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Compensation For Loss Of Office, Etc Pursuant To Part Xvi Of Act

Volume 987: debated on Thursday 3 July 1980

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The following paragraph shall be inserted after paragraph ( d) in subsection (3) of section 259 of the Local Government Act 1972 (Compensation for loss of office)—

"(e) the provisions of Part XVI (Urban development) of the Local Government Planning and Land Act 1980 or of any order made or direction given thereunder;" and, accordingly, in relation to any regulations required to be made in pursuance of such paragraph (e) of subsection (3) of the said section 259—
  • (i) in subsection (1) of that section for the words "such body or such Minister" there shall be deemed to be substituted the words "such urban development corporation";
  • (ii) the reference in the said subsection (1) to any provision of that Act or of any instrument made thereunder shall be deemed to be a reference to any provision of Part XVI (Urban development) of this Act or of any order made or direction given thereunder; and
  • (iii) subsection (4) of that section shall not have effect.—[Mr. Neil Thorne.]
  • Brought up, and read the First time.

    With this we may dis- cuss new clause 20—Compensation (Part XV).

    The purpose of the new clause is to ensure that anyone who is at present in the employ of a predecessor authority shall be compensated for loss of office if he is not appointed to the staff of a new urban development corporation. This has been the common practice in recent years in any local government reorganisation, and similar provisions should be made in this case.

    Frequently, local authorities are anxious to second staff for such development projects which might not at first attract urban development corporation designation. Good staff will not be encouraged to accept the flexibility and challenge offered unless they know that their jobs will be available when they return. It would be a shame if they were reluctant to take up the challenge, particularly as local government staff are often seconded for a considerable time, and promotion is sometimes gained thereby. Naturally, when such staff need to return to the job that they left it is inappropriate for them to return on the original basis. I hope that the Government will support my new clause.

    New clause 20 is important. I suspect that the Government are attempting to shuffle out of responsibilities which they have as a direct consequence of the Bill. In a nutshell, the responsibilities relate to the rights of public servants who are employees of the New Towns Commission or of development corporations and who are liable to suffer redundancy as a direct consequence of clause 15.

    The Government and Parliament have a responsibility to such public servants. I shall seek to show that the responsibility can be properly discharged only by the payment of compensation to people who are put in a worse position as a result of the Bill. That can be done by the payment of what is known as the Crombie code to all those adversely affected.

    The code originates from 1947, when the then Government had to make compensation provisions for redundancies as a result of nationalising industries, and as a result of local government reorganisation. The existing code, which dated from 1888, was thought to be too generous. The Crombie committee was, therefore, set up by the Treasury to make recommendations for a new code.

    The recommendations of that committee were accepted, and they provided the framework of a code of compensation that has survived, in essentials, ever since. The code applies only in cases of statutory intervention. That is an important point, to which I shall later refer. The code was applied, for instance, to the massive local government reorganisation undertaken by statutory intervention, as it was to the reorganisation of the National Health Service. That was another piece of statutory reorganisation.

    The code's latest application is in the GLC housing compensation regulations of 1980. I understand that about 90 orders have been laid, covering 10 to 12 Government Departments. For the new towns, it is pertinent to mention that the Crombie code was applied to those who suffered loss as a consequence of the transfer of new town housing to local authorities, which was made possible by the New Town Amendment Act 1976.

    The Secretary of State makes the regulation with the consent of the Minister for the Civil Service, who acts as arbiter ensuring, among other things, that Departments do not outbid each other in the award of compensation. I shall not detain the House with a lengthy recital of the details of the code, but I think I should mention two important aspects.

    The code involves three stages, each with its own qualifying conditions. They are resettlement, long-term compensation and retirement. The basic principle is to relate the compensation in each case as precisely as possible to the loss that an individual sustains as a consequence of a statutory change made by the Government and Parliament. Therefore, though its terms are reasonably generous they are related strictly and stringently in each case to the circumstances of the redundant person. It is not—and I repeat "not"—a golden handshake.

    I consider next whether the Crombie code terms are applicable under the Bill. Does the Bill constitute the kind of statutory intervention that is liable adversely to affect the career prospects of individuals currently employed by development corporations and the Commission for the New Towns? I argue that the answer is "Yes" on two counts.

    The first is that in clause 110(2) there appear the words:
    "The power of disposal"—
    that is of land—
    "by virtue of this section may be exercised notwithstanding anything in the 1965 Act".
    Those words, in effect, override words contained in the New Towns Act 1965, section 18(1), to the effect that disposals by corporations may take place.
    "as they consider expedient for securing the development of the new town in accordance with proposals approved by the Minister … or for purposes connected with the development of the new town:"
    The House knows why the Government wish to supersede those words. It is because of their stated objective of selling off new town assets without any regard to purposes connected with the development of the new town. That may be done to reduce the public sector borrowing requirement or to repay the taxpayer some of his forced investment—as it was recently described by the Under-Secretary of State for the Environment—or for any other purposes which the Minister may consider or which may occur to him at some future time. The point is that the law is being significantly changed to facilitate the disposal of new town industrial and commercial assets. Such disposal can have only damaging effects on the career prospects of those presently employed to manage those assets.

    Clause 111 permits the Secretary of State to reduce the size of a designated area of a new town by order. It is not possible to do that now. I do not pass any judgment or express a view on the wisdom of that provision, but it will, as in the previous case, significantly alter the parameters in which new town employees are employed—to their possible detriment.

    5.45 pm

    Both those powers can, and certainly will, lead to less available work in many new towns, and therefore to redundancy among those who took up appointments in the new towns. When I asked a question about this the Minister for Housing and Construction replied on 22 May in a written answer.
    "New town legislation has always provided for the dissolution of development corporations, and so the terms of the Crombie code are not applicable to their staff."—[Official Report, 23 May 1980; Vol. 985, c. 361.]
    With respect, that will not do. The situation of the staff about whom I am talking is parallel to that of housing staff who were affected by the 1976 Act and who receive Crombie code compensation. If it is argued that currently employed staff never had long-term security because it was never envisaged that the development corporations would last for more than about 15 years, the same argument must apply to housing staff.

    If it is argued that the housing staff redundancies were not foreseen and that something had to be done urgently, the same argument must apply in this case. An issue arose as a result of the reappraisal of the new towns programme by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) in 1977 and the redundancies that flowed from that, but there could not be any question of Crombie code compensation on that occasion because there had been no statutory intervention, which acts like a trigger in the operation of the code. It was unfortunate that nothing could be done except to apply existing management redundancy terms. This case involves legislation and I maintain that the Government have no alternative, in equity, but to extend Crombie code cover to those staff whose careers will be adversely affected by this legislation and by this piece of statutory intervention.

    In my search for a suitable form of words to cover the case and to provide an appropriate new clause I came across the words contained in schedule 18, paragraph 6(2) and (3). Those words apply to the employees of the Land Authority for Wales. Why are those employees treated in that way, while the employees of the new towns are not? It is clear that the Government have not turned their backs on the Crombie code, or they would not be using it for the Land Authority for Wales.

    I do not see how I can interpret the answer given by the Minister for Housing and Construction. He said to me on 30 June:
    "It is the view of the Government that the existing day-to-day management redundancy terms should be applied."—[Official Report, 30 June 1980; Vol. 987, c. 438.]
    If employees of the Land Authority for Wales get it, surely new town employees should get it also.

    I have listened with interest to my hon. Friend the Member for Ilford, South (Mr. Thorne) and to the hon. Member for Greenwich (Mr. Barnett). In answer to the hon. Gentleman, I have to say that we do not believe that the numbers of careers affected and the numbers of redundancies will be of the scope that he imagines. That has a considerable bearing on what I wish to say about these new clauses.

    Both the new clauses propose the making of regulations to protect the interests of staff made redundant or who suffer loss or diminution of emoluments. The first concerns those affected by the setting up of the urban development corporations on Merseyside and in London. The second is concerned with the disposal of assets in new towns and reductions in their designated areas.

    The Government do not believe that such regulations are necessary. In the first place, there are very few staff who are likely to be affected by these developments. In Merseyside, there is little, if any, overlap between the functions of the new urban development corporation and the existing local authorities. In London, the shadow UDC is actively exploring ways of ensuring that it is able to make use of appropriate skills whenever and wherever they are available, including the docklands development organisation. In the new towns, similarly, few, if any, staff will be affected by the proposals for disposal of assets and reduction in designated areas. Secondly, there are already in existence terms that provide for the payment of compensation to staff employed in local government or the new towns who may be made redundant or lose their employment in the interests of the efficient exercise of management functions. We believe that these powers are adequate to cover any redundancies that may arise and that no further powers are necessary.

    From that, I hope that the House will realise that the best practices that are followed now, and have been followed for some time, will apply in this case. I cannot accept the suggestion that the Government are trying to shuffle out of their responsibility in this matter. The history of Crombie was recited to us by the hon. Member for Greenwich. The Government do not see the need for the Crombie code today, as there was a need in the past, given that good management compensation terms are now available to cover most groups of employees. In the case that the hon. Gentleman cited, that of the Land Authority for Wales, he will accept that it was some time ago when that concession was given. We are talking about any future decisions in these matters.

    The people employed in the docklands development organisation could transfer back to the Greater London Council, or, alternatively, would, like the contract staff, have a good chance of being recruited. I am sure that note will be taken of that.

    The Government will resist both of the new clauses.

    The House has listened to the most unsatisfactory reply that I have heard in almost any debate during a Report stage. I attempted to advance views, which are sincerely held by the individuals involved, to show why they should be properly compensated. It it not an argument for the Minister to use that there may be only a few individuals involved. If one man is being unjustly treated, that is a serious matter. The Minister should know that when the housing transfer took place, relatively few people qualified for Crombie code treatment. Nevertheless, they were justly treated. What I was arguing was that the situation of these people differs in no way from the situation of those who were made redundant as a consequence of the housing transfer.

    The Minister referred to normal day-to-day redundancy terms, as I did, but surely he knows that the redundancy terms to which he referred are significantly inferior to the Crombie code terms, which are designed to compensate an employee for the loss that he sustains as a consequence of legislation.

    Also, I am surprised that the Minister regards the Crombie code, because of my recital of its history, as out of date. He is inaccurate about the Land Authority for Wales. The provision is in the Bill in order to protect the employees of the Land Authority for Wales in the future.

    What I am asking is that the Government should go away and consider this matter carefully and, if necessary, meet the employee organisations which are directly involved, with a view to seeking a proper solution to this serious matter.

    The Minister has given me no arguments at all to show why the Government should refuse to accept the responsibility which I believe that they have.

    I confess that I am rather disappointed by the reply of my hon. Friend the Under-Secretary, because in Committee he was usually extremely helpful. In this case, we should not overlook any of the people concerned who have been involved in working for predecessor authorities. I believe that my hon. Friend mentioned the joint docklands committee. I might be misinformed, but I understand that the chairman of that body has been replaced under the new organisation. Therefore, there is already one case in point in which someone has lost his office as a result of the new proposals.

    It seems wrong that we are not looking after these officials because of the bad will that this will create for the future. We must think of the future and of any other similar happenings that may take place. We should not want to find that we could not get adequate staff to provide the service required. I hope that before the Bill goes to another place the Minister will undertake to look again at this matter, so that when it returns here he can assure us that it will contain the power to compensate officials properly by some other means, if it is not to be done through the new clause. It is only on that basis that I am prepared to withdraw the new clause.

    I beg to ask leave to withdraw the motion.

    Motion and clause, by leave, withdrawn.

    Mr. Speaker listened with care to what the hon. Member for Caernarvon (Mr. Wigley) said on the his point of order earlier this afternoon, and he has asked me to say that he has selected for debate new clause 22.