Bodies excluded from the restrictions on public sector exit payments

Part of Enterprise Bill [Lords] – in the House of Commons at 3:15 pm on 8th March 2016.

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Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills 3:15 pm, 8th March 2016

Government amendments 3 to 9 will enable Welsh Ministers to make regulations on exit payments that they feel are suitable and devolved to them through the Government of Wales Act 2006. That has been agreed with Welsh Ministers through the Welsh Assembly, and I am grateful for that.

The Conservative manifesto was very clear that we would introduce the cap and that we would set it at £95,000. It is extremely important to remember that this relates to redundancy pay. The cap will curb only the top end of exit payments—just the top 5% in value of all exit packages across the public sector. Amendment 15 is merely a device based on an article in The Daily Telegraph written by my right hon. Friend Priti Patel back in January 2015. It was not part of the manifesto promise that was made. There is no honour, if I may say, in putting that forward as anything other than a junior Treasury Minister praying it in aid in an article she wrote in The Daily Telegraph.

I want to make it absolutely clear that the cap will not affect a classroom teacher earning the maximum of the upper pay range of £38,000 with a normal pension age of 60. It will not affect anyone working in the NHS earning below £47,500 or firefighters. I am told that police officers cannot be made redundant, and in any event no police officer earning below £54,000 would be caught by the cap. The Cabinet Office has confirmed that no civil servant earning below £25,000 will be captured. Some earning around £25,000 may be captured, but we can find no such example. A librarian earning £25,000 with 34 years’ experience could still retire on an unreduced pension at the age of 55.

We also think it unlikely that anyone earning less than £27,000 would be hit by the cap. It is important that we remember that it is extremely rare in the private sector for anyone on a wage of £25,000 to expect, on redundancy, a payment of £95,000—nearly four times their annual earnings. Having said all that, my hon. Friend Richard Fuller, who is no longer in his place, made one of the most important points: it is right that we look at the value of the cap, as opposed to the salary or income someone is earning when they leave.

Finally, I want to address the important points about new schedule 1 and ask hon. Members not to support it. I listened with great care to the excellent points made by my hon. Friend Sir Gerald Howarth—I pay tribute to the workers he mentioned—and Albert Owen. I must make it absolutely clear, however, that we oppose the new schedule because we think it wrong to put the exemptions in the Bill. The relaxation provisions allow for special circumstances but only after proper ministerial scrutiny. I can assure them that I will continue to speak to right hon. and hon. Friends in the Treasury.

I agree with the helpful and wise interventions from my right hon. Friend Mark Field, and I hear the points hon. Members are making. I will continue to speak to them, but now is not—