September 7, 2010
Nick Hurd winds up a debate on a temporary Bill which will cap civil service redundancy pay at one year’s salary or 15 months for voluntary redundancies whilst negotiations take place. He tells MPs the Civil Service Compensation Scheme is in need of reform and the importance of strking the right balance between treating civil servants fairly and putting a limit on the cost of the current scheme.
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.