Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watts.]
Thank you, Mr. Olner. That was observant at this time of the morning.
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 those—I believe the figure is 850—and 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 failing—the 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 not—as is the case most of the time—happen.
There are many worries besides the generality of regulation. For example, this weekend—I am sure as punishment for raising the debate—I 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 tolerance—I will even forgive the Minister for missing open goals when playing for the parliamentary football team—but 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, that’s 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 Chancellor’s 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.”
I think that Amicus disagrees with that, and there is a lot of argument going on about who is right and who is wrong. However, Norwich Union admits that
“we do not pretend that all aspects of our offshore customer service are yet 100 per cent. as we would like them”.
Although it thinks that there is an improvement in customer services, it acknowledges that there are several problems, of which I have illustrated just a few.
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 Norwich—or, rather, they mostly stand, and that is getting quite ridiculous, incidentally—and 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 Amicus—it negotiates with people in Norwich—loose 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 economy—would that Chomsky was believed—to 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 newspapers—no one has argued against it—that 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 dissatisfaction—I referred to the secret document leaked to The Observer—over 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 Union’s 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 charities—that is very welcome—but 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 Union’s position is that it provides a better service, and that there are few such episodes, but we are opening a Pandora’s box of more swindle as less regulation is put on the system.
The cost of labour is an issue in developing countries. With the Government’s 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 Industry’s 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.
I echo all the points that the hon. Member for Norwich, North (Dr. Gibson) has made, and I congratulate him on bringing this important debate to Parliament today.
The debate is particularly important given that Norwich Union, which is close to the hon. Gentleman’s 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 customer—the 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.
The hon. Gentleman touched on the effect on the economy. I am concerned about the effects on women, because call centres can offer flexible and part-time work. However, there have also been repercussions for their male counterparts, who tend to predominate in backroom business processing. I was also interested to discover that the Department for Trade and Industry has estimated that 200,000 extra jobs will be created in call centres in the next three years, which is somewhat contradictory to the doom and gloom that we have heard about. I shall be interested to hear from the Minister how that will translate in the United Kingdom’s economy.
My hon. Friend knows about the importance of the sector to us in Wales, with 30,000 jobs based in the south-east corner of the country. Does my hon. Friend agree that with the inevitable growth of offshoring, a far more robust regulatory regime is needed? The hon. Member for Norwich, North (Dr. Gibson) agrees, and so do I. My hon. Friend has read the same reports as I have about illegal buying and selling of personal information in India. Does she agree that the fundamental point for consumers is local knowledge and information? When one represents a constituency such as mine, which includes towns with colourful names such as Pontrhydfendigaid and Aberystwyth, and which adjoins constituencies with towns such as Machynlleth, local knowledge that responds to customer need is important.
I am grateful to my hon. Friend the Member for Ceredigion (Mark Williams) for his informed intervention. The points that he makes are right.
Customer satisfaction and local knowledge are important. Returning to the Norwich Union example, the research that the company undertook before outsourcing its jobs discovered that 51 per cent. of respondents were appalled at the prospect of outsourcing call centres abroad. However, it does not seem to have had any effect on the company’s final decision.
I am particularly concerned about disadvantaged individuals such as people from poorer backgrounds and those, like myself, who suffer from blood pressure problems. I am sorry to say that with call centres in the United Kingdom, including, I am sorry to say sometimes Government call centres, blood pressure can be a real problem. One must be emotionally calm and well psyched up before calling, so that one does not end up—in my case—cross, tearful or both by the end of the call, as a result of frustration at being unable to obtain the information that one needs, or even to get through to the individual whom one needs to speak to, in a reasonable amount of time.
The quality of the information that is given has also been called into question. Call centres are not regulated for their quality of financial advice, as banks are. In The Guardian on 18 October, there was an article about misleading advice given by a call centre on individual voluntary arrangements. The individuals who gave the advice stood to benefit from giving that advice. Obviously, the quality of the advice given must be monitored scrupulously.
Telemarketing is a £4 billion industry in the United Kingdom. There is a big challenge for telemarketing companies, because 13 million people are registered with the telephone preference service. If the hon. Gentleman wishes to see me afterwards I shall give him the details of how he can register, but I suspect that he is interested to find out what unsolicited calls he will get. Will the Minister comment on the idea that seems to be gaining ground in the field of telemarketing that, rather than people having to opt out of receiving cold calls, the Government should consider introducing legislation whereby people have to opt in? That would be beneficial for the telemarketing companies, which are fishing in a smaller and smaller pool. If they were fishing in a pool that wanted to be fished, that might benefit both the blood pressure of residents who do not want to receive cold calls and the marketing companies, who would be fishing more productively.
It would not be right for me to finish without mentioning silent calls, which were the subject of a Westminster Hall debate in March. The Government target of 3 per cent. for abandoned calls is welcome, as are the requirements that before a call is ended there must be a recorded message and that the number must be accessible on 1471. The fine has been increased from £5,000 to £50,000 but—it is a very big “but”—regulation will not work unless it is enforced. I am sorry to say that, following the criticisms levelled at Ofcom about the enforcement of rules on silent calls and other such matters, there is little evidence that the situation has improved. I hope that the Minister will be able to reassure me by giving examples of cases in which Ofcom has prosecuted somebody for the iniquitous practices that cause so much distress to local people.
I start by congratulating the hon. Member for Norwich, North (Dr. Gibson) on securing this debate and on introducing it in his customary style, which is always a delight to listen to. I doubt that any other Member of the House could bring Amicus, Norwich City football club and Chomsky into a debate on call centres. He always enlivens, entertains and educates us, and I pay tribute to him for raising issues on which every hon. Member and their constituents would agree. None of us have had letters from constituents saying how well call centres work and what a wonderful service they get from them. We get a considerable amount of correspondence, including e-mails, about their failings and the need for them to improve.
As the hon. Gentleman explained, the background to this debate is the decision of Norwich Union to outsource a significant amount of its call centre activity, reducing its work force in that field by some 11 per cent. I understand that it is not happening only in Norwich, although 850 of the 4,000 jobs will be lost there. There will also be reductions in York, Glasgow, Sheffield, Cambridge, Perth, Newcastle, Eastleigh, Stevenage, Bristol, Worthing, Belfast and Birmingham. The list sounds rather like a cross-country train journey with Virgin Trains. A massive number of centres will be affected.
We understand why Norwich Union felt it necessary to make such changes. I shall come on to issues of good practice shortly, but we recognise the competitiveness of the world in which Norwich Union operates and understand why such decisions have to be made. They are not easy, but for the future viability and vitality of a company, the decision to move offshore must sometimes be made. Norwich Union’s follows similar decisions taken by companies such as Royal & SunAlliance, which announced in June that it would cut 1,500 jobs in its call centres by 2008.
We should consider such announcements against the background of the call centre industry in this country, which has been a significant success story. It contributed £17 billion to the UK economy last year, so it is an extremely large and important contributor to our national wealth. Astonishingly, it is predicted that by 2007, more than 1 million people—4 per cent. of the UK working population—will be employed in call centres. It is important for the industry to realise that we recognise the important contribution that it can make. The Secretary of State for Health, when she was Secretary of State for Trade and Industry, said that we had a “vibrant call centre industry” and that the Government were keen to encourage it.
Much of the debate on outsourcing focuses on India, but we should not lose sight of the fact that it is a global industry. Call centre expertise is being developed in the Czech Republic, Poland, Romania, South Africa and elsewhere. When considering India, we often tend to think that people outsource activity there only because they believe it will be cheaper. If one speaks to the Indian companies involved, one finds out that they do not see that as being their remit at all. They want to be involved in a high-value industry that attracts graduates and highly qualified people, often in working conditions that are much better than can be found in other parts of India. My right hon. Friend the Leader of the Opposition, when he was in India recently, spoke to someone who heads up a major call centre about his global plans. He was told, “Yes, we are investing globally. Our next planned location is in Northern Ireland.” Indian call centre companies are therefore investing back into the United Kingdom. We must not let the debate centre around the idea that outsourcing is just a matter of cheap labour. Companies would lose their customers if they were not able to provide a good-quality service.
There are undoubted problems with the way in which the industry operates in the United Kingdom. It is estimated that call centres in the private sector are working at between 10 per cent. and 35 per cent. below optimum efficiency. Some 55 per cent. of companies operating call centres have reported difficulty in recruiting the right staff, which leads to a high level of staff turnover. It is estimated that 85 per cent. of direct corporate customer communication is via the phone. Most people employed in call centres are between the ages of 18 and 25 and we all recognise, perhaps from our own children, that those are not the people best able to communicate with adults on the telephone. My children will take me to task on that, but a wider range of ages needs to be represented.
The problems are worse in public sector call centres, which are estimated to be under-performing by 50 per cent. In 2005, the Department for Work and Pensions announced that there had been 13 million abandoned calls in its call centres. The industry association, the Customer Contact Association, carried out an assignment for the General Social Care Council in 2005 and was able to increase productivity by a staggering 1,500 per cent.—that is fifteenfold—in just 30 days. An assessment of the Royal Mail Group’s contact centres in 2004 indicated an opportunity to save £27 million, out of a total spend of £88 million. As Members of Parliament, we consistently come across Government call centres, be they for tax credits or the Child Support Agency, that are simply not working as well as they should. It is easy to see that there has been under-investment in employees and employee relations, and that the service delivered is not as good as it should be.
There are also other concerns. Too often people find that the location of the call centre is concealed. I received a phone call a few weekends ago. I asked the person where they were calling from and they said, “We’re calling out of Watford.” I said, “That sounds rather strange. Where do you mean? Are you in Watford or just outside it?” He replied, “No, we’re in India”, which I thought took the description ‘out of Watford’ a little further than one would have wished. Perhaps there is a Watford near Delhi, although I have not come across it yet.
When I tried to follow the call up and find out how the company had got my details, I was put through to a number that was unobtainable. I dialled 1471, got through to a recorded message and left a message two or three times, but I have never received a call back about where the company got my details. What people find unacceptable is such deception—that is a fair enough word to use—and people pretending that they are calling from somewhere relatively nearby when they are half way round the globe.
More has to be done to address working conditions. Call centres are sometimes described as the coal mines of the 21st century. If they are to be part of a truly vital industry, we must ensure that working conditions are the best that they can be. Staff turnover across the industry is approximately 30 per cent., which leads to huge training costs and problems keeping people motivated. Paying more attention to the working and employment conditions might help to address those issues. We also hear concerns about staff being required to meet impossible targets, with little time for comfort breaks or any break away from the telephone. There are also health and safety concerns. The time spent working on calls and at computers should be limited to 60 per cent. of a day, although 90 per cent. targets are not uncommon in the sector.
The hon. Members for Norwich, North and for Solihull (Lorely Burt) both raised the issue of silent calls, which we must without doubt do more to address. The hon. Lady referred to a debate from earlier this year. Indeed, a statutory instrument was introduced towards the end last year that addressed some of the issues relating to silent calls. It is extremely disappointing that, despite the issues that were raised then, the commitments that were given by the then Minister, the right hon. Member for Cardiff, South and Penarth (Alun Michael), have simply not been implemented. He said that any abandoned calls must carry a recorded message that identifies the source of the call. My understanding is that Ofcom is no longer rigorous in requiring that.
We all asked in that debate what the purpose was of increasing the threshold of the fines by so much if no one had ever been fined at the lower level. We were told that the higher fine was needed to make the legal actions and the work involved worth while. It is now many months since that higher fine was implemented, but as far as I am aware Ofcom has still taken no action against a single person making silent calls.
People feel extremely uneasy when they receive a silent call, particularly older people and women. Silent calls make them anxious, and it is little wonder that, as the hon. Member for Solihull said, some 12 million to 13 million people have registered their numbers with the telephone preference service to ensure that they do not receive unwanted phone calls. However, there are powers available, and we would like to hear from the Minister how the Government can ensure that they use them effectively.
Call centres are a substantial industry, with the potential to become even greater. Call centres are evolving into contact centres, which also provide a range of back-office services, so that more information and support can be given in the course of a call. It is quite possible that the number of call centres in this country will increase by about a half over the next few years. However, if that is to happen, there must be more investment in staff, so that they are better qualified, and working conditions must be improved. Measures must be put in place to reduce the high staff turnover. We must also recognise that without that investment we will not see the high quality of service that we want.
There are two aspects to the issue, one of which is good practice. The hon. Member for Norwich, North referred to the fact that the trade union was not advised of the redundancies until the day they were announced, which is an example of bad practice. There is good practice, which can be implemented through the industry itself, but there are also aspects that need to be addressed through regulation. I have already mentioned silent calls and integrity, whereby people are honest about where they are calling from, but callers should also be clear about where people’s details have been obtained. Invariably, if one asks, “Well where did you get this number from?”, the caller will say, “It’s publicly available”, even if one knows jolly well that it is not a listed telephone number and so is not publicly available. Callers will never say where they get people’s details from. It would be quite appropriate for regulation to be put in place, so that the person receiving the call has an absolute right to know where their information has been passed on from, which would be entirely in keeping with data protection legislation.
Regulation may also be required on the cost of calls. Many of us have no idea whether we are being charged when making a call to a call centre or what the charge rate should be. Call centres should be up front about charges the moment callers are connected, perhaps saying, “This call is going to cost a certain amount of money a minute,” so that people are in no doubt how much they are paying.
Finally, I hope that the Minister will be able to deal with some of the international scams. He may have caught a report on the “Today” programme this morning about a call centre operating in Holland that rang people up and encouraged them to buy dubious stocks that were a bad investment or stocks that did not exist. A number of people, particularly older people, have fallen for the operation, but because it operated from Holland it has been extremely difficult for action to be taken against it. We want to know that the Government are taking action on an international scale, as the industry is international.
Above all, however, some of the issues can be addressed by the industry itself. At the end of the day, call centres must recognise what their customers want. Customers will go along with call centres abroad, as long as the calls are handled in a way that is polite and courteous, meets their needs and does not harass them. The industry has huge potential, but it needs to improve its act if it is to achieve that potential.
It is a pleasure to see you in the Chair, Mr. Olner, and I congratulate my hon. Friend the Member for Norwich, North (Dr. Gibson) on securing this opportunity to debate the important matter of call centres. I would normally also thank him for the opportunity to address the Chamber, but he has delayed my return to five-a-side football by at least another week after my recent operation, as he said, so I am not very appreciative this morning. However, the issue is important and I am grateful to be here. I am also grateful for the contributions by the hon. Members for Solihull (Lorely Burt) and for Wealden (Charles Hendry).
In the past decade, call centres have become part of daily life, whether we want to pay a bill, make a service appointment or contact the bank. We come across them in a variety of different roles, from direct selling to customer relationship management, and they are used by nearly all commercial and industrial sectors, and by the public sector, to reach their customers.
There are more than 5,000 call centres in the UK, employing nearly 800,000 people. Many of those jobs have been created in areas of high unemployment. According to a recent Office for National Statistics study, in the three years between 2001 and 2004, employment in IT and call centres grew twice as rapidly as overall UK employment. This country’s open and competitive markets, our flexible labour laws, our relatively low costs, our advanced telecommunications infrastructure, and our business and management expertise have encouraged that success. In fact, the UK is the leading location for call centres in Europe.
I appreciate that from time to time callers to a centre experience poor customer service. People who experience a lack of service are quite rightly vocal—I dare say much more so than those who are satisfied with the service—when they make criticisms, but that is human nature, given the point that the hon. Member for Wealden made.
I apologise for arriving late—I was detained on my way here. Does the Minister agree that call centres could and should improve their reputation and acceptability, and that one way of doing so would be for the Government and the industry to encourage more people to sign up to the telephone preference service? That would cut down the number of unsolicited sales calls, which are particularly annoying, thereby boosting customer confidence in such an important sector of our economy.
The hon. Gentleman raises a similar point to that made by the hon. Member for Solihull, who suggested that the polarity should be reversed and that people should volunteer to be called, rather than excluding themselves. I shall come to that later, but there is a method through which people can exclude themselves from being called. The hon. Lady’s analogy of people volunteering to be fished from a pool sounded a bit like turkeys voting for Christmas; I am not sure that anybody is likely to go down that road. Nevertheless, she made a valid point to which I shall return shortly.
Responsible companies recognise the valuable part that their call centres play in growing business and delivering customer satisfaction. Organisations such as the Customer Contact Association are playing their part; it has set its membership ever-higher standards of skills training and quality customer care. The association is piloting for the industry a voluntary kite mark that will assist in raising standards.
As has been mentioned by my hon. Friend the Member for Norwich, North and other contributors, call centres have been criticised for the proliferation of unsolicited direct marketing telephone calls. I can certainly appreciate the nuisance and inconvenience that such calls cause. They are usually made through a computerised calling device that dials the telephone number and automatically connects to a sales agent or provides a recorded message when the call is answered. Although the machines allegedly give efficiency savings to the company, they can be very irritating to those who receive calls—especially when there is no message, as my hon. Friend said.
The Government listened to complaints and took action accordingly. Under the Privacy and Electronic Communications Regulations 2003, no one is allowed to make an unsolicited direct marketing call to a subscriber who has previously notified them that they do not wish to receive such calls or to someone who has been registered with the telephone preference service for at least 28 days. The telephone preference service is an industry-run opt-out scheme, operated by the Direct Marketing Association.
Responsibility for the enforcement of the regulations rests with the Information Commissioner’s office and is drawn from the Data Protection Act 1998. Breaching an enforcement notice is a criminal offence subject to a substantial fine—recently raised from £5,000 to £50,000—in a magistrates court. I have heard the criticism, made by the hon. Member for Wealden, of silent calls. I shall look into his point about Ofcom’s role in monitoring and enforcing the regulations.
Protection of personal data is another vital issue, and it has been raised by all speakers in the debate. Many people are rightly cautious about revealing their details to organisations, not least because of the newspaper articles and television programmes that have exposed instances of alleged malpractice by call centre staff in this country and abroad.
However, wherever their operations are based, companies remain bound by the requirements of the 1998 Act, in particular that for data to be kept secure. Companies remain responsible for how data are processed overseas on their behalf, and that includes the transfer and overseas processing of the data. Companies have taken many steps to protect the security of data and many examples of good practice are followed. To monitor standards, it is also important that strong links be maintained between the UK and call centres located abroad.
In March 2006, the British regulator, the Banking Code Standards Board, visited eight Indian call centres. More than 1 million inbound calls from the UK, together with other processing work, are handled each month by those centres. The review identified good standards of compliance with the banking code.
Increasing integration of the international economy presents challenges and opportunities for all sectors of the UK economy. The potential impact of globalisation on the UK’s prosperity will depend critically on business response, in terms of choices businesses make about location and successfully meeting the needs of customers. That has led to the offshoring of some jobs and services, and calls for protectionism and economic patriotism, although I know that my hon. Friend the Member for Norwich, North was not making that challenge in introducing the debate. Those are part of the competitive challenges facing business and the Government alike.
We need to put the issue of offshoring into perspective. We want to keep jobs in the UK, but we operate today in a fiercely competitive global market, and no sector is more competitive than IT. Changing technology is a fact of life. Some call centre and other service functions have moved to India and other third countries. It is for companies to choose their investment locations; the Government cannot protect jobs by suggesting that industry operate in a certain way, and we cannot stem the tide of overseas or technological competition. However, we can aim to provide the most favourable conditions for businesses, whether they are already located here or want to locate here. In addition, we can encourage all call centres to move up the value chain.
Will the Minister elaborate on why he thinks that offshoring call centre services have worked as well as those services in Britain? How will he protect the data out there? As I said, there is no legislation to stop the flow of information. A server in the United Kingdom may be operating the computer, but the information is still available to staff who work abroad, giving opportunities to the Nick Leesons of this world. How will the Minister prevent that?
On my hon. Friend’s latter point, I mentioned a moment ago that call centre companies are bound by the 1998 Act. The regulator is obliged to monitor and enforce that Act. That is why I mentioned that the Banking Code Standards Board went to India to examine eight Indian call centres. The board is obliged and empowered to deal with any breaches.
I shall come to that later. If I do not, I shall investigate and write to my hon. Friend in due course. The Banking Code Standards Board is the British regulator empowered to monitor and enforce. If I do not have the relevant information in my speech, I shall get it for my hon. Friend.
As I was saying, there is an additional responsibility to encourage all call centres to move up the value chain. We should remember that outsourcing is a two-way process. The UK is the world’s second largest recipient of inward investment. Inward stock was worth £472 billion at the end of 2005 and call centre firms contribute to UK exports, which in turn contribute to our prosperity.
HCL Technologies, an Indian company, has bought two call centres in Northern Ireland. It now employs about 2,000 people, who among them speak eight different languages. The centres service clients such as BT, the AA and Deutsche Bank, and are the largest outsourcing operation in the whole of Ireland. Companies need to think carefully about relocation and to consider the difficulties of managing staff, maintaining standards and offering appropriate customer care when staff are relocated thousands of miles away. We would do well not to forget that customers have a choice about whom they do business with. They have power, and can take their custom elsewhere.
Service quality is one of the many important considerations companies have about relocating. Quality of customer contact is crucial for many companies. Offshore call centre services may be the obvious short-term economic option, but some companies are now sounding a note of caution as a result of strong customer feedback. Customers are demanding successful delivery of goods and services; to achieve that, call centre workers need detailed social, cultural and geographical knowledge of their customers’ requirements.
As a former Minister with responsibility for the fire service, I could digress about fire service mobilising systems, the latest caller ID technology, global positioning systems, local road data and contemporary information. However, I shall not be tempted down that path by my hon. Friend the Member for Norwich, North.
May I tempt the Minister in another direction, which is precisely relevant? Several Members have made the point that the unions are not subject to negotiations. As an ex-trade union activist, does the Minister understand the feeling of employees and trade union representatives when they are told about changes, or find out after they have happened? Should the Department of Trade and Industry guidelines not be much stronger?
My hon. Friend makes a strong point. However, the Government signed up last year to European Union standards in the information and consultation directive, as recommended by the DTI, so we are up with our European partners. Obviously, we always advise best practice, and companies that look after their staff inevitably find that those staff are better motivated to improve the profit margins, as they know that they are valued.
Some companies have taken account of considerations such as customer preference or the difficulty of managing staff at a distance and have decided to bring back operations from abroad. Where jobs are unfortunately lost, we continue to do everything possible to help people to find new jobs and, if necessary, new skills. Jobcentre Plus and the rapid response service provide that help. We encourage companies to consult their employees and unions over relocation decisions, and, as I just mentioned, the information and consultation directive was signed last year by the Government. Co-operation is mutually beneficial.
I do not have any detailed information to hand, but I believe that we are all familiar with anecdotes that reflect the sentiments that I mentioned earlier. Companies are much more sensitive. Call centres abroad have been getting a pounding for a variety of reasons—some are probably not so valid, but others are. I think of the question about Watford raised by the hon. Member for Wealden, people’s dissatisfaction levels and customers who may feel let down or that they are not being offered the best possible service, even though many overseas call centres offer an excellent service. Those aspects make companies think twice about outsourcing and make them think about bringing call centres back. Those are business considerations, and such decisions are taken every day.
If they do, it is obviously because that is in the interest of the company—service that is more satisfactory to customers makes for better business. However, as I said, those are decisions for companies to take in the light of their experience, the services that they provide to their customers and how their business is going.
I was about to quote an example of co-operation between Amicus, the union mentioned by my hon. Friend, and Computer Sciences Corporation, which is an information technology services company. An agreement has been negotiated to provide the company with the flexibility to enhance its competitiveness while aiming to safeguard the job security, skills and careers of its work force.
The Government are investing in schools, higher and further education and the skills of the UK’s work force. While there will be ever-growing pressure from the likes of China and India—together, they produce 2 million graduates each year to our 400,000—to compete for higher-skilled jobs, it is still our best course to have the confidence to find our comparative advantage by investing in a more highly skilled work force who can respond quickly and flexibly to change in the globalised market.
Skills are central to UK competitiveness. The Government are working with key stakeholders to improve productivity by raising the level of and demand for skills, by developing a diverse and flexible labour market and by increasing the take-up of ways of working to foster high-performance workplaces. Skills underpin the ability to innovate, and innovation drives the demand for better and higher skills. We must continually improve the work force’s skills and motivation to deliver.
Call centres have an important part to play in driving UK productivity and competitiveness. Wages in the Indian IT services industry, for example, are rising by some 15 per cent. a year, so competitiveness in that market is narrowing.
In conclusion, research commissioned by the DTI in 2004 showed that the call centre sector will continue to grow. However, the way forward is not regulation, which just adds to the burden of red tape and stifles initiative in an innovative sector. The future lies in continuing the good and positive work of concentrating on staff training and enhancing skills so that the work force move to advanced, high-value work with an emphasis on customer care and satisfaction.
I heard my hon. Friend’s request for an inquiry. I hope that I have given enough reassurance to support the Government’s view that an inquiry is not needed, but I acknowledge the concerns that he and other hon. Members have.
I am grateful to the Minister for giving way, as he is just about to conclude. He kindly agreed to review Ofcom’s role in enforcing contraventions of the regulations. I agree that regulation is not necessarily what is called for, but the regulations that we have must be enforced. If he is not able at this moment to provide examples of how regulations have been enforced by Ofcom, perhaps he will be good enough to write to me and explain what actions Ofcom has taken since I received the same assurance in the last Westminster Hall debate on this matter earlier this year.
I am grateful for that intervention. I should have said earlier that, further to the research that my office will undertake, I am happy to write to the hon. Lady and to hon. Gentlemen who took part or intervened in the debate to ensure that everybody is up to speed with Ofcom’s role and the data that our research will produce.