The top civil servant in the business department has formally queried the wisdom of a £1.7m government grant to subsidise the wages of 50 steel apprentices who lost their jobs last month — saying it could set an “unhelpful precedent”.
Martin Donnelly, permanent secretary at the department for Business, Innovation and Skills, issued a written warning to ministers that the support for apprentices at the SSI steelworks in Redcar could fail Whitehall’s value for money tests.
“I am also concerned that spending at this level would be repercussive, and might create an unhelpful precedent,” he told Sajid Javid, business secretary.
Mr Javid subsequently overruled the advice, pushing ahead with the funding because of the “extreme situation” in Teesside.
But the civil service advice was criticised as “hugely insensitive” by union, Unite.
“It is grossly short-sighted of the permanent secretary of BIS to suggest helping apprentices from the Redcar site could set an ‘unhelpful precedent’,” said Tony Burke, assistant general secretary at Unite.
“Investing in apprentices, giving people a future and keeping them off the dole is not ‘unhelpful’ and should be a central mission of a government department which has ‘skills’ in the title.”
Thai-owned SSI was put into liquidation in early October with the potential loss of up to 2,200 jobs amid a wider flurry of job losses and closures in the British steel industry caused by a global supply glut.
The crisis has proved an acute test of Mr Javid’s free-market instincts and what critics say is his reluctance to embrace an industrial strategy for the UK.
The letter from Mr Donnelly last week came in the form of a “ministerial direction”, a rare intervention that permanent secretaries can make in their role as accounting officers for their departments.
BIS announced in early October that it would give a package worth up to £80m to help support people who had lost their jobs as a result of the mothballing of the SSI plant.
The package includes funding for affected workers to retrain at local colleges and support for those who want to start up their own company.
In his intervention, Mr Donnelly acknowledged the closure of the Redcar steelworks was a “major shock” to the economy of the Tees Valley.
But he questioned the plans to help out 50 apprentices — including those who had not yet started work there — by paying a 100 per cent wage subsidy.
Instead, he argued, it was normal practice in such situations for the National Apprenticeship Service to seek to place apprentices with other employers to complete their training there.
“The required appraisal process concludes that this would not offer value for money even after taking into account the very real economic challenges facing apprentices in the Tees Valley at this time.”
Mr Javid accepted that the move represented “poor value for money” when measured conventionally, but said the situation required “an exceptional and urgent public sector response” equal to the scale of the challenge.
Angela Eagle, shadow business secretary, said the ministerial direction was further evidence that the government had “sat on its hands”.
“The government must now show real political leadership to ensure the specialised skills and expertise of the workers are not lost, and stand up for the apprentices by fully supporting them to ensure they find new jobs,” she said.
Ministerial directions are only written if civil servants believe a ministerial decision may breach either “value for money”, “regularity”, “propriety”, or “feasibility”.
They were used only 50 times in the 23 years between 1990 and 2013, according to research from the Institute for Government think-tank.
Mr Donnelly last issued a ministerial direction to Mr Javid in June when he questioned whether it was good value for money to allocate a minimum of 10 per cent of Royal Mail shares to employees in the privatisation of the service.
Source: http://www.ft.com/