Consideration of Bill, not amended in the Public Bill Committee.
New Clause 1
Consents required for civil service compensation scheme modifications
‘(1) Section 2 of the Superannuation Act 1972 is amended as follows.
(2) In subsection (3), at the beginning insert “Subject to subsection (3A) below,”.
(3) After subsection (3) insert—
“(3A) Subsection (3) above does not apply to a provision which would have the effect of reducing the amount of a compensation benefit except in so far as the compensation benefit is one provided in respect of a loss of office or employment which is the consequence of—
(a) a notice of dismissal given before the coming into operation of the scheme which would have that effect, or
(b) an agreement made before the coming into operation of that scheme.
(3B) In this section—
“compensation benefit” means so much of any pension, allowance or gratuity as is provided under the civil service compensation scheme by way of compensation to or in respect of a person by reason only of the person’s having suffered loss of office or employment;
“the civil service compensation scheme” means so much of any scheme under the said section 1 (whenever made) as provides by virtue of subsection (2) above for benefits to be provided by way of compensation to or in respect of persons who suffer loss of office or employment.
(3C) In subsection (3B) above a reference to suffering loss of office or employment includes a reference to suffering loss or diminution of emoluments as a consequence of suffering loss of office or employment.”
(4) The amendments made by this section apply in relation to reductions to which effect is given by a scheme made under section 1 of the 1972 Act after the coming into force of this section.
(5) Subsection (6) applies if—
(a) a scheme under section 1 of the 1972 Act is made after this section comes into force, and
(b) consultation on the proposed scheme took place to any extent before this section came into force.
(6) The fact that the amendments made by this section were not in force when that consultation took place does not affect the question whether the consultation satisfied the requirements of section 1(3) of the 1972 Act.’.—(Mr Maude.)
Brought up, and read the First time.
I beg to move, That the clause be read a Second time.
With this it will be convenient to take the following:
Amendment 4, page 1, line 1, leave out clause 1.
Amendment 3, in clause 2, page 3, line 14, at beginning insert ‘Subject to subsection (2A),’.
Amendment 2, page 3, line 14, at end insert—
‘(2A) Section 1 shall not come into force until the Minister has laid a report stating that the affected members of the relevant trade unions under section 2(3) of the Superannuation Act 1972 have given their approval by means of ballots to the terms of section 1, and the House of Commons has come to a Resolution on a Motion in the name of a Minister of the Crown approving the report.’.
Amendment 5, in title, leave out from ‘provision’ to end and insert
‘modifying the effect of section 2 (3) of the Superannuation Act 1972 for benefits to be provided by way of compensation to or in respect of persons who suffer loss of office or employment.’.
Government amendment 1.
In my statement to the House in July and again on Second Reading in September, I made it clear the Government’s intention is to make the civil service compensation scheme affordable, and I set out our intention to legislate to underpin the negotiations to achieve that. However, I have made it clear at all stages—and I make it clear again today—that our principal aim has been to reach a negotiated settlement with all six civil service unions to introduce a new successor scheme that would provide, in particular, better protection for lower-paid civil servants.
The current civil service compensation scheme is unaffordable and completely out of kilter with practice in the rest of the public sector, let alone in the private sector, and it actually makes more likely redundancies among the lowest paid and shortest-tenured civil servants. The previous Government recognised that and engaged in protracted negotiations over many months—indeed, over several years—with the Council of Civil Service Unions to try to reach agreement on a successor scheme. I pay tribute today, as I did on the previous occasion, to the right hon. Member for Dulwich and West Norwood (Tessa Jowell) and her predecessors, who persisted in trying to get full agreement from all members of the Council of Civil Service Unions.
Despite those months of negotiations, the previous Government were unable to achieve full agreement. I understand that it looked as though an agreement was there, but at the last minute the PCS—the Public and Commercial Services Union, the largest of the civil service unions—pulled out, leaving a proposed new scheme in place that had been agreed by five unions, but not by the sixth.
Given the extensive consultations and negotiations that took place, which gained agreement from five out of the six unions, the previous Government felt and concluded—I said at the time that I agreed—that it was only right that one union should not hold the right of veto on any change. So in April the previous Government imposed a new compensation scheme that reflected the agreement with the five unions. But for the action of the PCS, that might have been where the story ended, but the subsequent actions of the PCS have led us to where we are today.
The PCS challenged in the High Court the right of the Government to impose a settlement in such circumstances and the Court subsequently quashed the February scheme. So almost literally on my first day in office after the election, I was confronted with a situation in which the previous civil service compensation scheme was still in force and had not been reformed at all. That scheme, as I have said, is completely unaffordable, inherently unfair and in urgent need of reform. It was striking that on Second Reading, when this issue was extensively and thoroughly debated in a constructive and open spirit with no element of partisanship creeping in, every Member who spoke agreed that the current scheme was unsustainable and needed reform. There was complete consensus across the House.
The current compensation scheme is extremely generous compared with the rest of the public sector, let alone private sector, equivalents. A comparison with the statutory redundancy scheme shows that payouts, particularly for lower-paid workers in the private sector, are capped at 32 weeks’ pay at a maximum weekly pay that is still, I think, capped at £380. The maximum that can be paid out to anyone under that scheme is less than £12,000. By contrast, the maximum value under the civil service scheme is the equivalent of six years and eight months’ salary. Typical schemes in the private sector—particularly the statutory scheme—pay one week’s salary for each year worked. The civil service scheme pays at least four times that amount—a month’s salary for each year worked, and in some cases up to three months’ salary for each year of service.
The previous Government spent £1.8 billion on civil service redundancy payouts in the last three years, including a number of spectacular six-figure settlements for individuals. The result of the scheme’s being so generous and unaffordable is that Departments cannot afford to make civil servants redundant, even if they are willing to go voluntarily, if they are highly paid and of long tenure. If Departments need to save money—as they had to under the previous Government and as they will have to under the coalition Government—through redundancies, they simply cannot afford to choose those individuals on high pay and long tenure. In order to make the same savings in salary terms, they need to make many more lower-paid and shorter-tenured staff redundant. The unjust effect of the current scheme’s being so badly structured and unsustainable is that if it were allowed to remain in place, more civil servants would lose their jobs and more civil servants on lower pay would lose their jobs. The coalition Government are not willing to see that happen.
I understand the logic of the Minister’s argument, but I have a constituent who has a business case for her to take early retirement under the voluntary scheme—I have seen the business case, which will save a great deal of money over the next few years. She is not being allowed to go now because of the uncertainty surrounding this process. Do we not have a little disconnect at the moment in that this process and this Bill are stopping people leaving early when it suits them and would save money right now for that Department?
Depending on what the House decides today, some of that uncertainty should be removed. I want Parliament to be able to move quickly to enable the new scheme to be put in place, because it will provide certainty. I absolutely understand the uncertainty that exists for many dedicated, hard-working public servants who know that there might not be a future for them because of the situation—because, frankly, of the previous Government’s legacy of the fiscal deficit—and it is really unfair to leave people in limbo and with that kind of uncertainty. I want us to achieve the greatest certainty at the earliest time so that people know where they stand and so that Departments and agencies that have to make redundancies can go ahead with them and enable people to make the break and start the next phase of their lives.
The caps contained in the Bill are, as I said on Second Reading, a blunt instrument that will immediately limit the amount that can be paid to any individual. Those caps were never intended to be a long-term solution. It is and has always been our absolute priority to create a scheme that is affordable but that provides protection for the lower-paid. However, those protections are complicated to engineer and we felt—I do not resile from this at all—that it is incredibly important to consult thoroughly and to discuss properly how those protections should be configured. The discussions with the unions have been very productive and have led to the scheme, which I shall describe, being configured.
Widespread concern has been expressed throughout the House about the impact of the Bill on hundreds of thousands of civil servants. I welcome the fact that the Government have improved the offer to the civil service, but that offer is not as generous as what was on offer in February and agreement has yet to be reached. Will the Minister agree personally to meet the six unions concerned to try to achieve a negotiated solution? Negotiation has to be better than the blunt instrument that will impose serious changes for the worse to the employment contracts of, for example, defence civilians in the Ministry of Defence who are serving in support of our forces in Afghanistan right now. That instrument will establish a chilling precedent for the future and it is worrying all public servants. Will he make one final effort before the Bill becomes law?
Absolutely and unequivocally, yes. I shall talk a little about the process we have been through and where we are in the negotiations. I say clearly to the hon. Gentleman and to the House that if it is at all possible to achieve a fully negotiated settlement that is affordable and fair to the taxpayer and that meets the concerns of all the unions, we will certainly try to achieve such an agreement with all six unions. I shall say a little more about that in a while, but the answer is definitively yes.
In Committee, the hon. Member for Birmingham, Erdington (Jack Dromey) made some good points about individual exceptions in which even the terms proposed in the negotiations with the trade unions might be unfair to individuals who have been through particular hardship. Does the Minister agree that that can be resolved only through negotiation and that aiming to resolve it through legislation would be a mistake?
My hon. Friend is completely right: there has to be flexibility. That is why I have always said that the caps imposed by the Bill are not right for a permanent system because they do not provide that flexibility. The scheme that has been brokered between the negotiators for five of the unions would provide much greater flexibility and would, I think, meet the concerns that he raises.
Also in Committee, Dusty Amroliwala, the civil servant responsible for handling the scheme, said that he would have advised any Government to take that approach to break the legislative logjam. He also said that there had been no estimates of what the Bill would save because there was no expectation that what it proposed would be the end result. In that sense, does the Minister agree that this is part of the process of breaking the legislative logjam?
Yes, indeed. If the result of the process that we have been through with the Bill is that it makes a negotiated settlement more likely, that will be extremely beneficial. I do not want the outcome of all this to be that the existing scheme remains in place with the crude caps that the Bill imports. What we want is a new, successor scheme, and there is now a serious prospect of that being achieved. If it can be achieved with the support and agreement of all six civil service unions, no one will be more delighted than I. However, if we have to go down the path of having a new scheme that is supported by fewer unions, that would still be better because it would mean that many of the concerns that have been raised would be met better than by the Bill. That would be infinitely better than the current scheme remaining in place, as it is simply unaffordable and unsustainable, as the previous Government openly accepted.
In response to the points raised by Opposition Members regarding the difference between the deal that was done by the previous Government and deal being done now, how would the impact on low-income workers in the civil service differ?
If my hon. Friend will allow me I shall come to that later, because I want to talk in a little more detail about the terms of the scheme that has been brokered by the negotiators for five of the unions.
I repeat that we want a long-term negotiated successor scheme. We want a package of reform that provides genuine protection for lower-paid civil servants, that caps the total amount that can be paid out, that provides protection for those closest to retirement and that reforms the accrual rates. It takes time to negotiate such a scheme and it has been a very intensive process. That is why the caps were put in place in the Bill—as a safeguard to ensure that if agreement could not be reached, we could at least limit the payouts in the short term. I have always been hopeful that we could reach agreement with all six unions by the time the Bill reached Report.
After the intensive negotiations throughout the summer, we reached an impasse. The same five unions that agreed the February deal with the right hon. Member for Dulwich and West Norwood came together once again and put to me concrete proposals for reform. Sadly, the PCS refused to join them in that approach. That was disappointing, but I made it clear to the PCS that it was welcome back at any stage if it was willing to put forward concrete proposals, and I wrote to Mark Serwotka, the general secretary, to that effect. In the meantime, my officials and I engaged productively with the remaining five unions to attempt to reach agreement. Last week, all five union negotiators, representing Unite, GMB, Prospect, the First Division Association and the Prison Officers Association, agreed terms with us that they were prepared to recommend to their executives. The terms of that agreement represent a reasonable outcome for everyone involved and deliver on our objectives of being fair, affordable and sustainable.
It is worth dwelling a little on the terms of the agreement. We reached agreement on a standard tariff in which each year of service would provide one month’s salary in the event of redundancy. That compares with one week’s salary for every year of service under the statutory redundancy scheme. The tariff would be capped at 12 months for compulsory redundancy and at 21 months for voluntary redundancy. All civil servants being made redundant would be entitled to a three-month notice period. That is in contrast to a cap, in some circumstances, of well over six years’ pay—six and two-thirds years—and paying up to three months’ pay for every year of service, as is the case currently. It contrasts with the current situation of having a six-month notice period for all compulsory redundancies, but no equivalent notice period for voluntary redundancies. The new scheme will be simpler, fairer and more affordable.
We also agreed on significant protection for lower-paid civil servants. Under the terms of the scheme, any civil servant on a full-time equivalent salary of less than £23,000 who was made redundant would be deemed to earn £23,000 when their redundancy payment was calculated. So for someone earning £13,000 in those circumstances, the multiplier by which the number of years would be multiplied to calculate the redundancy payment would be deemed to be £23,000. For the very lowest paid in the civil service, that is significant additional protection and, I have to say, better protection for the lowest paid than the February scheme. I say again that that would be a permanent feature of the scheme, not a transitional feature of it. It would be in place for all time, or for all time until some subsequent Government chose to revisit it.
Conversely, staff earning more than six times the private sector median average earnings, which is around £150,000, would have their salary capped at that figure for the purpose of calculating their redundancy payment. That would be an end to the mega-payouts, which have been highlighted in a national newspaper recently and which cause a certain amount of offence to taxpayers.
We also agreed on protection for staff who have reached the minimum pension age of 50, allowing them to opt for early retirement when they leave, in return for surrendering the appropriate amount of any redundancy payment. Again I stress to the House that under this proposal that will be a permanent feature of the scheme, whereas in the February scheme, which the right hon. Member for Dulwich and West Norwood attempted to impose, it was framed as a transitional arrangement that would run out over time.
I believe that that is a fair deal for civil servants and for taxpayers. Given that we had agreement from five of the six union negotiators on the terms of the new scheme, I therefore proposed an amendment—the new clause that we are now discussing—to allow the Government to impose that scheme, which is a power that the Government thought they had and used when the right hon. Lady was in office, but which was subsequently struck down by the High Court.
I want to make it absolutely clear that there will be an obligation for the Government to consult properly before any scheme is imposed. I believe that that obligation already exists in section 1(3) of the Superannuation Act 1972, but lest there be any doubt, I undertake that we will introduce a further amendment in the other place to put the matter beyond doubt. In the intervening period, I shall want to discuss with the right hon. Lady and with the unions how we can frame that measure in a way that gives the necessary comfort that this is a serious process. That commitment is there. There is already in the existing Act an obligation to consult the unions. It is not framed in quite that way, but that is the effect of it. We shall introduce further amendments if they are regarded collectively, by us all, to be necessary to put the matter absolutely beyond doubt.
I want now to make it absolutely clear what the new clause does. It does not create any unprecedented power for me that has not been available to my predecessors. It simply recreates precisely the power that the right hon. Lady had when she imposed the February scheme. It does not go one whit beyond that. It is rigorously framed so that it goes no further at all than the power in the original Act, on the basis of which the right hon. Lady—in good faith, and with our full support—acted before the election.
Let me say a word about the PCS. I have no wish at all to exclude the PCS from the negotiations. Late last week, the leadership of the PCS came back to me and indicated that they would like to return to the negotiating table. I welcome that and have told them that I am looking forward to seeing their proposals. The other five unions have been making constructive proposals for some little time now, and those suggestions have formed the basis of the proposed new scheme brokered and agreed by the negotiators for those five unions. I have stressed to the PCS that any changes to the proposed scheme cannot exceed the cost envelope of the scheme already agreed, and that any changes must be agreed with the other unions, which have already worked hard to reach this agreement.
May I say a word about the Opposition amendments, which have been grouped with the Government new clause and amendment? The Opposition amendments would effectively invalidate the effect of the Bill, as they would remove the caps, which are the essence of the Bill. There is nothing more to say about that. On Second Reading, I set out the reasons for having the Bill at all, and I have reiterated them today. I say again that no one would be more happy than I would if, the day after Royal Assent is given to the Bill, should it get that far, I am able to put those provisions into abeyance; I do not want us to be in a position whereby those caps are what applies in practice. I want there to be a new scheme—ideally agreed by six unions, but if not, agreed by as many as possible, and imposed using the powers that the right hon. Lady herself used, which the Government new clause will put into effect and allow to be used.
I earnestly hope that a successfully negotiated new scheme agreed by all six unions will follow from today’s debate. I stress that I remain completely committed to achieving that. If we can achieve it, neither the caps in the Bill nor the power contained in the new clause will be needed, but if there were no such agreement, it would be wrong for the PCS to be able to veto any changes to the current scheme, because that scheme has been universally agreed in the House to be unsustainable. This amendment will simply put the current Government in the same position as the previous Government—committed to consultation and to negotiation, but able, in the end, to decide. I commend it to the House.
I shall speak against Government new clause 1 and in favour of the amendments standing in my name and that of my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). I give notice that I intend press amendment 4 to a Division, subject to your will, Mr Speaker.
I also want to put on record my appreciation of the conciliatory tone in which the Minister has addressed the House today and note what I think was very constructive scrutiny of the Bill in Committee, which gave the opportunity to hear witnesses.
I would like to identify the common ground that we share, but also what still divides us. We agree that the civil service compensation scheme is in need of reform—as the Minister observed, I spent many hours trying to secure that reform—but it is also important that new legislation take account of the conclusions of the judicial review. It is important, too, that that is done in the right way, giving the 500,000 or so civil servants who are liable to be affected the confidence that the process will be fair and that the fairness of that process is institutional.
The legislation represents very high stakes for the 500,000 or so civil servants whose lives stand to be directly affected by its provisions. The Bill is not simply a blunt instrument for negotiating purposes. For those 500,000 civil servants, it could be a matter of their keeping their home, helping their children through university or averting financial hardship while they look for a new job. We heard eloquent evidence of that anxiety from witnesses who appeared before the Public Bill Committee.
To summarise, we have two central problems with the Government’s position on the Bill. The first problem, as we argued from the outset on Second Reading, is with the unacceptable caps set out in clause 1. Our amendment 4 is intended to deal with that. The second is the unbridled powers that the Government are seeking to impose on any new scheme that fails to secure a negotiated agreement. We will take every step we can to insist that a requirement for consultation and due process appears in the Bill.
I am not talking about the scheme; I am talking about the power in the new clause for the Government to impose a new scheme, which the right hon. Lady has just described as an unbridled power. I am asking her to agree what is certainly the case: that the power that the new clause would give to me is precisely the same power as she had and exercised when she held my job eight months ago.
Let me come back on that point. When I was responsible for the negotiations, they were long, as the Minister outlined, and involved a serious and concerted attempt to reach a negotiated agreement. New clause 1 is a necessary way of dealing with the unexpected outcome of the judicial review earlier this year. Had we been returned at the general election, we would no doubt have had to amend the 1972 Act in the light of that, but the critical difference is that we would not have introduced legislation simply to impose a settlement in the absence of a clear commitment in the Bill to negotiation in good faith in order to try to achieve a proper agreement. That is why I stand by my description of the powers, as drafted in the Government’s new clause, as unbridled.
We recognise the need for an amendment to the Superannuation Act 1972. The High Court judgment made a clear case for ensuring that the Government are able to compel a settlement and that no union should be able to veto changes. That is a position that we would support.
The right hon. Lady’s amendment (a) would mean that the unions would have to consult their members in accordance with the rules before any new scheme could come in. Does she agree that that would provide the opportunity for a trade union to veto any changes merely by refusing to negotiate or consult its members?
If the hon. Gentleman reads the amendment carefully, it will be clear to him that it is intended not to give the trade unions a veto, but to require a report to Parliament on the progress of the negotiations where the power is intended to be used, giving the effect of the imposition of a settlement in the absence of the agreement of all six unions.
The amendment states that the Minister must lay
“a report of the consultations that have taken place with the workforce and their recognised representative trades unions with a view to agreement”
and that the report should contain
“a statement that the representative trades unions have consulted their members in accordance with their rules”.
The report cannot include such a statement unless that has happened. That, in essence, would revert to a veto for the trade unions. I should think amendment (a) should not be moved.
The approach is intended to ensure that what appears in the Bill when it receives Royal Assent represents a right and proper balance between the responsibility of the Government to secure a settlement and the entitlement of the trade unions to be properly consulted. However, as the hon. Gentleman may not quite be aware, in Mr Speaker’s wisdom he did not select that amendment for debate.
I return to our clear view that no one union should be able to veto a change to the civil service compensation scheme that is the result of negotiated agreement with the majority of unions. The Government’s ability to compel a settlement should be the course of last resort, once it is clear that common agreement cannot be reached—
I shall make progress. Many Back Benchers want to speak in the debate and the hon. Gentleman will have a further opportunity.
We cannot support the Government new clause as drafted because it allows the Government to impose changes to the scheme at any point, without the contingent obligation to consult the work force or their representative trade unions.
To be absolutely clear, the Superannuation Act states, at section 1(3):
“ Before making any scheme”—
this would refer to the schemes that we are discussing—
“under this section the Minister . . . shall consult with persons appearing to the Minister . . . to represent persons likely to be affected by the proposed scheme”.
So there is an explicit obligation in the 1972 Act to consult representatives of staff affected by any new scheme. That is absolutely explicit. It was the obligation that the right hon. Lady herself followed scrupulously when holding the job that I now hold, and it is the obligation that I absolutely undertake we have been following. If there is any doubt about it, we will make that even more explicit with an amendment tabled in the other place.
I am grateful to the Minister for that clarification, but as nearly 30 years have passed since the Superannuation Act was introduced, both the terminology and the reference to the negotiating structure could be updated to make the two commitments clear—the right to impose in the absence of unanimity among the unions, but a right that is exercised only on the basis of clear, systematic, open and proper negotiation with the appropriate trade unions and work force representatives.
The other underlying issue is the lack of confidence in the process so far. The Bill was published before the civil service unions had even met the Minister or his officials. None of the work force had the opportunity, unlike during the negotiations that we undertook, to comment on the proposed reforms, despite the fact that they marked a significant and detrimental departure from the previous package. The obligation to consult the work force at every stage is missing from the Bill.
Given the powers that the Government have asked the House to grant them through the new clause, it is only right that safeguards be put in place to ensure a fair and reliable process whereby the work force have a right to be consulted, the Government are obliged to seek an agreement with the representative trade unions and the House is the arbiter of whether that process has been fair and transparent. If those safeguards had been put in place, we would have supported the Government and not sought to vote against the new clause.
We have outlined a very clear basis for our opposition to the proposed change, but we make it equally clear that if the Minister for the Cabinet Office seeks to introduce in the other place a revised amendment that addresses the judicial review and puts consultation and proper process in the Bill, we will support him. That is dependent on Mr Speaker taking his usual principled and pragmatic view and not judging the Bill to be a money Bill, which would eliminate the possibility of any such constructive amendment and scrutiny in another place.
To be absolutely clear, I am advised that if the new clause were not agreed to and the Bill remained as drafted, it would be possible for Mr Speaker to exercise his discretion—and it is a discretion—and certify it as a money Bill. However, I am also advised that if the Bill were to include the new clause and amendment that I have tabled, the question of its being a money Bill would not even arise. So, if the House were to carry our proposed changes, there would be no question of the Bill’s continuing to be a money Bill for the purposes of the other place; it would go through the full and usual processes there.
The Opposition would very much welcome full and further scrutiny, as the negotiations are ongoing.
The issue is about the right reforms, which we seek to put forward through our amendments 4 and 5, whose purpose is to strike out the arbitrary caps that the Government introduced at the start of the process. Those caps have led to an improved offer, as my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) said, as a result of negotiation, and we welcome that. There is now an improved offer on the table, so we do not understand why the Government oppose our amendment. Given that new clause 1 would give them the power to impose any settlement, why have the caps, which have caused such distress and anxiety to civil servants, remained in the Bill?
We are pleased that the Government claim to have reached an agreement with at least some of the trade unions, and the Government have declared that that will supersede the terms before us. To echo the Minister’s language, I note that he has managed to introduce a “sharp instrument” to replace the “blunt” one, but that leads us to question why the Government persist in wanting those terms to remain in the legislation.
The caps are simply out of kilter with the subsequent agreement that the Minister claims to have reached. He, his colleagues and his officials have told us that he wants a negotiated settlement, and on both sides of the House the consensus is that that would be the right course of action. Instead, however, the Government want to proceed to impose the arbitrary caps that they sought to impose at the beginning of the process. For those reasons, we ask the House to oppose the Government’s proposed changes and to support our amendments 4 and 5.
The Government, in their handling of the Bill, have already tried the patience of the House to its limit. First, they asked us to agree to caps that they never intended to use, or hoped would never be used or reach the statute book. Then, they asked us to support a set of final provisions that would allow those terms to expire and be resurrected at any time in the future. Now they implore us to support a new clause that, in effect, would give them a blank cheque to draw up a new scheme at any time, with no guarantee that the work force, the trade unions or the House would be engaged in or influence the outcome.
The handling of this Bill has been an absolute shambles, and it is with some sympathy that I say to the Minister that he is now in a hole. The Treasury is breathing down his neck and insisting that he makes whatever savings that earlier in the process he might have pledged, but that now will take a little longer to realise. We will oppose the new clause and press the House to a vote on our amendment 4, simply because the legislation before us will have a profound effect on the lives of thousands and thousands of civil servants, and they deserve better.
This has been a rather depressing debate, because the Opposition have demonstrated “oppositionism” at its worst. Everybody recognises that there is a problem and, basically, we cannot afford to pay six and two thirds years’ redundancy payments to some senior civil servants. The Government are trying to look after the low-paid, and our proposals are better than the Opposition’s. The Opposition’s amendment, which admittedly has not been selected, would have reinstated a veto for the trade unions on any proposals for change, something that the Opposition disagreed with when they were in government.
I accept the shadow Minister’s point that the Opposition’s proposals are the same as those in the negotiations, but the whole point of the Bill is that it is not supposed to be the end result. Civil servants have not made any estimate of the savings as a result of the Bill, because it is not supposed to be the end result. This legislation is what the civil service has advised us to undertake in order to break the legislative logjam that the previous Government created. It is about making progress.
On the issue of how we manage the civil service, I think that we should try to look after our employees and aim to minimise redundancies. In the absence of the Bill, however, that would become harder and harder. One thing that must be recognised is that reorganisation has essentially come to a halt, because we will not be able to save money if we have to pay six years’ redundancy to somebody. Paying six years’ redundancy will mean that we increase the deficit.
The hon. Gentleman keeps using the figure of six and two thirds, but will he concede that that is wholly inaccurate? Under the current terms, the maximum payment is three years. The six and two thirds figure to which he refers includes the enhanced pension that somebody would receive if they were over 50 years old. Will he therefore accept that his explanation is inaccurate?
The question is about what we add to the deficit—the actual cash costs. That is the key. The proposals that the previous Government tried to impose were struck down by a judicial review, so we have reverted to the original scheme.
In essence we are trying to reduce the deficit and reduce borrowing, and, if by making redundancies we increase borrowing, that will not get us anywhere at all. That is the reality of life. Underlying that, however, things can be done to reduce the full-time equivalent headcount without reducing staff—finding ways in which people can go part-time and so on. But, there is a legislative logjam that needs to be broken, and we need negotiations. Indeed, the 1972 Act requires them. The Public and Commercial Services Union argues in its briefing that there needs to be a trade union veto because there is no contract. However, those people who have contracts can find that their contracts are changed.
To be fair, I should take a very different view if there were any threat to pension rights. Pension rights are different, but an unaffordable redundancy scheme, in which we cannot reorganise organisations and save any money, is one that we cannot deal with in these circumstances—much that the priority has to be otherwise. To that extent, new clause 1 is the right way forward. I am surprised that the Opposition have taken the view that they would rather this were a money Bill than not, because their amendment would create the situation whereby it suddenly became a money Bill.
I thank the shadow Minister for saying what her objectives are. In the past, the Opposition have often had objectives that they failed to achieve. Their objective was to remove the trade union veto, but the amendment would reinstate it. Their objective is for this not to be a money Bill, but by voting against new clause 1 they would, if successful, make it a money Bill. I accept that the shadow Minister has particular objectives, but what she does tends not to work; that is the reality of the situation.
We have to be effective in terms of running Government. We must do things that work—that achieve results. This Bill is about achieving results: it is about creating a situation whereby there can be negotiations with the trade unions in which we can deal with difficult cases where individuals are suffering particular hardship. In the Public Bill Committee, there was an attempt to negotiate through discussions with the trade unions. That was dreadful—it was almost impossible to get anywhere, and I find it rather sad that anyone tried. The reality is that negotiations have to work in a particular way; one cannot negotiate through a process of producing legislation. We need a blunt instrument that creates an environment in which a negotiated settlement can be arrived at. To that extent, I support new clause 1.
Following the final comments by the hon. Member for Birmingham, Yardley (John Hemming), I fully agree that we have been trying to create an environment in which agreement can be reached. However, if I were a civil servant watching this debate, with the prospect of the large-scale redundancies that will happen after the comprehensive spending review, I would almost despair. It will be extremely difficult for all of them to come to terms with the loss of their jobs. As a manager in the public sector in a former life, I have always found that people are realistic as long as their views are respected and they are involved in the discussions and negotiations, which have been entered into in a spirit of good will. To achieve that, we need to create a climate of good will where people feel that their views are being heard.
Despite my having opposed every cut of every job in recent years under the previous Government, we were told in the Public Bill Committee that 80,000 jobs were lost but there were only 80 compulsory redundancies. The negotiations that took place on the basis of the protocols established with regard to redundancies and transfer between Departments resulted in a system whereby large-scale compulsory redundancies were avoided. The Minister referred to past practice under the previous Government. As I said, I did not support the cuts that went on, but I genuinely think that they were committed to a negotiated settlement. In my view, had it not been for the interference of No. 10 and the Treasury—this is almost like history repeating itself—we would have obtained a negotiated settlement that all unions would have accepted. However, the settlement was imposed, and I opposed that. The PCS took the then Government to court because it believed that the accrued rights of its members were being interfered with contrary to law because it was an imposed settlement, not an agreed one. It was proved right in the court of law, and we have to come to terms with the reality of that.
I do. I will come to that in a few minutes.
The position of the unions in the Public Bill Committee represented an attempt to acknowledge their responsibilities to their members. The PCS was in a similar position whereby, if it had not taken the Government to court to assert its members’ rights to their accrued rights and to consultation and agreement, it could have been taken to court by any individual member for failing to undertake its duty to its members.
Under the previous Government, there was a genuine attempt to negotiate a settlement. Under the current Government, I have found in my discussions with civil servants—not only PCS members but members of the other unions—that there is uncertainty among many of the people who may well be affected by the cuts to come as to whether the Government genuinely want a settlement, and anxiety that the Government are seeking to provoke a dispute. I listened to the Minister’s words, and I am grateful for them: they were positive and tried to create the climate in which a negotiated settlement can be achieved. However, the pattern of negotiations and ministerial statements in the past few months has not engendered an atmosphere in which a negotiated settlement can be brought about. That is why the Opposition have tabled their amendments. Every trade union representative at the Public Bill Committee made it clear to us that it was unprecedented for a Government, in the midst of negotiations, to introduce a Bill to impose a settlement in this way. It has never happened before in negotiations between a Government and the public sector.
That very civil servant’s advice landed the last Government in court, where they lost. I met him in the week before the general election and said to him: “You will lose in court because this is inaccurate advice on legal grounds, but in addition, it will not contribute to the conclusion of a negotiated settlement, and we’ll be back again within weeks”—and we were.
I do not believe that many civil servants who will be affected by job losses believe that the Government are seeking to resolve this matter by negotiation, and I am trying to reflect those views. We in this House, and the Government in particular, need to go the extra mile to get back to an atmosphere where there is confidence among the people who may well be threatened with the loss of their jobs, and we need to convince them that there is the opportunity of a genuine negotiated settlement. As I said in Committee, our responsibility is to seek to create a climate in which a just, negotiated settlement can be engendered.
I will come to that.
There has been a litany of disasters during these negotiations. If we want to secure an agreement, we need to try to keep everyone on board. The puerile attempts to divide the unions have been completely counter-productive. The first attempt was to try to insinuate that the PCS negotiator had agreed the terms but had been overturned by the PCS executive. That was put to the PCS negotiator in the Public Bill Committee and it was denied, so it is not true. In fact, the PCS did what it always does as a democratic union—it takes the issues back to the executive. It is probably one of those unions that consults its members more than any other.
The second attempt to divide the unions was by the reference to five unions having agreed a settlement and only the PCS being excluded by refusing to do so. The Minister put out a press release that caused anger among the trade unions. The Prison Officers Association immediately issued a press release saying that letters written to the Minister, in confidence and without prejudice, were put in the public domain. The result is that this week the POA has rejected the deal.
It seems that four of the six unions were originally going to put the deal to their members, but the POA and PCS represent more than 90% of the people who will be affected. They are the unions that we have to convince if we want a negotiated settlement, and they are negotiating on behalf of their members based on what those members tell them through their executive.
I meant 90% of the trade union members with whom the Government are negotiating.
May I tell the Minister what the POA has said about his words? Its general secretary Steve Gillan has said:
“I am annoyed that Mr Maude has leaked without prejudice discussions but I believe this has been deliberate in an attempt to drive a wedge between the POA and PCS. The POA will not allow him to do so.”
The Minister’s actions have meant that the union has now rejected the deal. Those actions were not responsible, and they were in contrast to the words of comfort that he has used here today and elsewhere in trying to engender a good industrial relations climate.
As my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) said, Members need to understand the strength of feeling among PCS, POA and other trade union members about the impact that the changes will have on their lives. We have had heart-rending cases submitted to us by people who have entered into mortgages, for example, believing that they had the security that even if they lost their job, they would have redundancy pay that would cover their mortgages. Now, they might lose their homes. We have heard of other people who were expecting significant compensation related to their salaries, one of whom would now lose £90,000 as a result of the Government’s proposals. No wonder people are angry and concerned. That is why they want their Government and their trade unions to come together to agree a fair way forward.
Yes I can, and the PCS has written to the Minister again recently asking for meetings. I believe that one meeting has taken place, so there is potential. However, we cannot expect a negotiated settlement to take place when tactics are used that undermine the confidence not only of the PCS but now of the POA. That lack of confidence is now infesting other unions as well.
Does the hon. Gentleman share my concerns about employees beyond those directly affected by the Bill? I am concerned about the hundreds of thousands of employees in the rest of the public sector who will be watching the process closely and wondering what the next stage will be as we rebalance the economy from public sector jobs to private sector jobs.
I take the hon. Gentleman’s point, which is valid and valuable. The Bill sets what many believe is a precedent for what will happen elsewhere, so it behoves us to get it right and ensure that we create a climate in which people at least understand that they will get a fair deal.
The Government’s tactic of the use of a money Bill was derisory. This was never really a money Bill, and when we asked for the justification for its being used as one, nothing was forthcoming. I have seen no note from Minister even defining it as such. It was simply a tactic whereby the Lords would have been excluded from amending the Bill, which would therefore have been implemented earlier. This House would have been denied the second opportunity for debate provided by Lords amendments. That tactic had an impact on people’s confidence in the genuineness of the Government’s approach to the negotiations.
The Government’s approach to the concept of accrued rights has been blasé. Their interpretation of accrued rights—that they are not really accrued but are obtained only at the time of a redundancy—seems contrary to not just law but common sense. I cannot see it standing up in any court of law, and it could indeed be challenged in court. As was said on Second Reading—by the Chair of the Public Administration Committee, I believe—the Bill could be enacted and then the scheme challenged in a court of law and the European courts. The Government could lose again, as they already have once, and then we would have to pay compensation to all the people who had been made redundant in the interim. That is no way to treat people and certainly no way to enact legislation.
I have some anxieties about the Government’s new clause, which is why I support my party’s Front Benchers’ efforts to eradicate it. It is there as a threat that the Government will drive people out of employment on the lowest terms possible. It would also enable them to amend the scheme in future. There are now additional proposals to change the protocol involved, the notice period for redundancy and other matters, which would undermine the protection of people who lose their jobs and the flexibility of a manager to avoid compulsory redundancies, which the hon. Member for Birmingham, Yardley sought.
The Government’s handling of the issue has soured the industrial relations climate in the civil service and sent a message to trade unions in other areas, such as health, teaching and local government, that what has come to the civil service unions affected may be visited on them. If the Government do not learn the lessons of the debates on the Bill over the past few weeks, they will provoke industrial action, and that action will be justifiable. Unions will have sought to negotiate a reasonable settlement, but the Government will have played fast and loose with the process, refused to listen and imposed something that will have a considerable effect on the lives of people threatened with the loss of their jobs.
To answer the question that the hon. Member for West Worcestershire (Harriett Baldwin) asked me, the position of the PCS, and now of all the other unions, is that they would welcome the Government going back to the negotiating table for serious negotiations. I urge the Lords to amend the Bill so that it will be brought back here for debate. I welcome the Government’s proposals for amendments in the Lords, because they would give us the opportunity for further debate and a further period in which there would hopefully be serious negotiations. They would give this House a long-stop role, so that we could determine whether there had been a just settlement and whether the Bill should therefore pass.
Finally, the House should not underestimate the strength of feeling of public servants on this issue. We have a responsibility to them and to our constituents whom they serve. If we undermine their role in any way through the Bill, we will live to regret it and so will the Government.
I am puzzled by the logic of the Opposition’s position this afternoon. At the beginning of the Bill’s passage, it was agreed throughout the House that every party recognised the need for change. The right hon. Member for Dulwich and West Norwood (Tessa Jowell) tried to bring it about. She introduced her Bill, but she was blocked and prevented from taking it through. The ball passed to the coalition parties, and we have now introduced a new Bill that recognises the bluntness of the instrument required to achieve a negotiated settlement.
We have heard this afternoon from my right hon. Friend the Minister about the deal on the table, which, if I understand it correctly, will offer up to 21 months’ pay on voluntary terms, plus a notice period of three months, making a maximum total of 24 months’ redundancy pay for all civil servants earning less than £23,000 a year, but based on that £23,000 figure. That is a better deal than the one that the Labour party offered civil servants earlier this year. When the right hon. Member for Dulwich and West Norwood said that she would oppose new clause 1 on the basis that our civil servants deserve better, I was left wondering which civil servants she meant. The truth is that the debate clearly shows that those of us who support new clause 1 do so precisely because we want a much better deal for lower-paid civil servants, which is the whole exercise of the Bill.
The right hon. Lady asks in which ways the Bill’s provisions are better. My understanding is that under the new deal that is being negotiated, a lower-paid civil servant—for example, one on a salary of £10,000—would receive up to 24 months’ statutory redundancy payment based on a salary of £23,000, which is better than the deal put on the table by the Labour party.
One theme that has come up in all debates on the Bill, including in Committee, was that we want better treatment for the low paid. I agree with my hon. Friend. I would have thought that the Opposition would welcome the low-pay aspects of the Bill and the improvement in the negotiating position.
No, don’t! She is being discourteous.
The point that I had reached was that many in the House clearly agree that civil servants deserve better. Those of us who support new clause 1 are absolutely clear—I have talked to PCS members in my constituency—that many members of the trade unions involved do not understand, and are indeed being misled by their unions on, what is on offer and what is being negotiated. I therefore put it to the House that Members who believe in supporting lower-paid civil servants will support the new clause, precisely because those people deserve better. That is what the measure will achieve and why I support it.
With the leave of the House, Mr Deputy Speaker, I want to make one or two comments at the end of what has been a good discussion of Government new clause 1, Government amendment 1 and the amendments in the name of the right hon. Member for Dulwich and West Norwood (Tessa Jowell).
My first point is that the coalition Government earnestly hope to avoid redundancies. It is in our mind at all times that every job lost, whether in the public sector or elsewhere, represents a personal disaster for that individual and their family. All hon. Members should bear in mind that these are grave matters for a lot of hard-working, dedicated public servants. Everything that we do in government will bend towards trying to find ways to avoid redundancies in whatever way we can.
Sadly, because of the lamentable state of the public finances, which the coalition Government inherited from their predecessor, it is unrealistic to expect that there will be no redundancies. Our concern throughout the Bill is to ensure that the terms on which people are made redundant are fair to the individuals affected and to the taxpayer. The aim therefore must be, as I have said repeatedly, a secure and sustainable negotiated agreement with which all are willing to live.
The hon. Member for Hayes and Harlington (John McDonnell) has said that the PCS wishes to engage and believes that there should be serious negotiation—he is very close to that union—and I wholeheartedly endorse that approach. The negotiations, which I am bound to say have proceeded without the PCS, have been serious and constructive, and that they have been entered into in a spirit of good will. They may have been fractious from time to time, because these are difficult matters that make a great difference to a lot of people’s lives, but throughout the process, despite repeated invitations to do so, the PCS has not made constructive proposals.
When Mark Serwotka came to see me at the beginning of this week—I spent a long time with him—and asked to be allowed to put forward proposals to reopen the proposed new scheme that had been brokered by the representatives of, and negotiators for, the other five unions, I said to him, “Yes, I am willing for that to happen, but the PCS must come forward with serious, constructive proposals.” I am still waiting. I want those proposals. I said that they must be discussed with the other five unions, because those unions have put in the hard yards of negotiating among themselves and with the Government on the configuration that best meets their varied needs and requirements.
The PCS must engage with not only the Government—it must do that—but with the other unions, because there is a limit to what can be afforded in these straitened times, and that limit has been reached. Within those constraints, however, there could be scope for reconfiguring the proposed new scheme to meet the PCS’s concerns. However, the first port of call for the PCS is to make genuine proposals to, and to engage with, the other unions involved. As I have said, those unions have been involved much more constructively and in a more open spirit than the PCS.
I want briefly to deal with the points made by the right hon. Member for Dulwich and West Norwood, who led for the Opposition, because her position—I will put this as charitably as I can—is somewhat inconsistent. She has said that amendment 4 would remove the caps, which are at the heart of the Bill. That is possible, because new clause 1 would create a power for the Government to impose a new scheme in any event. There is a certain slender logic in that, but I point out that there is a long way to go in the legislative process before that power comes into existence.
That slender logic completely self-destructed when the right hon. Lady said that she would oppose new clause 1. If the House did as she urged, it would not only remove the caps in the original Bill, but deny the Government any power to impose a new scheme in any event. The Government would therefore have no ability reform the existing scheme, which is what she and everyone who has spoken accepts is needed. Frankly, I am at a loss to understand how she can reconcile her opposition to my new clause and her support for her amendments.
For the record, I think I have made the position absolutely clear. The Minister’s words were more of a debating game than a substantive discussion of policy. We oppose new clause 1, because it creates no specific obligation to consult. Removing the caps would remove the structure of a settlement that the Opposition believe is profoundly and fundamentally unfair. The settlement is substantially detrimental to 500,000 civil servants compared with our February 2010 scheme, which has been grossly misrepresented by Government Members.
This is not a debating game. The Bill is deadly serious for hundreds of thousands of hard-working, dedicated public servants. The fact is that the right hon. Lady has today proposed removing everything—the ability to create caps on the existing scheme, which she says needs to be changed, and the Government’s ability to impose changes.
Let us look at what the right hon. Lady has argued on new clause 1. She accepts that my new clause is necessary and needed—both words that she has used at times to describe it—but she plans to vote against it on the grounds that it is, she says, an “unbridled power”. It is exactly the same power that she herself exercised earlier this year. Did she feel then that it was an unbridled power? Of course she did not, because there is already on the face of the Superannuation Act 1972 a clear and explicit obligation on the Minister to consult trade unions before imposing a scheme. Sadly, she seems to be unaware of that, so I am happy for the opportunity to enlighten her. She followed that obligation, and I undertake to follow it as well.
In the spirit of good will that has—broadly—dominated these deliberations, I have made a clear commitment that if further amendments are needed to make it clear in the Bill that proper consultation must take place before a scheme is imposed, they will be introduced in the other place. However, it must be recognised that as a “bridling” of this power—to adopt the right hon. Lady’s word—the legislation already contains an obligation to consult, and it has done so for nearly 40 years.
This new clause is necessary to give effect to a successor scheme to the current unsustainable, unaffordable and frankly unfair scheme, and the whole House accepts the need for that change. I stress again that it is the Government’s aim—we will strain every sinew towards it—to achieve a negotiated scheme that is supported by all six trade unions, in which case neither the caps nor this power will need to be exercised. However, to have any chance of reaching that point, it is necessary to reject the right hon. Lady’s amendments and to support the new clause.
Question put, That the clause be read a Second time.
New clause 1 read a Second time, and added to the Bill.
Limits on value of benefits provided under civil service compensation scheme
Amendment proposed: 4, page 1, line 1, leave out clause 1.—(Tessa Jowell.)
Question put, That the amendment be made.
Amendment made: 1, in title, at end insert:
“; and to make provision modifying the effect of section 2(3) of the Superannuation Act 1972 in relation to such benefits”.—(Mr Maude.)
I beg to move, That the Bill be now read the Third time.
The Bill has been debated extensively on Second Reading and in the good deliberations in the Public Bill Committee. We canvassed the central issues again in the course of today’s discussions on the Government new clause and the Opposition amendments. I say again that we are dealing with matters of huge significance to large numbers of dedicated public servants, who are in a state of considerable uncertainty and anxiety about their futures, which I completely understand.
We wish to avoid redundancies wherever that is possible, because we recognise—as everyone in the House should—that every single job lost is a personal disaster for that person and their family. We will therefore do everything we can to avoid them, but where they are inevitable it is important that the terms on which civil servants become redundant are fair, both to the individual and to the taxpayer. That is what we are seeking to achieve. I say again that the Government will strain every nerve to achieve a negotiated new scheme that will make the caps imposed by the Bill unnecessary. That would also mean that the power reinstated by the Government’s new clause and amendment that have just been agreed—which simply reinstate a power that previously existed and that was exercised by the right hon. Member for Dulwich and West Norwood (Tessa Jowell)—would not need to be exercised.
The effect of the passing of the amendments and new clause is that the question of whether this is a money Bill no longer arises, so it will move on to the other place and undergo full scrutiny. As I have said, I undertake to introduce further amendments there to clarify and entrench, to the extent that that is needed, the obligation to consult before any new scheme is imposed. I will ensure that that happens and will discuss the content and format of such amendments with the right hon. Member for Dulwich and West Norwood and with the relevant unions.
The Bill remains as essential today as it was when I announced our intention to introduce it back in July. We have made huge progress since in configuring what a new replacement successor scheme would look like—sustainable, affordable and fair. On that basis, I commend the Bill to the House.
I agree with much that the Minister said, particularly the extent to which the prospects for negotiated settlement on behalf of 500,000 civil servants, although not necessarily the Bill itself, have improved as a direct result of the parliamentary process to date and the probing questions asked by the Opposition. The offer now on the table is substantially improved, and I welcome the Minister’s commitment to introduce further amendments in the other place that will substantially improve what we believe to be a profoundly flawed Bill. I also welcome the Minister’s commitment to avoid redundancy in every available circumstance. I think that the civil servants who service so diligently the purpose of government will be listening closely to what he says.
Perhaps my final piece of advice is to remember that this settlement will have to remain in place for these kinds of negotiations for a very long time, so I urge the Minister to resist the pressure he is doubtless getting from the Treasury to reach the quickest and cheapest settlement, as that will not extend to those deserving civil servants the treatment that not just they but the country expect.
In a sense, it is sad not to see massive press interest in an issue that is very important to many people in this country. I am pleased to hear the Minister express the same views as I have expressed on the need to minimise the number of redundancies, and, if there have to be any, to maximise the number who go voluntarily through agreement so that we absolutely minimise the number of compulsory redundancies. This is about the way we manage staff—I have managed staff for more than half of my lifetime—and I believe it is important to work in consultation with people and to tell them what is going on. Discussions and negotiations are crucial. I very much welcome the Government’s approach to that.
The reality is that this process was started in July 2009 by the previous Government. This is a continuation of a process that everyone recognises was necessary. The Opposition now think that none of this should be done and they want to oppose it all. It is their prerogative to change their minds, but the reality is that we have to get on with it all and manage a very difficult situation. To that extent, we support Third Reading.
Much has been said about the need for the unions to negotiate. Let me be clear about the unions’ position, as a number of general secretaries are in the building today. The POA makes it clear in its statement that it has rejected the Government’s final offer, but it has left the door open for further dialogue with the Government, which must be meaningful with all the Council of Civil Service Unions present and with no exclusions.
Mark Serwotka of the Public and Commercial Services Union has written to the Government and briefed other MPs to the effect that he is keen to re-enter talks, but stresses again that they must be meaningful. The PCS believes it has worked hard to reach a settlement. Let me quote Mark Serwotka:
“From the outset PCS has worked hard to come to a fair deal. We cannot accept the current offer and are calling for further talks. If those talks do not take place we will continue to oppose the Bill in Parliament and will take legal action when appropriate as we have successfully done in the past.”
The two unions representing the vast bulk of the civil service members who will be affected by the Bill are willing to negotiate.
The problem seems to be not the Minister’s willingness to negotiate, but the Treasury envelope within which he is negotiating. If that is the problem, I suggest that the Treasury gets directly involved in these negotiations as well, so that it can see that its attempt to gain a short-term saving will have a long-term cost to the Government. That might help to get some productive negotiations going. By the time the Bill comes back from the other place, we might have a settlement across all the unions, but any attempt to try to divide the unions again will, I believe, be counter-productive. We now need to create a climate of industrial relations that will enable these negotiations to take place successfully for all the unions, not just for a small minority.
Question put, That the Bill be now read the Third time.