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Hain for offshoring, MPs shocked

Labour Leader of Commons Peter Hain follows Trade Secy Patricia Hewitt in endorsing outsourcing.

india Updated: Dec 27, 2003 23:17 IST

Peter Hain, Labour's Leader of the Commons has joined his ministerial colleagues, deputy Prime Minister John Prescott and Trade Secretary Patricia Hewitt in endorsing the outsourcing to India. But, nevertheless, his rather candid admission that loss of thousands of jobs to India was good for Britain has shocked quite a few of his party MPs.

Both Hewitt and Prescott were a bit more circumspect and had said that it would ultimately help the economy by giving British companies more competitive edge.

Hain too iterated that companies which have moved jobs overseas would see higher profits in future. He told MPs that evidence from Call Centres Association suggested "those companies outsourcing part of their work are getting a big return on that.

"A surplus is coming back into this country enabling them to expand services and create more jobs and contribute to the prosperity of the country. Although it is painful and difficult when this kind of churning takes place - of displacement of some jobs and their replacement by other, often higher-value-added, jobs - it is not just as straightforward as saying we've lost jobs to another country. The return that comes back is important as well."

What has upset the MPs is possibly the timing of Hain's comments. He spoke soon after Norwich Union announced that it will be moving 2, 350 jobs to India. Unions claim that Britain has lost almost 50,000 jobs to India in the last few years, mainly in the financial service and IT sectors. One media report calculated that 200,000 jobs have been lost out to India.

Hain had been asked for his comments by Labour's Hugh Bayley, MP, on decisions by Lloyds TSB and Norwich Union to transfer call centre and administration jobs to India. The MP called for a debate on the impact of globalisation on the telecoms industry "so we can assess the risks it poses to jobs in Britain and to minimise those risks."

Another Labour's David Clelland, MP said in his constituency of Tyne Bridge, Lloyds TSB was closing call centres and transferring work to the Indian subcontinent resulting in a loss of almost 1,000 jobs.

But, Hain maintained that the British Government was effectively powerless to stand in the way. He said: "We can't simply withstand competitive global pressure on our private enterprises, including call centre companies, and we are seeking to combat the situation as best we can."

Mathew Knowles, policy adviser to the British Chambers of Commerce said he found it very "worrying" that a British minister said that "it is a good thing jobs are being lost in this country.

"They should be trying to improve the regulatory burden rather than taking up the benefits to India. All we want is a level playing field."

The financial workers union Amicus is already up in arms against Norwich Union's and demanded a meeting with the company's bosses. Its national secretary David Flemming said, "This is selling British jobs cheaply."

Tory's industry spokesman Stephen O'Brien said: "It demonstrates that this Government has not been committed to boosting innovation and that our education and skills agenda is failing. As we have stood still, other nations have raced ahead and are now able to offer similar services at cheaper prices."

First Published: Dec 25, 2003 21:33 IST