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Public sector workers take poorer salaries in return for more reasonable terms and conditions. When things go pear-shaped, they expect reasonable protection. Things have gone pear-shaped without a shadow of a doubt; the problem is that the safety net that public sector
workers thought was there is going to be withdrawn. Ministers can do the right thing, and I hope that they take heed of my arguments and those made by some other Members.
"Our view was that had the scheme that was introduced by the last Government, which was diluted as the negotiations went on, I understand, in order to secure the agreement of all of the unions, including PCS, remained in place then there would have been a very pressing case made for us to retain that and work with that."
"the truth is that there are significant numbers of people within the Civil Service for whom through no fault of their own but simply because of the way life has moved on there is no job in reality but who are not made redundant because the terms are prohibitively expensive at the moment."
With the greatest respect, that is arrant nonsense. I have visited Government Departments, agencies and non-departmental public bodies the length and breadth of the country, and I have never seen highly paid workers sitting around doing nothing. I do not believe that what the Minister said is accurate and I hope that he will withdraw the comment. He should know that 40% of civil servants earn £20,000 or less and four fifths earn less than £30,000. It is for the right hon. Gentleman to tell us in which Departments these people are sitting around doing nothing and earning money.
The trade union position is another stumbling block that we cannot hide from in this debate; it is important that that should be covered as well. The fact is that five of the six trade unions backed the February 2010 deal and that the Public and Commercial Services Union rejected it. To the Public Administration Committee, the PCS said that half of its 300,000 members-the higher-earning members-would lose out because of that deal. I fully understand the concerns, but then I look at the other trade unions involved in the negotiations-the FDA and Prospect, for example. The FDA represents the most senior civil servants in the United Kingdom and Prospect's predecessor unions have represented professionals, managers and scientists, who are more highly paid. Both those trade unions accepted that they had to make some compromises in the negotiations under the last Labour Government. They probably reached the conclusion, before the words were said by Government Members, that "we are all in this together" and that the public sector also had to make a contribution to the rebalancing of the economy.
The PCS rejected the deal, took legal action and stopped it. However, they stopped it not only for their own members but for all the trade unions that are part of the Council of Civil Service Unions. Now, this Bill tells us that all bets are off. The Minister for the Cabinet Office states that had that deal been accepted, this Government would probably have honoured it. He then offers a significantly poorer deal, which is linked to future negotiations. The Minister may feel that there is an opportunity to save more money or to humiliate the PCS for what he might perceive to be its exceptionally foolish action.
Mr McCann: I always tend to go with the majority; that is the democratic thing to do. When five out of six trade unions accept a deal, that tells us something. I would have taken the view that the majority position should have won through.
John McDonnell: For the sake of accuracy on the record, I should point out that the vast majority of members affected are PCS members; the numbers from the other unions are relatively smaller. Actually, when balloted, 63% of PCS members affected voted against the proposal for the scheme and in favour of industrial action.
Mr McCann: My hon. Friend is correct that 70% of those covered by the negotiations were PCS members, but we should bear in mind that 150,000, or 50%, of them would have been protected by the Labour Government's proposals. It is also dangerous to go down the line of citing figures from ballots because we then tend to look at how many people voted in them.
Mr McCann: With the greatest respect, I do not think that people should worry about numbers-we need to go to the meat of the debate, which is about protecting low-paid civil servants who would be disproportionately affected by the proposals.
The Minister may feel that the PCS has been foolish. He may feel that he wishes to take advantage of the PCS's vulnerability at this time and punish it. I genuinely urge him not to do so, because we anticipate a hard time for civil servants, many of whom may be made redundant as a result of the comprehensive spending review, and it would be vindictive in the extreme to hit them with the double whammy of redundancy and then a poor redundancy payment to boot, and to strip them of the hard-won conditions of service that they had.
You will be delighted to hear, Mr Deputy Speaker, that I am now going to sum up. The February 2010 deal was a fair deal, in my view. It saved money, it protected the lowest-paid, and it covered the protection of civil servants' redundancy payments and early retirement provision. We should not be attempting to punish members of the five trade unions who backed the February 2010 deal, nor should we punish PCS members, even if Ministers believe that the PCS strategy was somehow misplaced. To use the motto of Government Members, if we are all in this together, we should be fair to civil servants. We should put the February 2010 deal back on the table, legislate for those changes, and get the deal done. Then, we can ensure that all public servants who work in the civil service are protected properly.
Mr Deputy Speaker (Mr Nigel Evans):
Order. The hon. Member for East Kilbride, Strathaven and Lesmahagow said several times that we are all in this together. We are all in this debate together, and if everybody takes about 20 minutes, we will get fewer
than 10 Members in, so please be focused. We have not introduced a time limit on this debate, but if it carries on like this, I will have no hesitation in doing so.
Mr Bernard Jenkin (Harwich and North Essex) (Con): I am grateful for that comment, Mr Deputy Speaker, and I will truncate my remarks as best I can. Perhaps it is just an irony that the PCS is the single union that held up the agreement and a representative of the PCS held up the debate for 21 minutes after being implored to speak for only eight minutes. I reflect on that.
The Public Administration Committee, which I chair, recently took evidence from my right hon. Friend the Minister for the Cabinet Office and the principal civil service unions about the provisions of the Bill and the prospects for a negotiated settlement of the dispute about ongoing compensation for civil servants who are forced to leave their jobs or voluntarily accept redundancy. The hope then was that the parties would reach a negotiated settlement, but regrettably that settlement has not been reached.
It is appropriate at this stage to remind ourselves of why we are having this debate. We are here because there was no agreement. The agreement reached with the five other unions by the previous Government was challenged in the courts, and we finished up with the courts ruling that the compensation payable represents legally enforceable rights. That was never the intention of the original legislation, and that is why we have this Bill. We are not undoing previous legislation; we are undoing the work of the courts on previous legislation. In my view, it is about the culture of judicial review and judicial activism that we now live in. It is unfortunate but it is where we are.
Let us have no illusions about why this is necessary from an economic viewpoint. We are facing the worst public expenditure crisis since the 1930s. It is inconceivable that compensation arrangements that were reached as part of voluntary arrangements between Government Departments and civil servants, and have become legally enforceable by accident, should be respected as though they were contracts entered into and signed in blood. I do not accept what the hon. Member for Southport (Dr Pugh) said about these arrangements. They were intended to be flexible and negotiable, and the Bill is attempting to restore that position, albeit now putting in place a statutory baseline that is harsh-let us have no illusions about that. It is sobering to reflect how harsh these arrangements are in comparison with the existing arrangements.
The hon. Gentleman misunderstood me. The Government have made it clear that they want a negotiated settlement, and that they are not prepared to talk about the terms of that settlement in this debate.
Obviously, however, what we enact here provides a legally enforceable baseline that ultimately is not negotiable-the hon. Gentleman is quite right. The point is that the Government have made it absolutely clear that they want a negotiated settlement. With five of the six unions having negotiated in good faith, I hope that the PCS will also do so, whether or not the Bill passes on to the statute book and comes into force.
The need to reform the civil service compensation scheme is well understood. In fact, all the evidence that we received from the trade union representatives conceded that we need to deal with it as a matter of urgency in the current economic climate. This short Bill is simply a reflection of the accumulated mess that successive Governments and successive decisions in the courts have got us into. If there is one thing I regret, it is that there is not more understanding from the official Opposition of the mess that they were in on this same subject and that we cannot present more of a united front, but that is the prerogative of opposition and our democratic process, and I respect that.
I have two particular concerns about the Bill, and I would be grateful if the Minister could address them when he winds up. The first is technical and raises an important issue of principle. Clause 2 provides for early termination or an extension of the 12-month applicability of the legislation. Of course, sunset clauses are not unknown, and in many respects they are welcome provisions because they provide an opportunity to declutter the statute book. However, this Bill is unusual in providing what one might call a "sunrise" clause whereby, if desired, the legislation can be revived by an order under the affirmative resolution procedure in this House. The only similar provision was made in relation to section 13 of the Prevention of Terrorism Act 2005. I worry that the matters in this Bill are hardly in the same category, and that the ability of this House properly to control the law is being excessively compromised for nothing more than the managerial convenience of the Government. Can the Minister explain what the special circumstances are that justify such a provision in this case?
Secondly, I should like to focus on the possibility of a further legal challenge to the provisions of the Bill given the High Court's decision to quash the earlier agreement. In his judgment, Mr Justice Sales took the view that compensation payments under the scheme should be taken to be accrued rights in the same way as pension entitlements. In his answers to me about the Bill's compatibility with the European convention on human rights, the Minister for the Cabinet Office was, if I may say so, not entirely persuasive that he had addressed the legal point made by the unions and potentially to be made in a future action. The PCS argues that the Bill is unlawful because it offends against the principles of the ECHR, namely that the legitimate expectations about compensation rates that the current state scheme gives rise to, are legally possessions of which individuals cannot be deprived.
In the explanatory notes, the Government declare the Bill's compatibility with the Human Rights Act 1998 because payments under the civil service compensation scheme cannot be considered to be a possession. In any case, they say, even if they were to be considered possessions, since the cap on compensation rates does not apply
until a redundancy notice is issued or a voluntary departure is agreed-that is, after the Bill has come into force-it does not therefore amount to the deprivation of an existing possession. That is all very elegantly argued, and no doubt the Government have had the benefit of legal advice, but if the Bill is enacted and subsequently challenged in the courts, the consequences could be extremely significant. Even if the challenge were not successful, if it went to the European Court of Human Rights for a determination, the delay and dislocation would be considerable. How sure is the Minister that the rights generated by the legitimate expectation of civil servants about their terms and conditions with regard to redundancy payments will not be regarded as possessions?
I understand that there is case law in the ECHR suggesting that mere claims to possessions are capable of being interpreted as property rights when there is sufficient basis in national law, for example when there is settled case law in the domestic courts confirming that. Precisely that confirmation was provided in the case that was adjudicated in May. Is the Minister confident that, even if the accrued rights are considered possessions, the Government are justified in interfering with those rights in the wider public interest, and therefore lawfully able to do so? In short, is he satisfied that the unions will not have a claim against him for not exercising his discretion in a fair and proper manner in failing to recognise existing entitlements?
That is an important matter, not some arcane point. A legal challenge could run for a very long time in Strasbourg, perhaps for years, and if the Government lost having gone ahead with job reductions on the terms set out in the Bill, it would potentially saddle the public purse with a huge liability at some future date, to say nothing of the subsequent complications in trying to repay individuals long after the event. I point out that Governments of both parties have a long history of wishful thinking when it comes to such cases. I speculate that it appears that the easier course in the short term is often to risk defeat in the courts sometime in the distant future rather than to confront the legal realities and their implications immediately. That is not conducive to better governance and decision making, and if it continues to happen under this new Administration there will perhaps be a case for the Public Administration Committee to launch an inquiry into why the Government's legal advice has so often proved deficient in such cases. I place the Government on notice about that.
Subject to those qualifications, I support the Bill and will vote for it. What Ministers do will be taken as a reflection of the regard in which the civil service is held, and that will have an effect on the morale of the public service at a time of great uncertainty and change, and therefore on this Government's relationship with civil servants. Nobody listening to this debate can be under any illusion about the seriousness of the measures that we are discussing and the impact that they will have on people's lives. I commend many of those who have spoken from both sides of the House for alerting us to those concerns.
Jack Dromey (Birmingham, Erdington) (Lab):
May I declare an interest? For 15 years I was chairman of the Ministry of Defence joint industrial Whitley council,
which at its height covered 120,000 industrial civil servants. It was the only body in British industrial relations that survived the 18 years of a Conservative Government with a Minister in the chair, such was the emphasis on good industrial relations in a very sensitive Department. I know from my own experience that the armed forces value greatly the outstanding service given by defence civilians in the Army, Air Force and Navy. A colonel in charge of one of the biggest army bases in Europe once said to me, "Jack, we pay them poorly, but at least they can look forward to a decent pension and, if they lose their job, a good redundancy payment." That historic assumption is now being torn up.
Who are the civil servants about whom we are talking? Reference has been made to those who work in customs, in the UK Border Agency, in the issuing of driving licences and in air traffic control, and I will give two additional examples. First, only two weeks ago I was in the Jobcentre Plus office in Erdington High street, which covers the area with the highest unemployment in Birmingham but is the highest performer. There were excellent young men and women there working with a passion to help the most underprivileged in a deprived community back into work. The other example is people I know very well from my own experience, the defence civilians at RAF St Athan who, right now, are working hard to support our troops in Afghanistan. They are typical of those who have historically worked in the Ministry of Defence-loyal, long-serving employees, many of them ex-service personnel.
There are 35,000 civil servants in the west midlands, and I want to dispel the myth that they are well paid and have gold-plated pensions and secure jobs. They are mostly low-paid people whose wages have fallen behind inflation. Their average pension is £4,200 a year, and 100,000 civil servants have lost their jobs. Can we have a debate based upon the facts, not the myths?
On the myth that civil servants are well paid, 40% earn less than £20,000 a year and 63% earn less than £25,000 a year. In the Department for Work and Pensions, the lowest-paid get but £13,000 a year. Yes, there was the IT director on £249,000 a year, and that was absolutely wrong, but can we stop using the exception to have a go at civil servants as a whole? On the myth that civil servants enjoy gold-plated pensions, I have already said that if we exclude the highest-paid, the average pension is £4,200 a year, and 100,000 retired civil servants have a pension of less than £2,000 a year. On the myth that they are in secure employment, 20,000 jobs have gone in HMRC, 30,000 in the DWP and 25,000 in the Ministry of Defence, and many more now face losing their jobs, particularly as we look towards the comprehensive spending review.
Reform the current arrangements? Yes. Negotiation to that end? Without hesitation. But it is fundamentally wrong, and a very dangerous precedent, for Government to impose unilaterally on any group of employees changes that are detrimental to their terms and conditions of employment. It is wrong to compare what is now on offer with what was on offer from the Labour Government. Somebody on the median salary of £22,500 a year who has been employed for 20 years and is made compulsorily redundant will suffer a cut of £37,500 in what they would otherwise have expected. That is a broken promise to people who had accrued rights on which they depended, which the Bill is taking away from them at a stroke.
It is wrong that there is no protection in the Bill for the lowest-paid. I heard the Minister's Delphic statements earlier about his hope and expectation, but there is nothing to support them in the Bill. It is wrong and bizarre that somebody who is made compulsorily redundant will now receive less compensation. I know, from my years negotiating in the industrial civil service, about what used to be called public interest terms, which were associated precisely with compulsory redundancy. The Minister said earlier that he knew of no other such examples, but it is common in the private sector that there are enhanced terms for redundancy but yet further enhanced terms for compulsory redundancy.
It is also wrong that, without negotiation or pre-legislative scrutiny, the vehicle of a money Bill is being used in this way, and it is a dangerous precedent. If yesterday we saw a constitutional outrage-a gerrymander-today we see a contractual outrage, the unilateral dashing of the hopes and expectations of hundreds of thousands of civil servants.
I return in conclusion to RAF St Athan, because the workers there working day and night in support of our armed forces in Afghanistan are themselves facing redundancy. I know many of the individuals concerned, and they are trying to plan their future. Now, at a stroke, what they had hoped for will be taken from them in this Bill. They are not responsible for the misdeeds of bankers, and they resent the peddling of myths about civil servants, as they will resent, in the words that the Minister used today, the use of a "blunt instrument" against good men and women who have served this country well and deserve dignity and respect, but who are being treated with contempt.
Harriett Baldwin (West Worcestershire) (Con): I wish to add to the comments of Members on both sides of the House my recognition of the work that our civil servants do throughout the country. I have spent my working life so far in the private sector. Until I read about this legislation and the background negotiations that brought us to this point, I had not realised that there were still jobs in this land in which people could expect at redundancy to receive a payment of several years' pay. As we heard, in rare cases people can receive up to six years' pay. Most of my constituents would be astonished to learn that some who are faced with redundancy-it is inevitably shocking and stressful-are cushioned by a payment of several years' salary.
I thought I might share with the House some observations from the labour market in the private sector. Redundancy is always a very difficult decision for an employer to take. In my experience, most employers will try very hard to help employees to move within the organisation or reduce their hours. There are many examples in the current downturn of people accepting less work and remaining employed. We acknowledge that redundancy is very expensive, not only financially but in human terms, and that all good employers will go out of their way to try to avoid it. However, we can also see that in a flexible, modern and changing economy, redundancies will occur. Therefore, the provisions are significantly more generous than one would see in private sector employment today.
Thomas Docherty (Dunfermline and West Fife) (Lab): I can think of many privatised companies, as I am sure many colleagues can-I am thinking of British Energy and others-that have generous, multi-year severance packages, so it is wrong to say that we find them nowhere in the private sector.
We all recognise that people are reluctant to make employees redundant, and that they would make every effort to move people to new jobs. However, the Minister made an important point when he said that when redundancies need to happen, people want to avoid the situation in which the most recently hired and lowest paid are let go because decision making is distorted by the packages that must be offered to more highly paid people who have been with a company for a long time.
We can also acknowledge that when redundancies are made in the civil service-I gather that in the three years from 2005, there were 16,500 redundancies, which cost the public purse about £1 billion at an average of about £60,000 per redundancy-the money must be found from the taxpayer. I differ from my colleagues who said that the decision to introduce the Bill was made because of the deficit. I submit that even if we did not have a deficit, the sums of money being paid out in redundancy would seem no less huge.
We have talked a lot about fairness in today's debate. Is it fair that some of the taxes paid by an individual who finds work after being made redundant in the private sector-the average redundancy payment in the private sector is approximately £9,000-go to pay significant redundancy payments in the civil service? We all agree that something must be done, and as the right hon. Member for Dulwich and West Norwood (Tessa Jowell) said, the CSCS is simply not appropriate for a modern civil service.
It would be right to do something about the situation in good times, just as it is right to do something in tough times, but it would clearly be better, as everyone agrees, if the unions and the Government successfully negotiated a change. It would be more attractive if the redundancies that are being discussed were voluntary. It is often the case that managing a redundancy process that has a significantly more generous voluntary element makes the process much less painful for the work force. In addition, it would be better if we negotiated a change so that the public sector is more vigorous and stronger when new jobs are created. It is one of the counter-intuitive laws of economics that companies that have very generous severance terms tend to hire fewer people than companies that are more flexible. It is also counter-intuitive that the mobility of staff within organisations that have more flexible employment terms is improved. That can often help with morale and job satisfaction.
We have spoken today about protecting the lowest-paid, but perhaps we should talk less about protecting them and recognise that the more junior staff are often able to move up. In other words, instead of talking about protecting junior staff, let us talk about promoting and creating more opportunity for mobility for them within the organisation.
It is also been observed that similar counter-intuitive laws of economics apply to countries. Countries that have more flexible employment laws have much stronger periods of job creation when they move into economic recovery.
I agree with colleagues on both sides of the House that it is a shame that we have to discuss the Bill and that it would be much better if we came to a successfully negotiated conclusion. Let us hope that while the Bill goes through Parliament, the negotiations bring about a more reasonable scheme that is both affordable for the public purse and fair to the very many valuable public servants who are covered by the current scheme.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Like other hon. Members who have spoken in the debate, I have been contacted by a number of my constituents who work as civil servants. The people who contacted me are not serial complainers and campaigners who write to me or to other politicians about everything, but people who do valuable work in a number of different departments within the civil service and other bodies locally, and who are genuinely concerned about their futures. They do important work in places such as the Identity and Passport Service, the Housing Investment Division of the Scottish Government, the Criminal Injuries Compensation Authority, the Child Support Agency and Registers of Scotland. Although those jobs are not based in my constituency, they are based in the travel-to-work area. They are important for an area such as mine, which has seen a downturn in the manufacturing sector and is still reeling from the announcement that Diageo is pulling out of the Johnnie Walker plant.
I have come to the Chamber today to put on record my constituents' concerns and, like others, to take the opportunity to praise dedicated public sector workers, including civil servants, who have given their lives and careers to work on our behalf. However, it is no good speaking such warm words in the Chamber if we do not take action to back them up. We heard the Minister in his opening statement take a softly, softly approach, saying, "We can sort this. It'll be all right on the night," but that does not match up with the measures in the Bill.
Cathy Jamieson: We heard today that the people whom the Public and Commercial Services Union represents-the majority of people who work in the civil service-did not agree that the previous Government's approach was the right one at that stage. Whether or not the hon. Gentleman agrees with the union, it had the right to go to court and did so, and secured a ruling in its favour. We must recognise and accept that. I was surprised to hear other hon. Members suggest that the ruling by the court was something that we should simply dismiss, and I would hope that that is not in fact what they are saying.
Given the need for brevity, I will focus on one particular point and that is the device that is being used to push this Bill through. I am very concerned that the Bill has
been laid as a money Bill. I am a new Member and I stand to be corrected if I am wrong or if I have misunderstood what a money Bill has traditionally been used to do, but my understanding is that the Parliament Act 1911 defines a money Bill and charges the Speaker with certifying whether a Bill is a money Bill. Previously, money Bills have been used to protect revenue and to raise tax, but never before has a money Bill been used in a situation like this. I agree with my hon. Friend the Member for Hayes and Harlington (John McDonnell) who suggested that the use of a money Bill in these circumstances could be seen as an abuse of parliamentary procedure, and certainly many of the people who have spoken to me about this feel that is indeed the case. It is an abuse of that procedure to try to speed a Bill through Parliament without the proper scrutiny and, as the Minister has already accepted, to use a blunt instrument to try to force something on to the negotiating table.
If we look at the detail of the Bill, although it is very short we see that the degree to which it is unworkable in the long term is implicit in its provisions. The sunset clause, which means that the Bill will expire after 12 months, can be repealed at any time and can only be extended for a further period of six months by secondary legislation, and that is a real cause for concern. On the one hand, the Minister said that we have to negotiate but we cannot negotiate in public. However, at the same time, he is very publicly using this blunt instrument to try to force the unions into a particular position without providing any of the detail that Members on both sides of the House have sought today-
Michael Connarty: My hon. Friend is, as usual, shy about telling people that she is a former Minister in the Scottish Parliament and probably knows more about this than most Back Benchers. She also points out that the Bill has a sunset clause, but it is more like a sunrise clause. It is a blunt instrument fashioned to be picked up again and again when the Government do not have the capacity to negotiate and to be used to attack people in the public sector whenever they wish to do so. All that will be required is a statutory instrument off the Floor of the House, without anyone seeing what they are up to.
Cathy Jamieson: I am grateful for my hon. Friend's complimentary remarks. In fact, I am a former Justice Minister. Far be it from me as a former Minister to suggest that people should be suspicious about very short pieces of primary legislation that give greater powers to secondary legislation that can then be picked up and laid without proper parliamentary scrutiny. Having had to work on legislation in another Parliament, I recognise that the concerns expressed by hon. Members are well made in this case.
The Bill puts the Speaker in a difficult and unfair position, because he has to decide whether it should be certified as a money Bill when in fact it is about industrial relations and people should be redoubling their efforts to put the previous deal back on the table and to ensure that all the trade unions are involved in the negotiation. Parliamentary procedures should not be abused in this way.
Given that brevity is required, I shall not seek to rehearse points that other hon. Members have made. However, when we are talking about the low-paid and
given all the warm words that we heard earlier about the desire to protect the lowest grades in the civil service, I do not think it is good enough that Ministers cannot identify what "low paid" means in those terms and how many people will be affected. It is incumbent on the Minister who winds up the debate to give us more information on that point.
John Thurso (Caithness, Sutherland and Easter Ross) (LD): The Minister will know that I wrote to the Minister for the Cabinet Office on 21 July to set out the reasons why I cannot support this Bill. I have to say that I have not changed my mind in the intervening weeks or during the course of this debate. However, notwithstanding the fact that I will not be supporting the Bill, I appreciated the way in which the Minister presented it and the moderation of his tone in some remarks. Given that we are short of time, I shall cut straight to the chase and set out the reasons why I cannot support the Bill. The debate about private and public is the wrong debate. It is not even comparing apples and pears: it is more like trying to compare bananas with Brazil nuts. There is no comparison. I have been in the private sector all my life. I have never had a pension or redundancy terms, and I have always managed to earn a considerable amount of money. I knew what I was getting into. When I signed on for this place, I knew that I would experience a severe reduction in my pay, but that I would get a pension and redundancy terms, although of course the latter are not now so good- [ Laughter. ] Hey, we will keep working on that.
The point is that people take into account what they will receive in certain situations when they take a job. There may not be a legal contract, but I believe that there is a moral contract between the state and its employees. To put it in human terms, I have people in my constituency who work in the Forestry Commission, for the Department for Work and Pensions-although sadly that office was closed by the last Government despite being one of the most productive and absence-free in the country-and for HM Revenue and Customs in an office scheduled for closure in 2013. The one thing that all those people have been able to count on is that when the Gershon axe fell, they had a cushion between them and penury. In particular, I think of one employee who said to me, "Well, I took out my mortgage based on the fact that if I lost my job I could pay off the mortgage. If this Bill goes through the way it is written, I will have to sell my house." That is the human reality of this.
Many of the people who have gone into the public sector have considerable qualities, had a vocational desire to be in the public service and have forgone the ability to earn more money in the private sector. Part of their consideration for doing that was the terms and conditions available.
Companies are different because they have a top line, and that can be driven to make more profit and expand further. The last thing that any of us wants to see is an ever-expanding public service. We would like to control it and keep it as cost efficient as possible while delivering the service. It is therefore a wholly different model to driving a top line and delivering a profit. It is right that the famous six times salary provisions-I suspect that those are few in number-and those at the higher-paid
end should be reformed, but I am concerned that in fact the low paid in my constituency will bear the brunt, as will those who are coming to the end of their career and have no chance or ability to find another job. I want a scheme that will genuinely offer some help and succour to those at the bottom end of the scale.
I have a final suggestion for the Minister. He probably will not reply to it, but he can take it away for the negotiations to come. If the Government want a cap of £50,000, fine, but they should keep the current terms. That is a progressive way to do it, because the people at the bottom would be very generously looked after and the people at the top would pay most. Let us try that for a change.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): I think that there is agreement on both sides of the House that the scheme needs to be reformed on grounds of economy and fairness, but the questions are what constitutes fairness and how one gets there. My view is that the Bill is arbitrary and unfair, and therefore likely to increase further the suspicions with which low-paid civil servants view this Government. It is arbitrary because it is a coercive measure seeking to impose new terms and conditions on public servants, even as the Government claim to desire a negotiated settlement, and it is unfair because, as we have heard, it does nothing to address the reasonable expectations of the employees concerned, especially, I reiterate, the half of all civil servants who earn less than £21,000 a year.
The people we are talking about are decent people, many of whom do vital and complex work for modest rewards. In my constituency, Her Majesty's Revenue and Customs is an especially large employer. Most people from Cumbernauld-myself included-have a friend who works, or has worked, in HMRC. Members of the House who are blessed enough to receive official correspondence from HMRC are likely to have done so from Cumbernauld, and the men and women who work there do so to ensure that taxes are paid, tax credits properly administered and the Government's revenue maximised. Few can doubt the importance of this work, especially in times such as these.
The Minister insists that the Government are working on a package to protect the men and women who do such vital work, but I hope that they will understand that those men and women are not prepared to take that on trust. The Government's good intentions do not to a policy amount. This is especially the case when a fairer package already exists-the one devised by the previous Labour Government and now accepted as a basis for negotiation by all six trade unions. Alas, the new Government are uninterested and intend to force through changes to the law that override their obligation to consult and reach agreement with civil service unions under the terms of the Superannuation Act 1972. In the long term, therefore, this Bill has implications for the legal right of all civil service unions to consultation and negotiated agreements. In the short term, it means the removal of protection for the low paid.
The Government's failure to build on Labour's work in this area will, I believe, have dangerous consequences. All parties are agreed that the times call for more
efficient government, but, as has been mentioned, particularly from the Liberal Democrat Benches, efficiency is not just about laying off staff more cheaply; good training, organisation and management are essential if those workers are to do the important job of closing the tax gap-a tax gap that appears to cost us all up to £40 billion a year. My view is that addressing tax evasion and avoidance is the only true, fair way to deal with the deficit. If individuals and businesses paid what they owed, closing the tax gap would become simpler. Successive Governments, including Labour Governments, have failed to do so because they have not resourced enforcement appropriately. It will be so much more difficult to do so in the context of a demoralised, dispirited work force fearful about their jobs and the terms under which they could be made surplus to requirements-a point powerfully made by the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) and his colleague the hon. Member for Southport (Dr Pugh).
The Government claim that they are about getting more for less, but they have to recognise that this ambition is a complex and demanding one, and that it cannot be imposed arbitrarily from the centre. A Government genuinely interested in efficiency would look to promote bottom-up programmes and work force empowerment, and should not force through primary legislation that dramatically undermines job security. The legislation, I repeat, makes an arbitrary change without consultation or warning. This is slap-dash policy making-the Minister will not even offer an estimate of the potential savings. No wonder that civil servants in my constituency and elsewhere are sceptical and worried. This is not fair, it is not progressive, and it gives the lie to the claim that we are all in this together.
Ministers' response to criticisms of their changes to the CSCS parallel the Government's defence of the fairness of their policies more generally-"Do not judge us by what we have said and done. Judge us by what we might do in the future." My constituents are not prepared to take the Government's word for it. The gap between rhetoric and reality has already been observed in a number of areas in Government policy. This Bill will produce agonising uncertainty among modestly paid civil servants, will undermine their productivity in the service of the public, is damaging to industrial relations and exposes a divisive and confrontational attitude on the part of the Government. Most damagingly of all, however, it ignores progress made by the pervious Government.
I will finish on this point. My constituents are generally sceptical of the bona fides of the Government, so I ask the Minister and the Government to do something concrete to assuage their fears about their intentions in this area of policy.
Gavin Williamson (South Staffordshire) (Con): Given that, in this Chamber, we often talk about cuts, you will be pleased to hear, Madam Deputy Speaker, that I have cut my speech substantially, in the interests of time.
It is interesting that so far in this debate there has been a general acceptance, on both sides of the Chamber, that change is needed in the civil service compensation scheme. That acceptance is welcome. I appreciate that both sides of the House cannot agree on how those
changes should be made, but this Chamber and this nation are faced with some difficult and hard truths-we cannot afford the situation that the country finds itself in or the deficit that the Government have inherited. While I, like, I am sure, virtually every Government Member, want to see compromise and agreement between the Government and civil servants and civil service unions, we cannot wait for, or be held ransom by, one union that has decided that it does not wish to seek a compromise.
The simple truth is that there is a massive disparity between the private sector and the civil service when it comes to redundancy. Figures from the Chartered Institute of Personnel and Development estimate that, in autumn 2008, the average cost of a redundancy in the private sector was £8,981. Yet, according to comparative figures for 2005-08, 10,000 compulsory early severance packages were served on civil servants, costing an average of £42,000 each. All Members would accept that that is a substantive difference. Governments, like businesses, need flexibility in what they do and how they work, but the current scheme does not offer that flexibility. We can argue about three years, six years or two thirds, and we can talk about trying to achieve efficiency savings, but the simple reality is that we are facing a payback of between three and six years in order to realise the benefit of those efficiency savings. Unfortunately, that it is not going to be enough in the difficult times that we have inherited from the previous Labour Government.
I very much welcome the words spoken by my right hon. Friend the Minister at the Dispatch Box, along with his obviously heartfelt wish to seek compromise and reach agreement with the unions, for the benefit of everyone in this nation and of the civil servants who work so diligently for this Government. That should be welcomed on both sides of the House. I also hope that, with the passage of the Bill, the civil service unions will realise how important it is to reach that compromise swiftly, for the benefit of all.
Ms Margaret Ritchie (South Down) (SDLP): Like other hon. Members, I have received representations from constituents, many of whom are civil servants. Very few would disagree that the civil service compensation scheme should be reformed; in fact, there are good, compelling arguments for public sector reform. However, we need to ensure that the compensation scheme affords protection for some of the lowest-paid and longest-serving public sector workers. Lower-paid staff should not be the victims of departmental cuts or of what is proposed in this Bill.
I represent a constituency in Northern Ireland whose economy is heavily dependent on the public sector. I am conscious that public sector reform is needed, that the economy needs to be rebalanced and that the private sector needs to grow and be stimulated, but there is still an urgent need to sustain jobs in the public sector and to make provision for new entrants into the civil service. Reform must always be tempered by the principles of social justice and fairness and by what is in the best interest of the public. We must not undermine the basis of the existing economy.
I speak as a former Minister in Northern Ireland who had responsibility for the benefits system for some three years. During that time, I had responsibility for some of
the lowest-paid civil and public servants in Northern Ireland. Many of them were women, many worked part time and many were vulnerable. Why should such people be held responsible for the present situation? Why should they be the victims of this legislation? Why should they be susceptible to the loss of their jobs? We must also recognise that, although we are in the midst of an economic downturn and facing severe budgetary cuts, there is still a need to protect front-line services, and the vulnerable and disadvantaged. Many civil servants, particularly those in the lower grades, feel that their jobs are under threat. That is their perception, and I have heard nothing today from the Government Benches to assuage those fears.
Notwithstanding all these factors, it is important that Parliament defends the roles and rights of civil and public servants, particularly those in the lower-paid grades. The proposals in the Bill will slash redundancy compensation, especially for older and longer-serving staff. It is important that proper agreements should be reached with the civil service staff and that those agreements recognise the accrued statutory rights held by many of them. The agreements should also be fair to new entrants to the service. The Bill must not be used as a blunt bargaining tool to influence the negotiating process. Efforts must be made to protect staff and the delivery of front-line services, as well as to develop our economy at this difficult time.
I suppose, after this long Second Reading debate, that the best maxim would be that we should follow the road of proper negotiation, rather than that of unilateral imposition. I have learned over the past few weeks that some people believe that the coalition Government are less interested in listening to the views of those who represent the stakeholders. Perhaps that can be seen in their reactions and efforts in relation to the Bill. My hon. Friend the Member for Foyle (Mark Durkan) asked what agreements had been reached with the trade unions in preparing this Bill. Obviously, there has been little agreement.
The Government seem anxious to depart from negotiation, even though it has always been the standard bearer for industrial relations, and to move to imposition. In fact, the Minister for the Cabinet Office could not even provide the right hon. Member for Belfast North (Mr Dodds) with a definition of a lower-paid civil servant. My colleagues in the Social Democratic and Labour party and I are firmly of the opinion that the Bill should be withdrawn, as it is not in the best interests of junior and lower-paid civil servants.
Matthew Hancock (West Suffolk) (Con): It is a great pleasure to speak in this debate under your speakership, Madam Deputy Speaker. I shall concentrate on the issue of fairness, which has come up again and again today. It is central to the Bill, and an extremely important factor. We are debating a sobering situation, and the Bill is a response in part to the enormous fiscal deficit that we need to tackle. It is clear that the negotiations and the Bill will have an impact on many thousands of civil servants who have worked extremely hard for the good of their country. Like many other Members, I pay tribute to the excellent work of the British civil service, and I echo the view of the Minister that it is the jewel in the crown of our constitution.
That is why it is so important that we consider the consequence for fairness as the negotiations go forward and the Bill goes through. That view has been reflected in speeches from both sides of the House today. I shall address the issue of fairness in three different ways. First, we must consider the fairness of these measures, given what else is going to have to happen if we are to tackle the deficit. Secondly, we must consider fairness across society and the economy. Thirdly, we must take into account fairness within the civil service in terms of working practices, and the consequences of the current system for some of those working practices.
The enormous fiscal deficit has overshadowed many of the debates in the Chamber since the election. We on the Government Benches argue that dealing with the deficit is a fair and progressive thing to do. In the short term, failure to do so would lead to higher mortgage rates and interest rates as well as create the risk of a catastrophic economic failure, which we do not want to do. It would also be unfair to burden our children and grandchildren with levels of debt that we had failed to deal with. It is therefore fair and progressive to deal with the deficit. It is important, when considering all the different aspects of that process, to think about the Bill in that context.
How can it be fair to defend a system, as Labour Members have done, in which payments of more than £500,000 have been made to certain individuals at a time when we are having to take other measures-as Labour Members would have had to do, were they still in office-to deal with the deficit? How can it be fair that the average redundancy package in some Departments has been more than £100,000 for the past three years? In an earlier intervention, I gave the example of the Department of Health, in which the average redundancy package last year was £122,000.
When this country is tackling its deficit, it is difficult to say that it is fair to make such enormous redundancy pay-offs. The argument has been put by Labour Members that there are only a few of them so it does not really matter. However, we as a country are going through a difficult process, and having extremely unfair examples of public spending like that only makes it even more difficult. We cannot argue that simply because there is not an enormous quantity of such payouts, they do not matter. They do matter and reforming the system is crucial, as the Opposition Front Benchers seem to recognise, but Labour Back Benchers too often do not.
Michael Connarty: I am amazed that the hon. Gentleman is still quoting the figure of £100,000 when one of his hon. Friends who spoke earlier provided him with the true average of £60,000. He ignores reality again and again. Some people get huge payouts, and some Labour Members have argued against them for the last 10 years but we could not convince our own Government to deal with these people. If the hon. Gentleman's logic had been applied after the second world war, the huge deficit this country would have had to carry would have meant no rebuilding and our people living in poverty for the next 50 years. The hon. Gentleman may be lucid, but he is certainly wrong.
The hon. Gentleman answers his own question when he says that the previous Government did nothing about the problem over the last 10 years. As
for this new argument I am hearing expressed by Labour Members, that we had a large deficit in 1945-yes, we did, but we also had large cuts in 1945 and not least to the military because we had just won a war. There are no such easy reductions now because of the mess left by the Labour party- [Interruption.] I will take no lessons from what the hon. Gentleman shouts out from a sedentary position. At one point in the last three years, £8 billion was spent on redundancy payouts. I do not know whether the hon. Gentleman is willing to defend very high payouts, but we seem to be getting a reaction on the Labour side against any change to anything. It is a great pity that Labour Members do not engage in the process of trying to deal with the deficit as we Conservative Members do.
Claire Perry (Devizes) (Con): I would like to focus on the average rather than the outliers, as that seems to elicit cries of outrage from the Opposition. It is an incontrovertible fact that if we look at the average redundancy payout and average compensation, we find that the average cost in the private sector in autumn 2008 was £8,981, while it was £17,926 in the public sector-almost twice as much. That demonstrates that we have reached a position where, on average, people are being paid twice as much to retire from the civil service as they are to retire from the private sector. There is nothing fair about that.
I was going to come on precisely to that point-my second point about fairness. Not only is it fair to deal with the deficit and, I think, unfair to give enormous payouts when we have to achieve other very difficult things, but fairness across the economy and across society is also important. The maximum payout in the mandatory private sector compensation scheme, for which this House legislated, is £11,400, yet the proposal is nowhere near that figure within the public sector.
It was interesting to note that when the shadow Minister, the right hon. Member for Dulwich and West Norwood (Tessa Jowell), responded to an intervention about whether it was fair to have a similar sort of payoff scheme in the private sector as in the public sector, she effectively said that she was not in favour of equality. I thought that Labour Members were in favour of equality, but obviously not when it does not suit.
Tessa Jowell: I am not quite sure what point the hon. Gentleman is trying to make. If the question is whether I agree the case for parity between the public and the private sector on these matters, the answer is that parity cannot be willed. We are not going to peg the public sector to the private sector other than in an indicative way. There are different incentive structures in the remuneration packages of people who work in the two sectors and they are in different ways reflected in aspects such as the compensation for redundancy that we are discussing this evening.
I thank the right hon. Lady for her intervention. In some cases, it seems, one can talk about parity, and in other cases about equality. If one is favour of it, one might use one word, but if one is
against it, use the other. The important point here is that we need to look at overall compensation packages and overall pay, including pensions and other terms and conditions of work.
That brings me back to the issue of fairness across the sectors. If we are to have a modern civil service and a modern flexible economy that work in the future, we also need to allow transfer between the two sectors. Bringing into line the working practices in the two is no bad thing; nor is bringing into line the redundancy payoffs as the Bill does-and, indeed, as the right hon. Lady's former proposals did. The hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) raised an interesting point when he argued that we should put the members of the unions ahead of the rest of our constituents. I think that the most important thing for a new MP to do is to represent all of their constituents, not just those who are members of a union.
My final point is about fairness in employment practices. I asked the House of Commons Library about the concept of priority posting pools, which are groups of civil servants who are given nothing to do, but cannot be let go because of the cost of the redundancy package. The Library determined that there were a total of 1,946 such civil servants. When people working for their country have completed their jobs and their projects, it cannot be fair to tell them, "We would like to pay you to do nothing. We cannot find anything useful for you to do. We do not think you would be any good at doing anything else, but we cannot afford to get rid of you, so we are going to carry on paying you." As of January 2010, there were 1,946 such people in the civil service. I believe it is unfair to them not to have a flexible employment system so that we can have a grown-up and modern civil service working for the future.
Such is my argument. We are here to look at the fairness of this Bill as well as other aspects of it. If we want to spend public money fairly, rebalance our economy fairly and try to improve the fairness of working practices in civil service employment, we should support the Bill. The alternative is defending £500,000 payouts, an unbalanced economy and out-of-date working practices. I do not want to defend those things, so I will support the Bill this evening.
Sheila Gilmore (Edinburgh East) (Lab): Notwithstanding the warm, or perhaps lukewarm, words from the Minister about our civil servants, I see the Bill as part of a concerted attack on the public sector and those who work in it. The war on the public sector is being waged by some parts of the media without contradiction from the Government, and, indeed, by large parts of the Government.
Creating a straw man or woman simply to knock it down is lazy politics, but that has been done this evening by speaker after speaker. It is a case of picking up an extreme example partly in order to divert public opinion from the reality. The aim is to win over public opinion-to make the public think, "Oh, that is dreadful! How can people receive payouts, or salaries like that? We must do something about it", rather than see the reality.
We cannot get away from the economic argument. Earlier, one of my hon. Friends feared that, if he drifted on to the subject of the wider economy he might be
accused of irrelevancy, but that subject is not irrelevant. We see a clear divide between the two sides of the House, not because Labour Members are not concerned about the deficit but because we have a different view of the economy, how it should be built, and how we should emerge from recessions. Members on the other side of the House obviously see the public sector as a drag on the economy and something that must be shrunk, and they tell us that lo and behold, the private sector will leap up to pick up the pieces.
Sheila Gilmore: Members on those Benches may find it disappointing to hear, but it is what many of my constituents who work in the public sector are hearing. They are witnessing a concerted attack on the sector and on public service. I am sure that many Members on the other side of the House genuinely believe that the public sector is pulling the economy down, but we do not believe it. We believe that we must not at this stage cut the public sector in such a way that the economy is put at risk, but that is what will happen if the Bill is passed.
Public sector cuts will increase unemployment, and my constituents are asking me where the other jobs are. Over the past few weeks redundancies have been announced by Standard Life, which is a big employer in my city, and by the Royal Bank of Scotland, which has also been a big employer there. My constituents are seeing such developments all around them. The construction industry has an administrative side, and people might otherwise have thought of working in that, but the sector has been decimated, and they know that there are no jobs.
We could all throw in such terrible examples. Members have spoken of low redundancy payments in the private sector, but we could cite the amount of money that Fred Goodwin received when his employment was terminated. Is it right for us to "equalise down"? We talk of equality, but why is it assumed that we should look to the least good employment conditions, and try to reduce the conditions of our public servants to that level? Some workers in the private sector do not receive sick pay. Where will it stop? Are we going to say, "That is a good idea-perhaps we should equalise downwards"? Such thinking constitutes a slippery slope, and in my view it is quite wrong. I am not surprised that my constituents are anxious.
Like some of my colleagues, I visited the local Jobcentre Plus during the summer break, and in many ways I found it an inspiring experience. It is a far cry from the old days when the staff sat behind glass barriers, frightened to come out, and people on the other side sat on chairs that were fastened to the ground-presumably in case they lifted them up and threw them-to arrange to sign on. A real effort has been made to do something that every party in the House considers important-to get people back to work-but how can that be done if the morale of the people who should be doing the job has been lowered?
I do not think that the Bill is the right way to deal with the situation. If we were serious about the outliers, the Bill would be about them. If the problem is people
on very high payouts-we have heard about that from several Members today-why is the Bill not about that? If that is the problem, the Government should deal with it, rather than introducing a Bill which will hurt all civil servants including the low-paid, and which is being used as a bargaining tool to force people to agree to even worse terms than those proposed by the Government. What is clearly being said is, "If you do not agree to much worse terms than you have at present"-although perhaps slightly better terms than those in the Bill-"the terms in the Bill will be what you have." That is really what the legislation is about.
Martin Horwood (Cheltenham) (LD): I declare a strong constituency interest in the Bill. Like many other Members, I have my fair share of constituents who work in local offices of central Government Departments such as the Department for Work and Pensions and Her Majesty's Revenue and Customs. For the moment, I also have constituents who do important work involving the environment and the countryside at Natural England and the Commission for Rural Communities. But, of course, most of those in Cheltenham who describe themselves inconspicuously as civil servants work at GCHQ. They form the largest part of what the Prime Minister has rightly described as
"the finest intelligence services in the world."-[ Official Report, 6 July 2010; Vol. 513, c. 175.]
GCHQ traces its roots directly to the wartime Government Code and Cypher School at Bletchley Park, which, as we now know, made a huge contribution to victory in the second world war. That contribution, however, remained largely unknown and unrecognised for decades because of the absolute discretion and loyalty of those anonymous civil servants-people like my own parents, who worked at Bletchley and, later, at GCHQ. When the history books are written 60 years from now, who knows what silent victories we will learn were being achieved as we spoke here today, and which will remain secret for decades to come because of that same brand of loyalty? I must say that, on the face of it, this Bill is a pretty poor reward for the loyalty of my constituents in GCHQ and of all the other civil servants in Cheltenham.
It has been suggested that, on average, public sector pay has caught up with private sector pay. I will not invite a repetition of the earlier altercation across the Chamber about which is higher, but neither of the sets of figures cited were based on directly comparable jobs and careers, and that is what really matters. A constituent who wrote to me put it very well:
"I've had a long career in the public sector and watched my university friends prosper in the private sector. They have had company cars, private health care and almost without exception greater earnings. In compensation I had more flexible working, a good pension (although not as good as friends in the insurance industry) and the knowledge that I wasn't in a hire and fire culture. Yet now, all the benefits are under attack but I can never make up for all those years of lower pay."
The mathematicians, linguists and IT experts at GCHQ are some of the finest minds in the country and had they chosen to work for Vodafone or Hewlett-Packard they would have undoubtedly earned more-perhaps
much more-but they chose to serve us instead. As one of my friends who worked at GCHQ once wryly told me, "It does inhibit you a bit in job interviews when you're asked to describe your work over the last few years and you have to say, 'I'm not allowed to.'"
GCHQ may be a rather extreme example, but it is true that many civil service careers do not translate easily into private sector job opportunities, especially if they have been very long careers in the civil service. The key point has been made by the hon. Member for Hayes and Harlington (John McDonnell), my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and others: our civil servants make life choices based on the promises we make to them. They make decisions about their homes, where they live, the schools their children attend, and above all they make career choices and financial decisions. They expect that if the day comes when it really matters we will keep our side of the bargain and repay their loyalty as promised. Well, that day has obviously come.
There is no question but that the Government are right to take drastic action to prevent further damage to our economy. I regret it deeply, but there is no question but that many civil and public servants will inevitably have to lose their jobs. The last Labour Government knew that too. The Cheltenham offices of Her Majesty's Revenue and Customs, Natural England and the Commission for Rural Communities are all closing, with inevitable redundancies. As overall departmental cuts bite there will doubtless be more, although I truly hope that an organisation as vital to the national interest as GCHQ will be looked at with the most extreme care.
There is also no question but that the Government are right to look at the civil service compensation scheme, which may now be more-possibly much more-generous, especially to top earners, than we can afford. That was certainly the conclusion of the Labour Government when they too tried to curtail the scheme to control costs. As the hon. Member for West Suffolk (Matthew Hancock) said, it is true that, if we do not economise enough here, we will have to economise somewhere else.
For all those reasons I understand why Ministers had to look closely at the scheme. Labour tried and failed to curtail the scheme by compulsion, but, of course, this Bill does not simply repeat that attempt at compulsion. It reduces the limit on redundancy compensation to one year's pay, which is even more drastic than Labour proposed. Incidentally, it is also more drastic than the terms that apply in other areas of public service such as the NHS or local government.
Another constituent wrote to me that as a civil servant she felt "victimised" by the new Government, and she was a Lib Dem supporter. If there is even a perception of that level of unexpected unfairness from our own supporters, we should hesitate before going ahead with this Bill. It is unexpected because these proposals were in neither coalition party manifesto. In the coalition programme for government there was a promise to reform the scheme and to bring it into line with the private sector. Reform can be very good. It could, for instance, have given civil servants some more of the security of the contractual guarantee of compensation enjoyed by many in the private sector, protecting them somewhat from the whims of Governments. The Bill, it seems to me, deviates radically from good practice and from the principles of the 1972 Act. It contains a
compulsory and substantial reduction in the agreed rights of civil servants and, arguably, the legally accrued rights of civil servants to compensation, and will be enacted just when they may need them most and while negotiations are under way. I must agree with other hon. Members that using legislation as a negotiating tool is unworthy of this Government.
If it is intended that the negotiations should lead to a more generous settlement, especially for the lower-paid, which is what the Minister for the Cabinet Office suggested, and that we can therefore expect the repeal of clause 1 by Ministers in due course, that prompts the question of why it is needed in the Bill in the first place. Why not place a more generous cap, perhaps along the lines of the earlier proposals, in the Bill? Why do Ministers need a weapon that they have no intention of using?
My father could not tell me very much about his work at GCHQ, but he once shared with me the news that he had successfully concluded quite tough negotiations about terms and conditions with the GCHQ trade unions on behalf of GCHQ management. They bought him a drink afterwards and he, I hope, retained the respect and loyalty of his colleagues. I am not sure whether PCS will be buying Ministers drinks after all this is over, but as a Government we should, at the very least, aim to retain the loyalty and respect of our civil servants. In Cheltenham, our national security might depend on it.
Those GCHQ trade unions were subsequently banned by a less enlightened Government than this one-something that was mercifully reversed some years later. I am confident that such union bashing lies firmly in the past and that this Government are committed to policies that are transparently fair. I hope that Ministers will, on reflection, agree that this Bill in its current form does not pass that test. They will have guessed by now that I plan to vote against it tonight.
Lindsay Roy (Glenrothes) (Lab): Thank you, Madam Deputy Speaker, for calling me to make a short contribution to this vital debate on civil service superannuation. My comments will be brief and they are intended as constructive reinforcement rather than unnecessary duplication, but it will be a test for Members to see whether they can distinguish the difference.
Let me say at the outset that few in the civil service in my community-and there are many of them-would deny that the civil service pension scheme needs reform. Given that position, there is all the more reason why the reform should focus on renegotiation rather than, as is patently obvious here, on a Government planning to proceed unilaterally with a devastating agenda. I appreciated the Minister's comments about the virtues and values of the civil service, but the contents of the Bill do not match that unqualified support. Significantly, the Bill tells us much about the nature and culture of this Government who, at the same time as focusing on negotiation, are using a blunt stick to bulldoze through change. They are taking measures forward in legislation that, if enacted, would have a damaging effect on a cohort of modestly paid people who give outstanding service to our community. Indeed, I dispute the fact that they are not profit-making. They make profit, although not in financial terms, through the dividends and benefits that they give to our community, which are much appreciated.
Surely in the aftermath of the judicial review, the opportunity should have been taken to engage in a steep learning curve jointly through further negotiation. A bullish, insensitive and punitive approach destroys trust between Government and a loyal and dependable civil service work force who believe that they are being treated shabbily, to say the least. They believe that they are being marginalised and that they are bystanders in the whole process. It ill behoves a Government who claimed that they would be champions of fairness to act in such a draconian way, trying to push through an unacceptable change without proper scrutiny. The vast majority of civil servants are modestly paid, yet they play vital roles in our society, as we have heard. They keep our borders safe, support our armed services and help the unemployed.
In essence, the Bill does not strike a fair balance between the interests of taxpayers and the legitimate expectations of civil servants, many of whose livelihoods are being threatened. Governments do have to make hard decisions, but they must underpin those with the values of justice, fairness and respect. Those values seem sadly lacking in the approach that has been taken-or at least that is the perception, as the lowest paid appear to be being treated in a reckless and cavalier manner. Let us make no mistake: this Bill is potentially part of a slash-and-burn approach, a highly insensitive attack on modestly paid public servants who, in an economic downturn, are facing real challenges economically.
So where do I see us going? My focus would be on renegotiations that will succeed and make the Bill redundant. So I urge the Cabinet Office Minister to reaffirm his commitment to go that extra mile-to adopt the principles of the February scheme as an initial basis for discussion; to review his definition of reasonableness, particularly in protecting the lowest-paid; and to balance the needs of the taxpayer and the legitimate expectations of civil servants.
The civil servants of this country deserve to be treated with dignity-with fairness, justice and respect. The citizens of this country expect nothing less, and I hope that common sense will prevail in resolving this dispute, and that the Minister will be persuaded to reconsider his strategy and tactical approach in addressing this dispute, and withdraw the Bill.
Mr David Ward (Bradford East) (LD): We have heard many speeches about unfairness and the lack of comparability between the schemes in the public and the private sectors, yet those speeches were unnecessary because, as far as I am aware, absolutely no one-not even the hon. Marxist Member for Hayes and Harlington (John McDonnell)-disagrees that we need more comparability and that the scheme that we are discussing tonight is over-generous and unaffordable.
Quite a few speakers have prefaced their speeches with glowing compliments to members of the civil service but have shown little sensitivity to the position that they would find themselves in if the Bill were passed. There may be a very good argument for changing the terms and conditions, but many members of the unions will have made life decisions based on their existing contracts, and they would be facing pretty severe circumstances, which they could not have planned for in many cases.
I was a trade unionist for 30-odd years and it was a general principle to consult before changing terms and conditions of service; that is a basic rule in industrial relations. It was not good practice to change terms and conditions while consultation was taking place.
The whole of the Government's strategy is built on a plan to rebalance the economy, and I support that strategy. The rebalancing includes a real determination to increase the nation's economic capability by increasing the scale of private sector employment to soak up the increased unemployment that will inevitably follow from the reductions in public spending required as part of the plan to reduce the national deficit. As a matter of principle, is it right to add to the sense of uncertainty, and no doubt in many cases the fear of redundancy, currently felt by many public sector workers by seeking seriously and unilaterally to reduce their entitlements to redundancy payments? This is not an emergency measure-unless, of course, it is intended for that purpose.
I say to my friends on the coalition Benches that I believe we are actually entering into a pact, not with each other but with the British public, and that pact is one in which judgment on the coalition is still deferred. The pact has to do with the strategy that I just outlined for rebalancing the economy. The Chancellor said many months ago that the Budget would be "tough but fair". The public know that it will be tough, but they are watching closely to see just how fair things will be.
Since the judicial review, all the unions have indicated a willingness to engage in further negotiations. That offer should be accepted with good will before we are asked to deliberate. What on earth are we doing getting involved in the nitty-gritty of discussions, consultations and deliberations on terms and conditions of service? That is not our role.
The Bill is important, not just because of the savings to the public purse, which we recognise are necessary, but because of the message that we are sending to those who work in the public sector, and to their representatives. People are committing an act of faith in thinking that we are working in the best interests of the national economy to put things right, but they are watching how we do that.
The degree to which the private sector can rise to the challenge of job creation is uncertain. The degree to which the public sector may be asked to contribute to balancing the nation's books is less uncertain. Efficiencies can and must be found to minimise the impact of budget reductions on front-line services, but no amount of natural wastage and vacancy freezes will remove the need for some redundancies. What message are we sending out if we pass the Bill?
At this most difficult time in the public sector, just when we require the support and good will of the trade unions, we in the heart of Government seek to jab them with a stick-to show them what? That we are tough? In the case of the PCS, possibly it is to teach it a lesson for daring to take us to court. There seems to be resentment against the PCS for stopping Parliament doing something unlawful.
It is the responsibility of all of us who support the public sector to root out and remove inefficient and ineffective public expenditure, because by doing so we
defend the sector from those who are ideologically opposed to it. I cannot defend over-generous and unaffordable terms and conditions of service in the public sector, and I have told people who have written to me on the subject that I cannot possibly support them on keeping the current scheme, but I believe that it is wrong, especially at present, when public sector jobs are expected to be lost, to use this House as a means of conducting negotiations with the unions.
I chased my Labour opponent for 20 years and stood against him five times before I managed to get into this House, and one of the slogans that we ran with towards the end of that time was "He never voted against his Government in the interests of his constituents". Well, I am not about to make that mistake this early in my time as an MP.
Chris Williamson (Derby North) (Lab): This is a mean-spirited, parsimonious Bill that borders on abuse of parliamentary procedures. We heard very plausible, warm words from the Minister for the Cabinet Office; it was almost as though he was in some way sympathetic to the civil servants who will feel the full brunt of this mean-spirited Bill, if it gets through its parliamentary stages. But make no mistake-and I am sure that the civil servants who are following our debate closely will not do so-the Minister for the Cabinet Office has cloaked his iron fist in a velvet glove.
The contributions from Conservative Members left me cold. It is clear that the Conservatives have not changed one iota-they are still the same old nasty Tory party, attacking the most vulnerable and lowest paid people in this country, just as they did in the 1980s and 1990s. We heard some rather sympathetic contributions from Liberal Democrat Members. One or two even said that they will join Labour Members in the Division Lobby. Let us hope that all Liberal Democrat Members have the courage of their convictions and join us in helping to defeat this terrible piece of legislation.
The Finance Bill introduced by the Con-Dem coalition is likely to lead to a double-dip recession. It received Royal Assent on 27 July, and inevitably it will lead to an increase in unemployment. It is against that background that the Superannuation Bill has been introduced, at a time when people are looking for work and finding it difficult to obtain employment. However, the Minister for the Cabinet Office and Conservative Members want to throw people on the dole, leaving them in a vulnerable situation by undermining the terms and conditions that have been built up over many years.
We heard one Member-it may even have been more than one-claim that the measure was fair in some way. The hon. Member for West Suffolk (Matthew Hancock), who regrettably is not in the Chamber, said that the Con-Dem coalition was all about fairness and was progressive as well. The Conservatives ought to look up the meaning of "fairness" and "progressive" in the Oxford English Dictionary, because the legislation that they have introduced is the very antithesis of fairness and of progressive politics. The Deputy Prime Minister himself said in the general election campaign that he wanted to "hardwire fairness into...society". The Bill, however, is yet another example of how hollow his words really are.
The Bill is the direct opposite of fairness, and it does not strike a fair balance between taxpayers' interests and civil servants' legitimate expectations. It provides inadequate protection for some of the country's lowest paid public sector workers. I wonder whether it is the thin end of the wedge. Many people in the public sector enjoy better severance packages than what is proposed in the Bill-in the national health service, in education, and in local government, the ceiling is two years-but time will tell whether they are next on the Con-Dem Government's coalition hit list.
"I will bring legislation to the House as soon as parliamentary time allows in a Bill to limit the costs of future compensation payments for both compulsory and voluntary civil service exits."
"I hope that the Government's invitation to the Council of Civil Service Unions will be received in the spirit it is offered and that they will engage speedily and constructively with a view to reaching an agreed, fair and sustainable long-term civil service compensation scheme."-[ Official Report, 6 July 2010; Vol. 513, c. 3WS.]
What a way to conduct negotiations-introducing legislation in the House, leaving the Parliamentary Secretary, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), to wield the sword of Damocles over the heads of the civil service unions and people working in the civil service. It simply is not the right way to conduct negotiations.
The Minister for the Cabinet Office has said that he is concerned about low-paid workers, and he repeated that today. Where, however, in the Bill is there a proposal to help those workers? It is non-existent. If he was genuinely concerned about assisting low-paid workers, he would include a provision to deal with the very point to which he referred in July, and again tonight. Once again, words from the Ministers of the Con-Dem coalition are meaningless and utterly hollow.
The Con-Dem coalition seems to be abusing the negotiating protocols by manipulating parliamentary procedures to get its own way, and that will not do. That is not the way to conduct negotiations. It is a sad day for democracy in this country when we see such a Bill before us. The Minister acknowledged that it was an extremely blunt instrument. Then why bother enacting it? Why not take a more sophisticated approach in the 21st century to industrial relations?
To conclude, in the short time that I have, what I find so objectionable about the process is the attempt by the Con-Dem coalition to get the Bill defined as a money Bill to prevent proper scrutiny in the other place. My hon. Friends the Members for Kilmarnock and Loudoun (Cathy Jamieson), for Hayes and Harlington (John McDonnell) and for Birmingham, Erdington (Jack Dromey) have all made that point. The gerrymandering tendencies of the Con-Dem coalition that were so blatantly exposed in the Parliamentary Voting System and Constituencies Bill are permeating other areas of policy making.
The Bill has been drawn up without consulting the work force. The Minister admitted that. Although he tried to wriggle and say, "Of course I've had discussions but, you know, the previous Government had negotiations," he was clearly nailed when that was put to him. There have been no negotiations. The Bill has not been subject
to sufficient pre-legislative scrutiny, but that is not particularly surprising, given the experience of the past few months.
This is a bad Bill, which will lead to a bad law. That is why I will vote against it tonight and support the reasoned amendment moved by my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell). I call on all Liberal Democrats to have the courage of their convictions and join Labour Members in the Lobby this evening.
Jeremy Lefroy (Stafford) (Con): I shall be brief, as I have been instructed and as I wish to be. The Bill aims to do something that is necessary-to reform the civil service compensation scheme. I support the aim. It should have been done many years ago. The scheme is not affordable in its current format. But I have a problem with what I have heard in the debate about the Bill being some kind of negotiating tactic. We have been elected to the House as legislators, not as negotiators. It is for Government to negotiate and for Parliament to legislate. I would value the comments of colleagues on that.
The previous Government put a great deal of work into reforming the compensation scheme, which I acknowledge, but it would have been better had they started the process a lot earlier. The work that they put together with the unions was eventually frustrated. The history is known to us all, and I will not repeat it.
I support the statement made by my right hon. Friend the Minister for the Cabinet Office on 6 July-a date that I cannot forget as it was the date of my silver wedding anniversary-that a settlement was required which
"will need to be fair, and in particular to provide a higher level of protection for lower-paid workers."-[ Official Report, 6 July 2010; Vol. 513, c. 4WS.]
"protecting the lowest paid civil servants".
It is clear that there is agreement across parties that lower paid civil servants should receive protection. That is only right. I ask the Minister to consider how he can best reflect that through the Bill which we, as legislators, have before us. As it stands, civil servants on all salaries are treated in the same way, with no particular consideration being given to those on the lowest pay. I know that he will have given careful thought to how the sentiments of his words on 6 July can best be reflected. They are the same sentiments that informed the Chancellor's action in the June Budget, when he protected the lowest paid workers from the general pay freeze, as was mentioned earlier.
I, like many colleagues from all parts of the House, want to underline the importance that I place on the work of those concerned. When we speak about people being made redundant in the public sector, we certainly do not want to send out the message that, somehow, it is their fault. If someone is in a job that is no longer necessary or even affordable, we should look at who created that job and why. Governments of all colours have been guilty of being far too quick to take on staff
for a new scheme without thinking about the long-term future. People are not playthings to be shuffled around on a whim. That is not to say that I oppose flexibility; I welcome it. But flexibility cuts both ways.
My second point concerns civil servants who have been in the public service for many years. A constituent of mine, working for the Ministry of Defence, pointed out that under the Bill he will, with a reasonable length of service, be entitled to the same payout as colleagues who have worked two or three times as long. He had no self-interest in raising that point; he simply wanted to speak up for his colleagues. I am a great respecter of length of service. Dedication and loyalty, whether in the public service, a private company or, indeed, a relationship is almost always something that we should celebrate. I therefore ask the Minister to look at how that can best be reflected in the Bill.
I shall support the Bill, because I know from what the Minister said today that he understands the points that I have made, but I urge all who are involved in negotiating the new settlement to arrive as soon as possible at a sustainable, practical and affordable long-term scheme.
Caroline Lucas (Brighton, Pavilion) (Green): I too shall be brief, because I know that time is short, and one way in which I can be brief is by associating myself with the eloquent remarks of the hon. Member for Hayes and Harlington (John McDonnell), who is no longer in his place.
I am glad to have the opportunity to speak, as more constituents have written to me to express concern about changes to the civil service compensation scheme than have written to me about any other issue since I was elected in May, so I am very keen to ensure that they are properly represented here today. There is a palpable sense of anger and disillusionment among public servants, and a real feeling that they are being made to pay for an economic crisis that was not of their making.
My constituency in Brighton is home to a large number of civil servants. Under their current compensation scheme, they have accrued rights that will simply be scrapped-torn up and thrown away-by the Government's proposals, despite the court ruling that a failure to recognise accrued rights is unlawful, and that any amendments to the civil service compensation scheme must be made on the basis of agreement by all the relevant unions.
"Many civil servants will, like me, have planned their finances on the basis that their jobs were reasonably secure and that if they did become surplus to requirements they could rely on a particular level of compensation. I have not, for example, taken out any insurance against not being able to continue to pay my mortgage through loss of employment. The government's plans for deficit reduction mean that civil service job security is now very questionable, whilst the Bill puts paid to the second part of my planning assumption. I feel unsettled and vulnerable at this unilateral change in what I had thought was the deal with my employer."
From his words we get a clear sense of a bargain being broken, of a contract being unilaterally torn up and of people being treated as if they were expendable, which
is particularly hurtful to many civil servants who have given many years of loyal service. His words also highlight the anxiety and uncertainty that permeates the civil service, particularly those who face a future in which they might not be able to work again.
"large numbers of civil servants are not very well paid-half of them earn £21,000 a year or less".-[ Official Report, 14 July 2010; Vol. 513, c. 932.]
I should like to discuss the context of these changes, because the public sector already faces unprecedented uncertainty in the form of cuts and redundancies under the coalition's policy of deepening and accelerating the previous Government's cuts programme. Surely the very least that the public sector can expect is to be given a proper voice in negotiations and the chance to agree a fair settlement.
As with so many of the swingeing cuts on the table, there is a perception that the planned changes to the civil service compensation scheme are not just about saving money; they are also seen by many as an attack designed to weaken the public sector-the same public sector that, for now at any rate, is the backbone of our education system and health service. It also includes civil servants who keep up and running services such as Brighton county court family centre, the Brighton and Hove learning partnership and the city's benefits service.
I end by pondering the irony of the fact that so many of the civil servants who will be adversely affected by the planned changes to the compensation scheme and to jobs, and by the service cuts, actually work for Her Majesty's Revenue and Customs. Surely it would be much fairer to help reduce the national deficit by keeping those HMRC workers in their jobs and enabling them to collect and crack down on the £100 billion a year in unpaid and dodged taxes-tax evasion and tax avoidance. That would save public sector jobs and protect working conditions in the process.
In the meantime, it is clear tonight that many of us are not prepared to stand by and see the vast majority of the civil service pay disproportionately for the economic crisis. That is why I shall vote against the Bill.
John Hemming (Birmingham, Yardley) (LD): I am 50 years old and have employed people for about half my life. My company was quite lucky relatively recently; we consulted with staff and were able to agree a deal under which there were no redundancies. However, I had to make redundancies in the early 2000s, and it is not a nice thing to go through, although obviously it is a lot worse to be made redundant.
We need to be aware that at the end of this process some people will lose their jobs. The challenge in politics is the national cake, and to some extent the political process can affect how that is divided. Our difficulty now is that we have to get a time machine and borrow from our children some slices that will be baked in future so that we can put them towards the national
cake today. The real challenge is how we get, over a period of time, to the stage at which the amount of cake baked every year is the amount consumed every year.
How do we do that in a just manner? The Opposition have argued that our attempt unilaterally to challenge the contract with the civil service is unfair, whereas their attempt unilaterally to challenge the contract with the civil service was fair. They have argued with our proposals, but those are far more generous than the conditions for the staff of Members of Parliament, for instance. Those staff are all hard-working, but they are subject to the statutory redundancy scheme. Birmingham city council also operates the scheme. My wife works for British Waterways, a public body that also operates that scheme.
Basically, the Bill creates a negotiating position that means that the trade unions cannot veto any agreement. That is the normal situation for employers. Employers can present their staff with a new contract, and the staff have either to take it or leave it. That is what has happened in all the pay and grading reviews in local government across the country. Pretty well all local government employees have gone through the process of being presented with a new contract. What is happening now is that a new contract is being presented. We have said that we are aiming to protect the lower-paid. The most important thing to try to do is protect people against unnecessary redundancies. That is the critical thing.
If six years' redundancy has to be paid to somebody, how can things be reorganised in a cost-effective manner? They cannot. Even paying three years' redundancy creates a major problem because it costs more that year to make somebody redundant than to continue to employ them. That means that those not covered by the redundancy schemes are the ones to whom people go to find the savings. That does not seem fair.
John Hemming: I do not think we should indulge in a race to the bottom. It needs to be recognised that this is the Government's opening position. People who argue that we should propose the final solution here in Parliament are obviously no good at playing poker; one does not reveal one's hand. We cannot expect the Minister to say, "We'll settle for X." The Government need to have a negotiating position, and the trade unions cannot be in a position whereby they can veto it-that would be absurd.
We need to think about our employees. I have always been concerned about the people whom I employ personally, and in the same way we should be concerned about those whom we employ collectively through UK plc. Options that may not cost the Government much money could be looked at to improve the situation. For example, constituents of mine who are civil servants have raised the issue of two civil servants living in the same household who are both under the threat of redundancy. I ask the Minister to consider whether it would be possible for one such civil servant to nominate the other, so that if one of them were made redundant the other would be protected against redundancy. Then at least the household would not lose both incomes, but only one. That would be an example of flexibility. It would not necessarily cost the Government any money, but it would protect people from the worst aspects of this process.
Similarly, in certain circumstances people might like to move towards a job share if the Government were willing to pay them a sum of money for that reorganisation, which might cost less than voluntary or compulsory redundancy. That would reduce the wages bill and the deficit without necessarily putting people in a very difficult personal position. We need to work with employees to try to minimise the effect on people.
Mrs Mary Glindon (North Tyneside) (Lab): As a former PCS worker and someone who until April this year was earning £15,300-I worked in the Child Support Agency for 18 months-I find some of the things you are saying quite offensive. Every worker has a right to work-surely you do not make decisions about whether a husband or wife, or a partner in the household, has that right.
Furthermore, if the Bill is rejected tonight, proper consultation might be re-entered into. I took industrial action against our former Government. I voted for that action having been consulted by the union and following the procedure that the Government started with us in 2009. I e-mailed the then Minister and went through all that process. What you are saying is contradictory. You are saying that people should be consulted, but only after a decision has been made. Do you not think-
John Hemming: I am suggesting that the Government could try to ensure that there are not two redundancies in the same household, whatever circumstances we are in. We all accept that redundancies are going to occur in the public sector, so why cannot we try to minimise the effect on households by ensuring that both partners need not be made redundant?
Similarly, there are opportunities whereby people can transfer to the private sector. Obviously the objective is to help people to find jobs in the private sector. A severance fee, equivalent to voluntary redundancy in some senses, paid when people find a job in the private sector could be a way of reducing costs to the public sector but doing so in a way that does not make public servants suffer. At the end of the day, we should be thinking about the effect on the public servants who work hard for this country. We need to recognise that and work in partnership with them.
There are all sorts of opportunities within my own company. I have had people take sabbaticals in the past. In certain circumstances the employer will say, "We can plan for that person to go away for a year and then come back." It suits them to do that, it has reduced the cost to the public purse, and it is in the interests of the employee. Possibilities can be considered, in partnership with the work force, that improve the situation so that everybody wins.
As a consequence of the reduction in the national cake-gross domestic product or however one wishes to see it-we face a very difficult situation that has to be dealt with. The Labour party has proposed its own version of a unilateral contract change and we have a different version, but something needs to happen. I will support the Government tonight, because I agree with the exact proposals put forward in the Bill. We need a negotiating position so that the trade unions cannot
veto any changes, and I have responded clearly to my constituents by saying that I do not think the trade unions should have a veto on contractual changes. The time has hit 20 minutes past, so I shall finish by saying that I shall support Second Reading.
Katy Clark (North Ayrshire and Arran) (Lab): Thank you, Madam Deputy Speaker, for giving me the opportunity to make the last Back-Bench contribution to the debate. Some of the contributions that we have heard from the Government side of the House have been quite astonishing, and many of the civil servants who will be directly affected by what we are debating must have been amazed by some of the things that they have heard.
As always since the general election, coalition Members are trying to blame the economic policies of the previous Government for the economic crisis that the whole world has been in. I sometimes had different views from some of my Front-Bench colleagues about the economic strategies that I wanted the Labour Government to pursue, and in particular I would have liked them to intervene to regulate the banks earlier and deal with issues such as bankers' bonuses and the financial sector. However, low-paid civil servants were not to blame for the economic downturn, nor indeed were the economic policies of the Labour Government.
We are here today debating not how to deal with the high pay of those in the banks, which have had huge public investment, or bankers' bonuses or bank regulation, but issues associated with the estimated 600,000 public sector workers who will lose their jobs if the Government carry out the policy that they have outlined. Today we are talking about civil servants, but I believe that in a few weeks or months we will be back here talking about how the Government want to erode the terms and conditions of workers in other parts of the public sector as well. That is shameful, and it is particularly appalling that those on the lowest salaries in the public sector should have their terms and conditions eroded because of the difficult situation that we are in. It is also appalling economic policy, because in many parts of the country where civil servants and other public sector workers are going to lose their jobs, there are no other jobs available.
The Minister said that half of all civil servants affected by the scheme earned £21,000 or less, and the Government also seem to accept that the provisions in the Bill for those workers are not fair. They themselves say that they want to offer something better, although we have heard no detail today and have been asked simply to trust that the Minister will do what he can to get a better deal for those people.
We have to deal with the realities in the Bill as presented, and the reality is that the amount of money that many people get now if they are made compulsorily redundant or take voluntary redundancy in the public sector is not sufficient to take them through to the time when they can get another job. If the provisions in the Bill go through, they will lead to a lot of people living in poverty. People will lose their homes, as at least one Member described in outlining the circumstances of an individual civil servant, and they simply will not be able to cope. Those who will be in the most difficulties may
well be those who would currently be entitled to three years' compensation-older workers who have worked in the public sector for a very long time. In the world we live in, they will not be able to get another job. We all know the difficulties in which older workers find themselves when they seek alternative employment.
It may be that the current provisions are good for some individuals on the highest terms, conditions and pay, but if we compare jobs like for like, we will see that graduates who have worked hard for many years in the civil service probably would have received a better remuneration package had they worked in the private sector. At the same time, many of those on the lowest incomes, such as women cleaners and women who look after young children in nurseries, probably have a more attractive package in the public sector, because they earn more than the minimum wage, and have sick pay, pensions and protection provisions of the kind addressed in the Bill. Those are the people whom we should defend. We should not tell them that if they worked for the minimum wage for the worst private employer, they would have a worse deal than they have in the public sector. We should drive standards up, not use the current economic difficulties as an excuse to implement such policies. Some in the Conservative party who set the agenda wanted those policies irrespective of the economic conditions. I am therefore pleased to hear that some Liberal Democrat Members will take a stand on this matter. We are considering the Bill today only because many Conservative Members would impose such terms and conditions irrespective of the economic conditions.
The Bill will be fast-tracked through Parliament as a money Bill, which we should discuss, because it is just one of many measures that will erode the terms and conditions of some of the lowest paid in the public sector. In many of the communities that we represent, there will be devastation if the proposed cuts in public services happen. Facilities for which individuals and communities have fought for generations, including community centres and libraries, will close. There will be no alternative jobs for jobcentre workers who lose their jobs as a result of the Bill. I suspect that, if we do not pay for people to do jobs, it will cost the state a great deal more in benefits and other support that it must provide.
The Bill is wrong morally in that it effectively unilaterally changes contracts of employment, but it also bodes ill for the future. If that is how the Government intend to conduct industrial relations in the public sector, we have a very bumpy ride ahead. The comprehensive spending review is coming up, and civil servants know that many of their heads are on the block. They are distraught at the proposals. I hope that they go out after this debate and tell their representatives, particularly those on the Government Benches, how they feel about their policies. The Bill is not good for the public sector or the private sector, because it says that we need to take everybody down to the lowest standards and that it is okay to rip up contracts. People who have worked for an employer for 20 or 30 years may have done so on the understanding that they have a contractual entitlement to a particular package if they lose their job, but the Government believe that it is completely acceptable to come along, rip that up and say, "We're going to give you a lot less."
Paul Goggins (Wythenshawe and Sale East) (Lab): We have had a good and thorough debate, with some thoughtful and powerful contributions from Members on both sides of the House, including my hon. Friends the Members for Edinburgh East (Sheila Gilmore), for Glenrothes (Lindsay Roy), for Derby North (Chris Williamson) and for North Ayrshire and Arran (Katy Clark), as well as the hon. Member for Brighton, Pavilion (Caroline Lucas).
The difficulty that we face as we prepare to vote on this issue is that the words we have heard from the Dispatch Box are very different from those that are written in the Bill. On 14 July, the Minister for the Cabinet Office set out his approach to the reform of the civil service compensation scheme. He said:
"I want to engage with the unions quickly to develop a scheme that protects the lowest paid...we need to negotiate".
"that scheme been in existence when the coalition Government came into office, a pressing case would have been made to leave it as it was and work on that basis."-[ Official Report, 14 July 2010; Vol. 513, c. 932.]
Unfortunately, our hopes were dimmed when this draconian Bill was published just 24 hours later, with no prior consultation with staff or the trade unions. The Minister was open and transparent about the purpose of the Bill. He said that it is not the final word. Indeed, in a phrase echoed by my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), the Minister described the Bill as a "blunt instrument". It contains a sunset clause and powers to repeal at any stage. In no sense is it a reformed scheme: it simply places a cap on the existing unreformed scheme. It means, typically, that a civil servant earning £21,000 a year who is made compulsorily redundant and who would get £63,000 under the existing scheme-and would have got £60,000 under the February 2010 scheme-will get just £21,000. Someone earning £18,000 who would have got £54,000 under the existing scheme or the February 2010 scheme, will get just £18,000.
The truth, which has been freely acknowledged by Ministers, is that the Bill is a negotiating device to ensure drastic cuts in the civil service compensation scheme. But as legislators we have to ask what will happen if those negotiations do not succeed. The Chair of the Public Administration Committee, in a thoughtful speech, warned about the dangers that might lie ahead in terms of legal challenge and delay. It is good to know that he and his Committee will keep a watchful eye on this legislation and other matters.
My hon. Friend the Member for Hayes and Harlington (John McDonnell), who chairs the PCS parliamentary group, has described this Bill as a landmine Bill, and he set out his definition of that. Whether that is true or not, there are real dangers if this Bill passes through Parliament while parallel negotiations go on outside that remain uncertain and, if unsuccessful, could create real resentment among those whom they affect.
There is no argument from my party about the need for reform. Indeed, we engaged in considerable detail in those reforms before the election. The focus of our reform was the vast majority of civil servants who do vital work on the front line of our public services. They include those who work in jobcentres trying to reconnect unemployed people with work; those who work in our prisons dealing with difficult and dangerous offenders and ensuring that our communities are safe places to live; and those who deal with tax credit claimants, ensuring that families have at least a decent minimum income on which to live. Most of those people, as we have heard from many hon. Members, work for modest rewards. Indeed, the Minister has said on several occasions that half of all civil servants earn £21,000 a year or less.
I genuinely want to give the right hon. Gentleman the benefit of the doubt-that is my starting point. I want it to be true when he keeps repeating the claim he makes in the Chamber and the media that he wants to protect the lowest-paid, but at some point those words have to turn into action, and he has to put flesh on the bones. My real concern this afternoon is that his comments have raised expectations above anything that his Government are likely or willing to deliver.
In particular, I urge the right hon. Gentleman and his ministerial colleague, the Parliamentary Secretary, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), to look again at the proposal that the previous Government agreed with five of the six trade unions, and which even now could provide a realistic, practical starting point for negotiation with all six of the unions-namely, that any civil servant on a salary of less than £20,000 a year who is made redundant would be entitled not to 12 months' or 15 months' salary, but to three years' salary. Labour Members will be tabling an amendment to that effect in Committee, and I encourage the Minister to indicate this evening that he and his colleagues will, when that moment comes, show that they mean what they say when they talk about protecting the low-paid and support that amendment. At the very least, that would be a clear indication, in their discussions and negotiations with the trade unions, that they are acting in good faith and mean it when they say that they want to protect the lowest-paid.
My hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) was among a number of Members on both sides of the House who reminded us that this debate and these proposals come before us in the context of deficit reduction, so it is important to remind the House, as my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) made clear, that our reform package would have saved £500 million over three years. The Government have pledged that, however tough life becomes as a result of the cuts that they introduce, fairness will be the watchword. How many times have we heard that from the Government Front-Bench team? But what is fair about the regressive provisions in the Bill that mean that maximum redundancy payments mirror exactly what an individual earns? If someone earns £100,000 a year, under the terms of the Bill their payment would be £100,000. If someone earns £50,000, the payment would be £50,000. And if someone earns £20,000, it would be £20,000, not the £60,000 promised in the reform package that we negotiated and set out in February.
What is fair about a set of negotiations carried out against the backdrop of a Bill that threatens severe cuts if the trade unions do not agree to a new scheme that dramatically reduces the provisions in the civil service compensation scheme? And what can be fair, as the hon. Member for Southport (Dr Pugh) asked pointedly, about unilaterally rewriting a contract with staff, either from a moral or even perhaps a legal standpoint?
Mr Reid: I agree with much of what the right hon. Gentleman is saying, but surely the Labour party believes in reforming the present system, so should it not be supporting the Bill on Second Reading, moving its amendment and then voting against it on Third Reading only if that amendment fails?
Paul Goggins: Absolutely not. Our starting point is, and the Government's starting point should be, the February 2010 proposals agreed by the then Government with five of the six trade unions, not this miserable backstop provision in the Bill.
Paul Goggins: The reasons it was declared illegal relate to the standing of the original legislation-the Superannuation Act 1972-and there is nothing preventing the Minister for the Cabinet Office and his colleague the hon. Member for Ruislip, Northwood and Pinner from sitting down tomorrow with the six trade unions and taking our February 2010 proposals as the starting point for negotiations. I urge the right hon. Gentleman to do that-he is in his place now. I was just reminding the House that he accepted that had the proposals gone through before the election, there would have been a pressing case for leaving it well alone. We are where we are, but it is fair to suggest that that could be the starting point for negotiation.
I ask again: what is fair about sending a message to loyal, dedicated, hard-working staff that they would be better off if they decided to go voluntarily, rather than staying in the job that they are committed to and running the risk of being made redundant compulsorily, resulting in a 20% reduction in the payment that they would receive? My hon. Friend the Member for South Down (Ms Ritchie) asked what was fair about deep cuts in the conditions of staff who run the very services on which those with the least in our society depend, including jobcentre staff and those who deal with tax credit claims.
I shall turn now to what I regard as the misuse of a Bill in the pursuit of these draconian changes to the civil service compensation scheme. I particularly commend the pertinent comments made by my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson),
who has considerable experience as a Minister in Scotland. Mr Speaker, you will be pleased to know that I shall not comment on whether or not this should be a money Bill. I am sure that you will take advice on that and make your decision when the Bill finishes its proceedings in this place. I am sure that you will not need advice from me; you will get it from others.
Having heard the promise of so many reforms and changes, it was bizarre, so early in this Parliament, to hear Ministers openly saying that they hoped they would never need to use the Bill. How bizarre is that, so early in the Parliament? Government Bills should be about putting policy into legislation, not about providing negotiators with a backstop bargaining chip, especially when so much about the Bill remains unclear and uncertain. The 12-month and 15-month caps are entirely arbitrary; they have been plucked out of the air. No rational explanation has been given, and no evidence brought forward, to explain why those time periods have been chosen. The equality impact assessment does not even acknowledge the potential impact on older and longer-serving civil servants, who stand to lose huge sums of money and who might very well be those who find it the most difficult to find alternative employment.
Ministers cannot tell the House how much money would be saved as a result of the Bill, because they do not yet know how many civil servants will be made redundant as a result of their cuts. Perhaps the Minister could say a little more in his winding-up speech about the negotiations. I recognise the constraints involved, and I do not expect him to carry out negotiations across the Dispatch Box this evening, but even an indication about the mood of the negotiations would assist hon. Members. Are Ministers close to agreement? Does the Minister believe that the Bill will actually be needed? When are the next meetings scheduled to take place? Does he expect to be able to come back after the conference recess and tell us on Report that substantial progress has been made, and that we might not need the Bill after all? If he is not going to table amendments when the Bill goes into Committee-the Minister for the Cabinet Office indicated that it was not his intention to do so-will he heed the advice of the hon. Member for Vale of Glamorgan (Alun Cairns) that he should go as far as he can to indicate the kind of measures that he and his colleagues are considering?
My hon. Friend the Member for Hayes and Harlington is right: it is unacceptable to expect hon. Members to vote for a Bill that is so far-reaching in its impact without knowing the detail of the provisions that sit beside it. If the Minister cannot go a little further in providing that detail, I believe that any sensible Member will be forced to conclude that words about fairness are just that, and that the only way to vote tonight is in favour of the reasoned amendment and against the Bill.
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd):
This has been a serious debate. It has been very sober in tone, and that is entirely right because we all know that there is tremendous anxiety out there about job losses and potential changes to the compensation scheme. Many Members have received representations on this matter, and many came to the House today to express strong constituency interests. They included my hon. Friends the Members for Cheltenham (Martin
Horwood), for Stafford (Jeremy Lefroy) and for Vale of Glamorgan (Alun Cairns), and they represented those interests very strongly.
What was striking as I listened to the debate was the consensus about the need for reform. That was not seriously questioned. The issue before us, then, is how, in seeking to reform the compensation scheme, we strike the right balance in treating fairly civil servants who lose their jobs or give them up voluntarily. As was stressed consistently throughout the debate, particularly by my hon. Friend the Member for Gloucester (Richard Graham), the issue is especially important to the large number of civil servants who are not well paid. How do we strike the right balance between being fair to them and discharging our responsibility to the taxpayer at a time when there is tremendous pressure on the Government to get public spending under control, as my hon. Friend the Member for South Staffordshire (Gavin Williamson) emphasised? My hon. Friend the Member for West Suffolk (Matthew Hancock) was entirely right to introduce the concept of fairness to future generations when talking about the need to get the deficit under control and tackle it with vigour.
As for the case for change, my right hon. Friend the Minister for the Cabinet Office made the Government's starting position very clear. This legislation is not an attack on the civil service. Many Members have placed on the record their appreciation of the crucial work undertaken by civil and public servants every day and across all Government Departments, and no one recognises that more than a young, new Minister with no experience of Government who relies on civil servants and the dedication and support that they give.
We simply believe that the current arrangements for compensating civil servants are unaffordable and unsustainable. My hon. Friends the Members for West Worcestershire (Harriett Baldwin) and for Vale of Glamorgan were right to express the surprise that their constituents would feel on understanding that in this day and age public servants are eligible to receive payment of up to three times their annual salary or, for older workers, enhancements to pensions and lump sum payments costing more than five times their salaries. That seems disconnected from constituents' experience of the real world, disconnected from statutory terms-a point well made by the hon. Member for Birmingham, Yardley (John Hemming)-and clearly out of kilter with terms in the private sector, as my hon. Friend the Member for Devizes (Claire Perry) argued.
The view of the coalition Government is that the status quo is unacceptable. As we made clear in the coalition programme, we want to bring this scheme more closely into line with that of the private sector. Critically, that view was shared by the previous Government, who tried to reform the scheme honestly, but ultimately without success. That view was apparently shared by five of the six unions involved in the negotiations, as they agreed to the package on offer. The case for change seems to have been accepted by the majority of speakers.
On affordability grounds alone, a responsible Government dealt the hand that we have been dealt on the public finances would have had to take action. As my hon. Friend the Member for West Worcestershire pointed out, there is also a risk of the current situation distorting decisions and creating unfairness. We do not want to take decisions on people's future based on how
easy or cheap it is to make them redundant. The effect of the current scheme is to make it particularly expensive to make the highest-paid public servants redundant. We do not want uncertainty to drag on, as it is bad for everyone and will breed only more insecurity. We want the uncertainty to end decisively.
As I said, I heard no serious arguments against reform. The debate on the Opposition side, honest as it was, was mostly about process and how the Government are going about this business. Strong reservations were made about the possible certification of the legislation as a money Bill, but that is clearly a matter and a judgment for you, Mr Speaker, at the end of the Bill's passage.
My hon. Friend the Member for Harwich and North Essex (Mr Jenkin), the Chairman of the Public Administration Committee, raised concerns about the risk of a legal challenge to the Government's approach and wanted comfort on the robustness of our legal advice. He will be aware that trade union members and some hon. Members have placed on record the risk of a legal challenge, so he will not expect me to go into the details of the legal advice. I can confirm, however, that it is robust.
The main argument from Labour Members was, "Why not go back to the deal that was almost struck? Why not amend the legislation so as to impose the terms agreed with the five unions earlier this year?" The truth is that the previously agreed terms were struck down by the courts and were not accepted by the Council of Civil Service Unions. Although those terms had much to recommend them, we would prefer not to see some aspects in the new scheme-for example, compulsory terms more generous than those on voluntary departure. Rather than embedding the scheme in primary legislation, we have sought to limit the costs of the current scheme while discussing the contents of a new scheme.
While I understand the concerns expressed by many Members about process, I believe that there is a danger of missing the central point. Reform is necessary-the status quo is not an option-and we want to achieve reform through negotiation. The Minister for the Cabinet Office has informed the House of his meetings with the Council of Civil Service Unions on 13 July, and of an imminent meeting. There are ongoing discussions almost daily, which he has described as genuine and sustained. We have sent a clear signal of flexibility on terms for voluntary redundancy, and have expressed a clear determination-this will be important to the House, given the concerns that have been expressed-to agree on terms that are fair to the lower paid. The model that we are exploring seeks to taper the protection given to the very lowest paid, but the limits and thresholds of such protection are clearly a matter for detailed negotiation, and should not be the subject of speculation in the House.
Why is the Bill necessary? It is necessary until we can reach an agreement with all the unions, because the current position enables them to veto any meaningful reform-a point grasped by the hon. Member for Birmingham, Yardley and many others-and they have demonstrated a willingness to use that power. Until we have secured agreement, we would be failing in our duty to the taxpayer if we retained the status quo and did not address the excesses.
The Bill does not itself introduce a new scheme, but merely limits the amounts that can be paid out under the terms of the current scheme. We have made it clear that those limited amounts represent the absolute minimum that the Government are prepared to offer staff. My hon. Friend the Member for Harwich and North Essex described that as an austere statutory base, but what was not mentioned was that the Bill makes it possible to adjust the amounts in one direction only, namely upwards. The Government seek to provide an example for other employees on good practice in relation to staff issues, and therefore have no desire to limit payments to the statutory minimum. The Bill caps the amounts to be received by staff departing on voluntary terms to payments calculated under the current terms, but limited to a maximum of 15 months' pay. For those who are formally dismissed, the limit will be 12 months' pay.
The Bill contains a sunset clause, and its effect can be brought to an early end if we are able to agree on a new scheme. We genuinely hope that that will happen. My hon. Friend the Member for Harwich and North Essex asked about the need for a sunrise clause as well as the sunset clause. I think it is impossible for us to be sure of every circumstance that could lead to a need to revive the Bill. The Government are therefore keen to maximise their negotiating flexibility. If we are unable to agree on a new scheme with the unions, the Minister for the Cabinet Office will have to renew the caps every six months by affirmative resolution.
The tone of the debate was extremely serious and consensual when it came to the need for reform, but I took exception to the suggestion by some Labour Members that the Government had no sensitivity in relation to the human consequences that might be forced on them. Labour Members chortle, but that suggestion is offensive to any Member on this side of the House. I do not think that anyone goes into politics to make other people redundant, except their direct political opponents. It is deeply offensive to ascribe the wrong motives to the Government. The coalition's priority is to reach a long-term agreement on a new scheme with all the unions involved: an agreement that is fair to the civil service and fair to the taxpayer. The Bill is needed in case we are unable to reach such an agreement. It introduces caps so that we can limit the costs of the current scheme while we discuss the content of the new scheme.
John McDonnell: I do not intend to embark on any party-political knockabout during the last few minutes of the debate. A key issue raised was process, which is important because it can demonstrate fairness. One of the failures of the House in the past has been the way in which it has rushed through legislation. A lack of scrutiny, both here and in the other Chamber, undermines the potential for good legislation.
The Speaker will determine whether this is a money Bill, but the Government have designated it thus, and I should be grateful if the Minister would clarify the reason for that. Given the definition in "Erskine May" of a money Bill, I see no reason why a Superannuation Bill can be so designated. I think it would be useful to rehearse the arguments in front of the Speaker, so that a wise decision can be made.
Mr Hurd: I understand the argument. It is based on the fact that this is about money and public expenditure, but as the hon. Gentleman knows the main point is that my view is irrelevant because it is the judgment of the Speaker that counts and the Speaker will make his judgment before the Bill completes its passage through Parliament. It is ultimately a matter for the Speaker to decide.
Matthew Hancock: Whatever the result of the vote on the amendment, the Minister is right to say that the tone of the debate all day has been in favour of reform of some kind, so is he as surprised as I am that we have just heard from the Opposition Front Bench that they will vote against the whole Bill, which means they will be voting in favour of £500,000 payouts to some at a time of such economic difficulty?
Mr Hurd: My hon. Friend makes an important point about the lack of coherence in the Opposition's position. They have set out clearly, and confirmed today, that they recognise the need for reform-and we have paid full tribute to the very honest effort they made when in government to reach an agreement. They recognise the reality of the situation, which is that effectively one union is holding the situation and the process hostage, and in all responsibility to the taxpayer we cannot let that continue. We have to break the deadlock, and that is the purpose of this Bill. It is needed in case we are unable to reach an agreement with the unions. It introduces caps so that we can limit the costs of the current scheme and we can go about the very serious business of reducing public expenditure while we discuss the contents of the new scheme. The critical point is that the Government's aim is to reach an agreement that is sustainable through negotiation. Those negotiations are ongoing and vigorous, and they are being held in good faith.
Mr Jenkin: Will my hon. Friend take this opportunity to correct the Opposition on one other point, which is that it would not in fact be possible to return to the February settlement because that has, effectively, been nullified by the courts? Even if all the unions now agreed to the February settlement, that settlement has been kyboshed by the courts, and even if they had agreed to it at the time, had there been a challenge in the courts and it had been successful-and it would have been-that would have nullified the settlement. This Bill is therefore indispensible.
Mr Hurd: My hon. Friend makes an extremely good point and he states a fact that I have placed on the record before: that the previously agreed terms were struck down by the courts and were not accepted by the Council of Civil Service Unions. The deal failed, and there is no guarantee that it would succeed in future.
Paul Goggins: It is important to be clear about this. The ruling was not about the content of what was proposed by the previous Government and agreed by five of the unions; it was about the fact that the legislation did not allow the Government to compel the solution. It is important that Members are clear about that before they vote tonight.
Mr Hurd: And our intention is to negotiate an agreement. This Bill is not the endgame. It is an interim measure which we hope to repeal as soon as possible, and it is on that basis that I commend the Bill to the House.
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