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E.ON Call Centre (Rayleigh)

Volume 506: debated on Thursday 25 February 2010

Motion made, and Question proposed, That this House do now adjourn.—(Mr. Spellar.)

I am genuinely grateful for the opportunity to raise in the House of Commons the proposed closure of the E.ON call centre in Rayleigh, in the heart of my constituency. I am glad to be supported in the Chamber by my hon. Friend the Member for Rochford and Southend, East (James Duddridge), several of whose constituents also work at this facility, and who may seek to contribute briefly if he is lucky enough to catch your eye, Mr. Speaker. My hon. Friend the Member for Southend, West (Mr. Amess), who is speaking at the Oxford Union this evening, and who also has several constituents employed at E.ON, also wishes to have his support for them recorded; I shall return to his views on the matter a little later. I am of course also grateful to the Minister for being here. In a few minutes I will have several detailed questions to put to her, of which I have attempted to give her at least some notice.

The background to this decision is that E.ON UK has three divisions, one of which, the retail division, incorporates the company’s call centres. Several years ago, the division was loss-making and the company therefore put in a turnaround programme, asking employees to alter working practices and improve productivity in an attempt to return the division to profitability. The work force in Rayleigh, who number more than 600 employees, actively participated in this programme to help to restore the division to financial health. As I understand it, E.ON has not yet published its 2009 results for the division, but it is apparently back in profit by some tens of millions of pounds, so quite a turnaround appears to have taken place, to which my constituents have actively contributed. I realise that the company needs to make a profit, but given that the division is now doing so again and that the employees in Rayleigh, who earn an average of less than £20,000 a year, have contributed actively to that turnaround, it seems scant reward for them to be made redundant by E.ON shortly thereafter.

Nevertheless, the company announced on 20 January that it was proposing to close the Rayleigh call centre, with the loss of more than 600 jobs. I was fortunate enough, Mr. Speaker, to catch your eye that day at Prime Minister’s questions, and that gave me an opportunity to ask the Prime Minister for an assurance that the Department for Business, Enterprise and Regulatory Reform and the Jobcentre Plus network would do everything possible to assist my constituents if they were to be made redundant. In response, the Prime Minister assured me that the rapid response unit of the Department for Work and Pensions and Jobcentre Plus would be made available to assist my constituents. I shall return to that point in a moment.

On that same day, I met Mr. Paul Golby, the chief executive of E.ON UK. We spent the best part of an hour discussing the issue, and as part of that meeting I asked him directly if the company might be prepared to reconsider its decision, particularly if it were to receive any kind of counter-proposal.

I subsequently visited the E.ON call centre last Friday, during the half-term recess, where I had meetings with the management of the retail division, including Mr. David Bird, the customer services director. I then met a representative group of 20 employees from the site, including some of the trade union representatives, to discuss the situation. Some of the points that I wish to put to the Minister this evening come directly from that meeting and will be made on behalf of the employees.

The company has now initiated a consultation process—

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Mr. Spellar.)

For those not familiar with our procedures, that is a technicality, but clearly it must be gone through, so I am grateful to the Government Whip.

The company has now initiated a consultation process on the future of the Rayleigh site, as it is required to by law. It is due to conclude by mid-April. If the company then decided to proceed with the closure, E.ON would apparently begin to make people redundant at the end of June. The trade unions at the site are apparently now preparing a counter-proposal to put to the company, with the aim of making savings but keeping the site open. It is still being generated, and I have not seen a draft, but if it is credible I urge E.ON to consider it very carefully indeed. I do not want to be accused of raising false hope, but if there were any way that the company might reconsider on the basis of the counter-proposal, my constituents, and indeed their Member of Parliament, would be very grateful.

I hope that I have been able to give the Minister a clear picture of the current situation. Given what I have said, I have several questions to put to the Minister this evening. First, with regard to the future of the site, the employees would clearly like to continue working, if not for E.ON then for someone else. The work force are highly skilled at what they do, and I understand that the company would be prepared to consider selling the centre as a going concern if a suitable buyer could be found. Given that some UK companies are now bringing call centre jobs back onshore, can the Minister offer any advice on companies that might be considering such a process? If she does not have an answer tonight, will she liaise with colleagues in her Department or elsewhere in Government and then get back to me promptly if she is able to obtain any information about a potential alternative investor for the Rayleigh call centre facility, who might be encouraged to consider the idea more closely and help save my constituents’ jobs? I am sure that she can understand why I ask the question, and any assistance would be greatly appreciated.

Secondly, E.ON has employed an outplacement company called Right Management to assist employees to find other work if the proposed closure proceeds. Essex Jobcentre Plus has also attempted to contact the company to provide advice and support to employees, but so far E.ON has not actively taken up its offer of assistance. I have no prior reason to doubt the abilities of Right Management, but I would like to have the maximum possible support available to my constituents. Following my visit, E.ON has assured me that it will improve communication with Jobcentre Plus, and in fairness I believe that it has been in contact with that organisation. However, will the Minister reiterate the types of services that Jobcentre Plus might be able to offer my constituents in these circumstances, so that they know what is available?

Thirdly, if the closure goes ahead, E.ON is apparently prepared to provide redundancy pay beyond the statutory minimum. However, it is currently also saying that if any employee were to leave before the end of June because they had been fortunate to secure another job, they might have to forfeit their redundancy payment. That seems unfair, particularly given the large number of employees who could otherwise all come on to the job market at the same time. I am told that the company might well be prepared to consider waiving that condition, but that doing so would effectively require the consent of the trade unions, at least before the consultation period concludes. I would definitely like the company to alter its position on that issue, so can the Minister confirm whether the situation as it has been explained to me is correct?

Fourthly, when I spoke to employees last week a number expressed understandable concern at the need to continue to meet mortgage payments if they lose their jobs with E.ON. Will the Minister summarise the help that would be available to help individuals meet their mortgage payments if they were to be made redundant through no fault of their own?

Fifthly, if the closure is confirmed, Rochford district council has offered in principle to organise an open day at the call centre, which staff from its economic development office and benefits division could attend to offer advice to employees on access to benefits, and links to other employers in the district. When I put that idea to the employee representatives, it was quite well received. They suggested that local training organisations and colleges might also like to be invited, to give those employees who might be interested an opportunity to consider retraining packages or even returning to further or higher education. If that were to go ahead, would the Department be prepared to support it?

Sixthly, I hope that the Minister, and indeed you, Mr. Speaker, will allow me to place on record a brief letter of support from my colleague, my hon. Friend the Member for Southend, West, who is clearly rather upset with E.ON and who has this to say about the situation:

“Whilst it was absolutely the right thing to do to contact my hon. Friend about E.ON’s proposed closure of the call centre in Rayleigh, I think it was less than courteous not to contact myself as a neighbouring MP who has many constituents working at the centre. This announcement has come as a terrible blow to the region and to families who work at the centre. As of yet, I have had no explanation as to why this decision is being made, which would—at the very least—give the local authorities and Members of Parliament concerned an opportunity to see if they could persuade the company to change its mind.”

In conclusion, my hon. Friend states:

“As a long-standing supporter of this energy company, I am very disappointed that they are embarking upon a very short-sighted decision, which I believe they will regret. I very much hope they will reverse their decision and intend to support my hon. Friend’s efforts in that endeavour.”

That is my hon. Friend’s rather robust position.

As I am sure the Minister can understand, I hope that E.ON might recognise the very real contribution that its employees at Rayleigh have made to returning its retail division to profitability, and that it might reconsider the proposed closure at the conclusion of the consultation process in April. However, if that proves not to be the case, as many employees at the site obviously fear—that was apparent during my visit—I would like the maximum amount of support to be made available to my constituents, not only by Right Management under contract to E.ON, but by the Department, the Jobcentre Plus network and the relevant local authorities, including Rochford district council and Essex county council, both of which, I believe, stand ready to assist if they can.

E.ON is currently the largest private sector employer in Rayleigh, and therefore I hope the Minister can understand my concern at what the closure could mean not only for the employees and their families, but for the wider community in Rayleigh, including local businesses that have previously relied on its custom. This is a blow for the town, not just the company and the people who work there.

As I am sure the Minister will acknowledge, no Member of Parliament likes the prospect of a major redundancy in their constituency, and I am no exception. I hope she appreciates the non-partisan spirit in which I have sought to raise this issue this evening, and I look forward very much to hearing what she has to say, some of which, I hope, will be of material help to my constituents. I reiterate that some of the questions that I have put to her effectively come from the meeting I had at the facility.

I will conclude in the hope that my hon. Friend the Member for Rochford and Southend, East can also make a contribution, not least on behalf of his constituents who are employed at the facility.

I congratulate my hon. Friend the Member for Rayleigh (Mr. Francois) on securing this very important debate. He is not only a valued member of the shadow Cabinet, but a first-rate constituency MP and a most excellent neighbour whom I am proud to call my friend. As he said, despite E.ON being in Rayleigh, a number of constituents who I have the honour of representing will also be losing their jobs. I thank him for this opportunity to raise the issue and to develop it further by considering the call centre and high-volume processing jobs that have been lost across south Essex.

Sadly, the closure of E.ON is not an isolated case. Southend has suffered from several large closures resulting in substantial job losses in the past year or two. One hundred and sixty-four jobs were lost at Lloyds TSB, and at the end of last year, just before Christmas, it was announced that 750 jobs will be lost at HSBC. The staff at the bank based above Victoria shopping centre were taken to the Odeon and told that the entire Southend HSBC credit card and collection service would be moved to Birmingham in 2011. For most at both E.ON and HSBC, moving such a distance would not be an option. After the announcement of the HSBC closure, I wrote to the group chief executive and expressed my concern about whether my constituents were receiving all the assistance that they could. I received some reassurance and I am looking forward to meeting face to face representatives from the bank, in addition to the conversations that I have had to date.

HMRC will shed 1,000 jobs in Southend by 2011. The situation is even more difficult to come to terms with for those who have lost their jobs, because the Department for Communities and Local Government rightly deems Southend a regeneration zone at the same time as the Treasury discourages jobs being relocated to the town.

The cumulative loss of call centre jobs deserves a co-ordinated response from the Government. This may also be an opportunity to look again at the Lyons review, which stopped civil service jobs coming to areas of deprivation such as Southend, East. I share my hon. Friend’s views about the closure of E.ON and am especially interested to hear the Minister’s response to his questions about the support that the Jobcentre Plus network can provide to those being made redundant, some of whom will be looking for jobs in institutions that are already closing in Southend. This is a very grave matter, and I look forward to the Minister’s response.

I congratulate the hon. Member for Rayleigh (Mr. Francois) on securing this debate on what is an important subject. I certainly realise that the announcement by E.ON UK is very bad news for his constituents. The company is a significant local employer and he has clearly set out the serious impact that the potential loss of 600 jobs will have in the area. The global recession that we have witnessed over the past 18 months has, sadly, left its mark on many communities around the country, as the hon. Member for Rochford and Southend, East (James Duddridge) also made clear.

I will try to address the points made by the hon. Member for Rayleigh, and I first wish to assure him that we will work with the Government office for the east of England and the East of England Development Agency to explore whether other companies might be interested in buying the centre. One of my officials from Go East spoke to E.ON this morning and I understand that the company is currently focused on the consultation exercise. Once that has been completed we can enter into more detailed discussions with the company about the disposal of the site. However, as the hon. Gentleman himself said, it is important not to raise expectations in the area, because we are not aware of any potential buyers at present. We will of course continue discussions. EEDA has also been in touch with the company and will be able to move forward as soon as the final announcement is made. I will keep in touch with him should any potential investors be identified.

On the hon. Gentleman’s second point, he is right to emphasise how important it is that Jobcentre Plus plays a leading role in the support services provided to E.ON employees. The rapid response service offered by Jobcentre Plus will work with E.ON and its employees to identify the support, advice and information that they would need. I know that a meeting has taken place this afternoon between Jobcentre Plus representatives and E.ON, to discuss the package of support to be provided in the event of closure.

I understand that E.ON has agreed that, following the consultation period, Jobcentre Plus advisers will be able to go to on-site surgeries for staff and open days and to get housing advice. In the meantime, an information leaflet for E.ON staff will be put together detailing the full range of support available from all providers. The rapid response service offers a wide range of services, including help with job searching and skills matching. As I have said, it will run dedicated advice surgeries for employees and give referrals to services provided by other local agencies. Crucially, it also acts as a gateway to training and reskilling, assessing an individual’s needs and matching them with the training and funding opportunities available.

That support from Jobcentre Plus will be at the heart of a comprehensive and co-ordinated package of Government support provided through local and regional partners. The response to redundancy programme, offered jointly by EEDA, Jobcentre Plus and the Learning and Skills Council, is also available to E.ON to complement the service provided by the rapid response service. It can offer a number of additional services, depending on work force needs—everything from child care for people attending training to advice on setting up a business. Importantly, the response to redundancy programme can also help to fund appropriate training courses for employees.

The hon. Member for Rochford and Southend, East mentioned Rochford district council and Essex county council, both of which are working to ensure E.ON staff will be able to access the advice that they need on benefits, finance and housing issues. I understand that a fact sheet has been produced bringing together all the resources available to people under threat of redundancy. I emphasise that all those public bodies are working together closely to ensure that E.ON staff can call on a co-ordinated and wide-ranging support package if the Rayleigh call centre does close.

I am grateful for what the Minister has said, and I am pleased to hear that E.ON is now actively talking to Jobcentre Plus. It might be a pure coincidence that that meeting took place this afternoon, on the day of this debate, but if, per chance, the fact that we secured this debate suddenly encouraged the company to talk to Jobcentre Plus properly, I would be pleased to know that perhaps we have achieved something by that method.

It is certainly true that there were some initial difficulties in making contact with E.ON to discuss its plans, but I am happy to say that constructive discussions are now taking place. Rochford district council is due to meet Right Management—the company engaged by E.ON, and to which the hon. Gentleman referred—in the next two weeks to discuss how its services can be integrated into the comprehensive support package that I have outlined.

The hon. Gentleman also raised the issue of redundancy terms. I am advised that, if agreement is reached between the employer and the trade unions representing employees, the consultation period can be curtailed prior to its scheduled conclusion. In those circumstances, staff members would be released with payment in lieu of the period they are not working, and with the appropriate redundancy pay. As he said, he raised that with the company during his visit last Friday, and I understand that E.ON has indicated that, in the event of redundancies, it will try to be sympathetic to people working at the call centre. I also understand that E.ON is awaiting proposals on this issue from the union.

The Government have set up two schemes for people who need mortgage support. The first is the home owner mortgage support scheme, which is designed to help owner-occupiers who suffer a temporary fall in income, for example because of redundancy. The scheme provides a valuable bridge, giving home owners who are experiencing financial problems sufficient time to find new employment. Those who wish to take advantage of the scheme should contact their mortgage lenders.

The mortgage rescue scheme is delivered through local authorities, registered social landlords, lenders and debt advice agencies. It is designed to help both families with dependent children, and elderly people and other vulnerable groups, although I suspect that the latter two groups would perhaps not be relevant in this instance. The mortgage rescue scheme offers two options. The first option is a Government mortgage to rent, under which an RSL buys the property and rents it back to the applicant, and the second is shared equity, under which the RSL provides an equity loan, enabling the householder’s mortgage repayments to be reduced. In those circumstances it is appropriate to contact the local authority.

Finally, the hon. Gentleman asked whether we would be willing to support an open day for E.ON employees organised by Rochford district council. Were such an event to be organised, I can confirm that representatives from the Government office for the east of England would attend, as well as representatives from the East of England Development Agency, the Learning and Skills Council, and Jobcentre Plus, to ensure that E.ON employees got as much information and derived as much benefit as possible from the day. In such circumstances it is important to reassure employees that all the information about the support available is being pulled together, so that they can be confident that they know how to access that support.

I have discussed the concept with Mr. Paul Warren, the chief executive of Rochford district council, and Councillor Terry Cutmore, who is the leader of Rochford district council and who, by coincidence, used to work at the call centre a few years ago. They are both keen to help if they can, and I would like to thank the Minister on their behalf for what she has just said.

If I can briefly take the Minister back to the point about redundancy payments, I realise that there are a number of legal technicalities and that things are slightly complicated, but let me stress something. My point in principle is that if people have worked for the company—particularly if they have worked there for a number of years—and if they can get a job before the end of June, it is incumbent on the company to recognise the difficulty that they are in and the service that they have given, and not penalise their redundancies as a result. I want to drive that point home now, while I have the chance.

I am sure that the hon. Gentleman is making that point to E.ON too, as I understand he indeed has. All such discussions are obviously subject to agreement between the company and the trade unions.

I understand that HMRC estimates that it will need 300 fewer staff in Southend by 2011, and that it aims to achieve this through natural wastage and a range of redeployment options for staff. There are no current plans for redundancy, and the intention remains to avoid that. I am sure that the hon. Member for Rochford and Southend, East will also be aware that the Chief Secretary to the Treasury announced that a review was being held to look into ensuring that progress on seeing where civil servants might be relocated out of London to other areas continues, and that work is progressing as well.

I recognise the figure of 300, but the figure that I was quoted was around 1,000. Does the Minister recognise that 2,491 people were employed by HMRC in 2004 in the constituency that I have the honour to represent, but that that figure is projected to go down to 1,500 in 2011? I am looking at the longer term. Does she recognise that by 2011 there will have been a reduction of more than 1,000 jobs?

I am not completely au fait with the figures that pertained prior to the ones that I gave the House just now, but I obviously assume that the hon. Gentleman is speaking correctly when he describes that reduction. If there is anything else that I can add, however, I will write to him.

The Government are absolutely committed to creating as many new job opportunities as possible. The East of England Development Agency has done a lot of work to support businesses and people during the downturn, as well as looking to the future and considering the type of industries that we can encourage in order to ensure that we take advantage of all the job opportunities, once the recovery really gets under way. For example, it has supported the expansion of Southend airport, which is adjacent to Rochford. That could involve the creation of about 3,000 new jobs in the sub-region. The regional development agency has also invested heavily in the university campus at Southend to increase higher-level skills in an area that historically has not had all those skills. We hope that these important investments will boost the employment prospects of people in the area and make south Essex a much more attractive destination for commercial investment.

As I have said, we are certainly focusing on the generation of new jobs and new economic opportunities for people in Rayleigh and across the country. I very much hope that the people working at E.ON will be able to access such job opportunities if the call centre does indeed close. That is why we are standing four-square behind them at national level, working closely with local and regional partners. We want to ensure that people get the training, support and advice that they will need to cope with the transition, if it comes.

I apologise for interrupting the Minister’s conclusion, but I want briefly to thank her for the spirit in which she has approached this debate. She has provided a lot of information for which I am sure my constituents will be grateful, and I thank her for that. I should like to thank my hon. Friend for being here to support me, and my hon. Friend the Member for Southend, West for supporting me in his rather punchy letter. That is very much his style. I should also like to thank you, Mr. Speaker, on behalf of my constituents, for giving me this opportunity to raise their fate in the Commons Chamber this evening. I am very grateful, and, with that, I shall allow the Minister to conclude her speech.

I thank the hon. Gentleman for those comments. I can assure him that we will remain in touch about any developments in the area, and try to ensure that, if the worst does happen, his constituents will be able to get back into work as soon as possible, with the kind of support that we are going to supply.

Question put and agreed to.

House adjourned.