Mark Lazarowicz: Edinburgh North & Leith

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	Outsourcing Jobs in Financial Services
	Mr. Mark Lazarowicz (Edinburgh, North and Leith): I declare an interest as the unpaid chair of a parliamentary group for Scottish Financial Enterprise. I congratulate the hon. Member for Edinburgh, West (John Barrett) on securing this debate. Not surprisingly—I am his constituency neighbour—my constituents have expressed the same concerns on this issue, which he set out very well. I want to take up a couple of points made by my hon. Friend the Member for City of York (Hugh Bayley) and the hon. Member for Mid-Worcestershire (Mr. Luff) about the response that we should make to the move towards outsourcing jobs in the financial services sector and other sectors. It is my position and, I suspect, that of other hon. Members in the Chamber, that every job that is outsourced should be regarded as a retrograde step. I recognise that in many cases that option makes the best business sense for companies and is in the interest of the remaining employees in this country. However, I cannot accept the argument that outsourcing is always inevitable and that nothing can be done about it. We accept, as an objective of the Government, that we must try to defend our manufacturing industry. As I understand it, decisions taken on the defence industry are specifically designed to maintain employment in this country, and we have heard that the Indian Government do not care to protect employment. Like other hon. Members, I am suggesting that our response to outsourcing should be more discriminating. We should not assume that there is nothing we can do in every case and that outsourcing is an inevitable effect of the global market. A number of considerations have a bearing on our approach to the loss of jobs and outsourcing. First, when companies choose to outsource jobs, they should be bound by the same rules that would apply if they were transferring their business within the UK or the European Union. They should be prepared to pay the extra costs of the loss of pension rights and other benefits that they would probably have faced if they were transferring jobs within the UK. The same rules should apply if companies are outsourcing jobs outside the European Union. That may mean that some outsourcing would not take place. It would certainly mean that the workers whose jobs would go if companies moved abroad would get better compensation for their loss of employment. Secondly, it is noticeable that the financial services companies that have made it clear that they do not intend to outsource are extremely successful and have shown a strong commitment to this country. So companies do not need to outsource to be successful. The hon. Member for Edinburgh, West mentioned the Royal Bank of Scotland, which has its headquarters in Edinburgh, and Standard Life, a mutual company. It is clear how important it is for the Government to take decisions to encourage companies to stay owned and headquartered in this country. They should not intervene to prevent people from entering the market, but should encourage strong UK-based companies, particularly in the regions and nations of the UK. We must encourage new businesses. That applies to Edinburgh and Scotland in general, where the business formation rate is too low. It also applies to part of north-east England. Above all, there must be a recognition of the scale of the threat to the financial services industry in Edinburgh, where it is a major private sector employer, and in other parts of the UK. I welcome the decision taken by the Scottish Executive and the Secretary of State of Trade and Industry to set up a working group on the subject because the issue is important, particularly for Edinburgh. I want an action group to be set up for Edinburgh, involving the Scottish Executive, the Government, the city council and industry, to determine the best response to the challenge that we face as a result of outsourcing. On the morality of responding to the outsourcing of jobs to India or elsewhere, the problem is that such policies will not benefit the landless poor or the urban poor who are on $1 a day or much less. Instead, those policies sometimes benefit the highly educated sectors in those economies and, above all, the financial services companies themselves. Such moves do not necessarily result in sustainable development in those countries. We already know, for example, that some of the jobs that have been outsourced to India are now being subcontracted to China. I am not arguing in favour of protectionism, but my comments emphasise what a complex phenomenon globalisation is. The issues are not as simple as they sometimes first appear. However, let us not assume that the process is inevitable or that there is no response other than simply sitting back and accepting that such moves will take place. We should recognise that the issue is complex and that Governments in countries such as India are trying to support their jobs and economies. Let us also ensure that we are as proactive in defending our jobs and interests as those other countries are in their own way.

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	10th December 2003, Column 82-3 Westminster Hall