital expenditure involved in it.

The hon. Member argued in the earlier part of his speech that had British Telecom still been a nationalised industry the Government would have been in a position to intervene in a matter of this kind. Perhaps they would with an Alliance or Labour Government, but it has been this Government's firm policy to give the nationalised industries the maximum possible freedom to reach their own commercial decisions on such matters. Therefore, if this point had been raised two, three or four years ago my answer would have been that this must be a matter for the business judgment of the corporation's board, and I would have invited the hon. Member to take it up with British Telecom direct.

If that were inappropriate then, it is surely doubly inappropriate now. I think that everybody in the country must have noticed that in the past few days British Telecom entered the private sector. It has entered the private sector with more than 2 million small shareholders, considerably more than any other private sector company in the country.

Surely, if this had happened two years ago, the hon. Gentleman, as a responsbile Minister of the Crown, would have wanted to investigate how about £20 million worth of investment since 1980–81 had been written off after such a short time. Would he not have questioned carefully the management of BT about the ethics of doing this, and about the merits of pursuing a policy that will lead the company to spend about £20 million developing another centre in place of the one in Portsmouth?

I am anxious not to encourage the hon. Gentleman to make another speech, but I draw his attention to a number of Adjournment debates in which I have participated, referring specifically to the Post Office, rather than to BT. He will find a common denominator in my replies to those debates, in that I said that we do not interfere in the commercial judgment of the Post Office, which is not privatised.

The Government meant what they said in the prospectus of BT. We said that we did not intend to use our shareholding—to which the hon. Gentleman referred—to intervene in the commercial decisions of the company.

The hon. Member surely cannot expect us to intervene now with the company in what is an entirely commercial decision of its own. It would be a complete breach of faith with those 2 million new private shareholders for us to do so, and I am sure that the hon. Member will understand that.

I understand that British Telecom has replied fairly recently to the hon. Gentleman, setting out its intentions and the arrangements for the full consultation that it has in mind. We should bear in mind also that it is not proposed that the closure should take place until 1988. If the hon. Gentleman and his constituents wish to avail themselves of the opportunity, there can be considerable consultation with the company before then. The hon. Gentleman should understand that it is no good trying to enlist us in his support, and he will understand well that it is not my place to go into the merits of the decision.

The hon. Gentleman has made much of the situation in Portsmouth and its employment problem. I do not deny that problems exist and that they are a source of much concern locally. However, I feel that he does less than justice to the splendid efforts of the Portsmouth city council, of which he is still a member and, by all accounts, an active one.

The city council's promotion of new industrial and commercial developments, together with the encouragement of tourism, have done much to mitigate the effects of the rundown of the naval dockyard, which for so long dominated the local economy. By its diversification, the city council is laying the foundations for future prosperity.

As I am sure the hon. Gentleman well knows, I have had the privilege of visiting Portsmouth on a number of occasions. I have always been struck during these visits by the initiative and enterprise displayed by the city council. These are key ingredients for success.

Many of the initiatives have been on the small firms front, and here I must declare an interest. I have always been conscious when speaking in Portsmouth—where initiatives to help small businesses abound — that I preach to the converted when I tell the City Fathers that this sector is so very important for our future prosperity.

I am sure that the hon. Gentleman will agree that the foundations for future prosperity are being laid locally by the city council. There is an exercise in self-help taking place there. The community is pulling itself up by its bootstraps. For its part, my Department has contributed nearly £3 million in grants under its support for innovation programme towards 19 projects since 1979. It is supporting also the Portsmouth ITEC, as the hon. Gentleman will know.

Our general economic policies are creating the conditions in which businesses of all sizes and types can flourish. Business in Portsmouth, which has the full support of the city council, is well placed to take full advantage of the opportunities that we have created.

I have referred to the hon. Gentleman's suggestion that the Portsmouth computer centre would not be run down if British Telecom were not being privatised. I want to lay stress on the argument that I advanced earlier. I think that the hon. Gentleman's suggestion is entirely wrong. British Telecom's decision arises from its increasingly commercial attitude as it is faced with commercial competition. It is nothing to do with privatisation. The Government can take some responsibility for British Telecom's commercial attitudes, as we have encouraged the competition and appointed the present strong management at British Telecom. To that extent the hon. Gentleman can reasonably lay some of the responsibility for British Telecom's commercial decisions at the Government's door. But the sale of British Telecom to the public is a quite different matter. This complements the decisions taken earlier but does not directly affect the reorganisation of computer services of concern to the hon. Gentleman.

This reorganisation is part of a policy which has brought the public great benefits—a far better service for customers, lower real prices for telecommunication services as a whole and a more efficient management of resources. That must be generally welcomed.

It is important to stress the Government's standpoint in British Telecom and other employers enlarging the number of jobs that they can maintain viably and not shirking the need to make organisational changes where these would enable a more efficient service to be provided. When the modest reductions in employment in British Telecom are considered, thought should be given also to the increased employment resulting from other companies taking advantage of the new competitive environment. As I said earlier, Portsmouth should be well able to take the closure of British Telecom's computing centre in 1988 in its stride.

I shall not intervene in the hon. Gentleman's dispute on behalf of his constituents with British Telecom. I cannot and should not do so, and it would be a breach of faith with the 2 million new shareholders to do so. The hon. Gentleman might like to think how he would convince those many thousands of the 2 million who live in his constituency that it is in their interests for British Telecom to preserve these jobs at any cost. For the power to determine the future of British Telecom has now been transferred to them.

Question put and agreed to.

Adjourned accordingly at half-past Twelve o'clock.