Clause 1

Superannuation bill – in a Public Bill Committee at 9:00 am on 16 September 2010.

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Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss the following:

Amendment 3, in clause 1, in page 2, line 3, at end insert—

Amendment 2, in clause 1, in page 2, line 4, leave out subsections (5) and (6).

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

We had two excellent sittings earlier this week. I welcome the spirit in which Government Members have approached the close questioning and their clear desire to seek proper understanding of the impact of the changes on the civil servants who stand to be so substantially affected. As we consider improving the Bill, it is important to remember that it is a time of considerable uncertainty and anxiety for thousands of civil servants. The Bill is not simply a blunt instrument  for negotiating purposes. If it finds its way on to the statute book in its present form—unamended—it could be vital to their lives.

We heard eloquent accounts from two civil servants about the impact of the changes on them personally. Karen Bell, the Central Office of Information civil servant, testified that she faces being made redundant in November and will lose £17,000 if she is made compulsorily redundant. The six to eight months that that would allow her to find another job she considers difficult, given her age and circumstances.

We also heard from David Cowell, a member of the Government office network. He faces a real threat of compulsory redundancy. In his written evidence, he said that the passing of the Bill would mean that

“it is highly likely that my house will be re-possessed by the lender and I will become homeless as well as probably jobless.”

Those are two human examples of the hardship and the potential impact of the changes on civil servants.

The Government in our sittings and on Second Reading set great store by their stated ambition of reaching a negotiated settlement. However, our scrutiny in Committee and elsewhere must ensure that the legislation that reaches the statute book is practical, fair and in the long-term interests of the civil service work force and the country. The Opposition’s argument is that the legislation, without amendment, meets none of those tests.

As Mr Dusty Amroliwala said in his evidence on Tuesday, he

“cannot for the moment see circumstances in which, if we were not to reach an agreement with the unions on a long-term deal, we would recommend to Ministers that they should exercise the provisions of the sunset clause.”––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 4, Q3.]

That makes one thing clear—the Bill is designed to be used and will set the terms under which thousands or, indeed, tens of thousands of Karen Bells or David Cowells could be made redundant. For them, the Bill represents whether they will keep their homes, help their children through university or avert acute financial hardship while looking for a new job. It is not simply a blunt instrument to be used in negotiation.

The Opposition believe that the amendments would improve the Bill, to strike a fair balance between the interests of the taxpayer and the reasonable and, it is fair to say, established expectations of civil servants. The existing caps set out in the Bill are unfair and discriminate against those civil servants who have worked in public service for many years. At a time when their jobs are being threatened by substantial cuts to departmental budgets, low-paid and long-serving civil servants could see their redundancy packages cut by up to two thirds of what they would have received under the scheme put forward by the previous Government.

Our argument, therefore, is that the February 2010 scheme should form the basis of the reform that we all agree is needed. It meets the tests against which reform should be judged, such as making a substantial contribution to tackling the deficit—£500 million was the accumulated saving under the 2010 package—while also ensuring that the reasonable expectations of civil service staff, and the lowest-paid in particular, are met. It was also important to address, as we sought to do, the age-discriminatory aspects of the earlier arrangements.

Photo of Gavin Williamson Gavin Williamson Conservative, South Staffordshire

What the right hon. Lady is saying is informative, but the Public and Commercial Services Union seemed interested to state that the February negotiations should be the starting point, rather than an end point. Do you believe that is feasible, or were the February negotiations by far and away too generous?

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. The right hon. Lady will answer in a moment, but first some standard procedure—it is a learning curve for everyone. Please address the Chair: do not use “you”, but “the hon. Lady”.

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

The hon. Member for South Staffordshire ought to know that I will address that point later in my remarks. I think that what we heard from PCS was essentially a negotiating stance. Anyone who has been involved in such negotiations would understand the difficulty of being put on the spot and, as Mr Lewtas the senior official from the PCS said, of revealing the negotiating hand when negotiations are being actively undertaken.

As Peter Boreham said in the evidence session, a two-year cap is not out of line with the private sector, but in line with what some of the—regarded as better—private sector organisations are offering. The amendment would bring the maximum cap for redundancy in line with other parts of the public sector, including local government, education and the national health service. It is important to underline that that emerged from an eight-month consultation between the Government and the civil service unions, and that we, on the Opposition side of the Committee, are confident that that would provide a fair resolution of this issue.

All six of the civil service trade unions have expressed their support for the use of the principles underpinning the scheme as a basis for moving forward. I would like to take the opportunity to pay tribute to the open-minded way in which the Minister approached questioning the trade unions earlier this week. He showed himself to be genuinely engaged in seeking to reach a negotiated agreement with the unions that is fair and recognises the principles that we established. The response from the PCS official on Tuesday should perhaps be seen in the context of negotiation, rather than as a clear statement that shuts the door on the possibility of reaching a negotiated settlement on the February 2010 provisions.

The amendment would end the undesirable differential between compulsory and voluntary redundancies. That is something that we need to address with some care. Several witnesses commented on the fact that staff who volunteer for redundancy are likely to be more highly skilled, better paid and with the prospect of future employment. More attractive voluntary terms may, therefore, result in the civil service losing some of its more talented staff. The officials negotiating with the unions were particularly exercised about that when we were in close discussion about the February package. It is important, however the matter is resolved, that there is not a perverse incentive in the provisions. In the evidence session, David Wreford from Mercer stated that

“It is often counter-productive” as

“People who volunteer tend to be most attractive to the market and…so you typically find that…those who step forward for voluntary terms are not the ones you would have otherwise chosen as part of the selection process.”––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 34, Q89.]

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

Does the right hon. Lady accept that, if those people who accept voluntary redundancy are more likely to get a job, and those who do not accept voluntary redundancy are less likely to get a job, we are likely to see fewer people out of work?

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London) 9:15, 16 September 2010

That depends on the level of impact of the Government’s forthcoming cuts, to be announced in the spending review on 20 October, on job numbers in the civil service. So I do not think that that is an answer that we can give at this stage.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

I thank the right hon. Lady for giving way again. I would like to address a point she made earlier. She said that Mr Boreham said that two years’ or three years’ redundancy pay is not out of kilter with the private sector. I have being trying to find that in the evidence, but have found that he said:

“Last year, a number of private sector businesses took the opportunity to reduce their redundancy terms simply to make them more affordable, given the financial situation that they were facing.”

Moreover, Mr Boreham goes on:

“The private sector is also pulling down redundancy terms on the grounds of affordability. So, there is a significant gap between public and private sector redundancy in financial terms.”––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 12-13, Q24 and 26.]

That seems to disagree with the right hon. Lady’s report of what Mr Boreham said. Will she clarify the source of her information?

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

Let me come back to the specific reference. I think that the gist of Mr Boreham’s evidence was on the benefits of good practice in minimising the long-term damage to the work force that provisions that are considered to be unfair and overly mean can inflict. It is wrong that those who are made compulsorily redundant should receive significantly worse terms than those who leave voluntarily.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

May I bring the right hon. Lady back to the point of the distinction between voluntary and compulsory terms? There is an important difference between our views on it. Does she recognise that the ultimate decision on who stays and who goes rests with the manager? There is a logic to increasing the incentives for voluntary exits in order to increase the pool of options available to managers. At the end of the day, it is managers who will decide, and that will help mitigate the risk articulated by the right hon. Lady about different incentives facilitating the exits of people whom we might not want to lose.

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

The decision about who goes and who stays is, of course, ultimately a decision for the authorised manager, because they will have to sign off the terms of the deal. However, reflecting on my own experiences as a former Minister for the Cabinet Office, there is considerable concern that a voluntary scheme that is significantly more generous than a compulsory one produces, and is at risk of producing, a perverse effect: the numbers may go down and the savings may be achieved, but we may end up losing some of the more talented staff, who will be able to find positions elsewhere.

One of the issues raised by the trade unions during discussions was the importance of a proper human resources strategy for managing the underperformance of staff who might otherwise be made compulsorily redundant. It is very important that the way in which the provisions are applied achieve the desired effect, which must be a civil service that is capable and has the capacity and the skills to deliver the intended policies of Ministers.

Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire

I completely agree with the Government on the point of view of the employer. However, we heard a lot of evidence from trade union representatives who effectively said that they would much prefer a redundancy process with great emphasis on those taking voluntary redundancy, and that the terms of the Bill give an added attraction to those made redundant on that basis.

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

Ultimately, however, that is part of the negotiation process. Ministers face having to manage an accelerated reduction in the capacity of the civil service to deliver policy. Civil service managers in all Departments will have to judge which staff have the skills necessary to continue doing a good job of delivering policy. We cannot have a situation whereby the people who leave are simply those who want to leave. That would leave managers having to organise and manage the remaining capacity, made up of the staff who wanted to remain for whatever reason.

Much of our discussion on Tuesday focused on the pay differential between the public and private sectors. The Office for National Statistics released a further report yesterday. I underline the point made by Mr Carl Emerson of the Institute for Fiscal Studies that public sector workers tend to have higher levels of qualifications, skills and experience.

Pay for comparable jobs is not higher in the public sector than the private sector, but the people doing them are likely to be better qualified. Pay in the civil service is substantially lower than in the private sector and other parts of the public sector. The median salary is about £22,000 a year and 40% of civil servants are paid less than £20,000 a year. Enhanced redundancy protection has formed part of a compact that has built the commitment of such people to work in the civil service.

The Minister has said on a number of occasions that he wants to protect the lowest-paid, and we agree with that aim. His colleagues have said that they want to protect the lowest-paid, and Mr Dusty Amroliwala told us that he wanted to do so. There is consensus across the House that that is the right course of action. However, if we do not agree to the amendments, we risk failing thousands of low-paid civil servants, whom we have all said we want to protect.

Negotiations may provide a fair settlement for the low-paid, but that is not guaranteed. Tens of thousands of people may be made redundant over the next year and that may well be done under the terms of the Bill. Such people will face the real life circumstances that two of our witnesses so vividly described. The Committee must not forget the heavy responsibility that it carries.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

One point that has been made from the Government Benches is that there is an interplay between the number of redundancies and the redundancies package. Is the right hon. Lady arguing for her proposals in the knowledge that they would lead to more redundancies? Is that a price worth paying?

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

The hon. Gentleman’s point is not wholly clear to me. I am explaining what I fear will be the consequences for lower-paid civil servants if the Bill is passed unamended. I therefore commend the amendments to the Committee.

Photo of Roger Gale Roger Gale Conservative, North Thanet

Before we proceed, a few words of explanation may be helpful, particularly for Members who arrived after the Committee started. We have grouped three amendments. As always, only the lead amendment will be decided on automatically and may be put to a vote if the mover so chooses. The other amendments may be voted on, but only by discussion with the Chair. Effectively, we are talking to the first amendment, so Members should not expect the others necessarily to be voted upon, although all Members may speak to any of the grouped amendments. For those who arrived slightly later, I have said clearly that the clause has a stand part debate, which is a debate on the clause in principle, once it has been debated.

Some Chairmen take a view that that can only be done at the end. With a Bill such as this, I have always taken the view that it is helpful sometimes to have a broader debate, which is why the right hon. Lady has perfectly properly, and in order, covered slightly wider ground than the actual amendments. Any comments on the clause should relate to that clause. This is not a further Second Reading debate on the whole Bill. The formal procedure is that I shall call Back Benchers—or indeed Front Benchers—from all parts of the Committee. The Minister will hear what everybody has to say and will respond to the debate. Any Member may, by catching the Chair’s eye, speak more than once. It is not the same procedure as on the Floor of the House.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

I rise to oppose all the amendments to clause 1. The first problem is that we need to focus on protecting staff working in the civil service, many of whom do a good job. The best protection is the flexibility to minimise redundancies. The Opposition propose, in effect, to reimpose their previous scheme, most importantly without the incentive of voluntary redundancy.

Allowing the incentive for voluntary redundancy will make it possible to work with the agreement of the work force in reducing numbers and, thereby, minimise numbers of redundant people. The fact that those people who will go for voluntary redundancy might be those more likely to get another job—or be more confident of getting a job—is valuable. In imposing the previous settlement, the Opposition are effectively saying that negotiations have come to an end.

The hon. Member for Birmingham, Erdington made a good point on Tuesday about some exceptional cases where people have specifically gone through a process— effectively creating a contract with the Government—whereby they specifically and obviously agreed something. That should form part of negotiations. The Opposition are saying that negotiations come to an end at that point; we revert to imposing the agreement that was in place earlier this year, we do not encourage voluntary redundancies and flexibility and we do not try to minimise redundancies. I cannot agree with that.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

In the general debate so far on the elements in the amendment, the most important concern for all members of the Committee was to create an environment in which negotiations could proceed constructively and come to a conclusion, whereby the legislation virtually becomes irrelevant. All the advice, from the unions and the CBI representatives, was that to succeed at negotiations in a difficult climate requires time. I think there was reticence to see the use of legislation, as it would impact on those negotiations. Some of us have put it more forcefully.

I do not support the details of the past scheme agreed between the then Government and five of the six unions, and which was then open to challenge. I do not support some of the detail, but I do support the principle, which was to achieve a negotiated settlement on a deal in which the majority of the trade union members it affected would not see a dramatic reduction of their accrued rights. That is where the deal fell apart last time; it was challenged. Whatever we think about individual trade unions, any union representative has to be able to sell the deal to their members. If a trade union cannot take its members with it, it cannot complete the deal.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley 9:30, 16 September 2010

Perhaps the most poignant advice was from Dusty Amroliwala, who I presume will be affected by the civil service compensation scheme. When he gave evidence to the Committee, I asked him:

Would I be right to assume, therefore, that you would advise any Government faced with this situation to use a legislative approach to open up the logjam?”

His answer, remembering that he is an independent civil servant and affected by the scheme, was:

“That was certainly one feature of the advice, yes, without a doubt.”––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 7, Q15.]

The advice from the civil service, which is affected by it, is that this particular mechanism is one to use to break the logjam.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

With the greatest respect to Mr Amroliwala—I hope he is not affected by the scheme as a result of some of the things that we are about to say—he was one of the advisers who constructed the last scheme that failed in the courts. Part of his advice that was so robust to Ministers was suggesting that the scheme would succeed in the courts. Therefore, I take with an element of scepticism the effectiveness of his advice and its ability to survive in the real world and sustain a proper agreement. I take more realistically the advice given by people with experience of negotiation; that came from both the CBI representatives and trade union representatives. It was about giving time for negotiations to take place.

I am trying to work through how to arrive at a reasonable settlement. What settlement will hold, not with just five of the six unions, but all of them? Also, within a union, what will hold with their members? The valid point made by a number of the trade union representatives was to ask what deal will hold and be sustainable in the courts if a legal challenge was taken—not by a union, but by an individual union member. The union representatives themselves made it very clear that they would be vulnerable to legal challenge, as the Government were, if they did not abide by what is now a court judgment on accrued rights.

The amendment is important and supportable. Although we do not want to be in a situation where legislation has been brought forward almost as a cosh within the negotiations, and although the Opposition feel—we have made this clear, and much of advice has made this clear to the Committee—that introducing legislation at this time is unprecedented and not particularly constructive, the amendment would give the basis of a message to the current negotiations, saying that the clause could form the basis of a deal.

The Minister put the PCS representative on the spot by asking him whether PCS could recommend a package as the basis of a successful deal to their members. No trade union official would have the authority to give the Minister that assurance at a meeting like that. A lot would have to happen; it would have to go back, and the negotiator would have to consider it. It would have to be put to the executive, before a recommendation went to members. It would then be up to them to decide.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

Does the hon. Gentleman think it is a good approach to try to negotiate an industrial agreement in a Public Bill Committee?

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I fully agree. That is why I never supported the legislation. I wanted to allow the negotiations to take place, have the normal mechanisms to report to Parliament that a deal had been signed, and then go forward. I do not want to go back to the principles of the Bill, but the context is such that legislation undermines the negotiations rather than assists them.

However, we are where we are. The legislation is before us, and through the amendment we are trying to create a climate of opinion in the negotiations that facilitates the making of a deal. As I said, I never supported the original proposals as set out here when they were agreed by the previous Government, and I do not think that they are the best. However, adopting the amendment would send a signal to the negotiators that there is a prospect of a deal, even if there are elements around the final deal that have to be ironed out by the PCS, and certain minor changes need to take place.

The role undertaken by the Committee would be constructive. Putting that message into negotiations would, in some ways, override some of the damage that has been done by the introduction of the legislation. I support the amendments on that basis.

From the Committee today, we could send a signal to the negotiators that we have some parameters of a deal that would protect most of their members from severe damage, under the Bill, to their accrued rights. That is  the reason to support the amendments. At this delicate stage in the negotiations there is a responsibility on our shoulders to be realistic about what sort of deal could emerge. If the approach is bloody-minded and we say that the Bill will go through without amendments and that these are not the sort of parameters that a negotiated settlement could be formed around, we will provoke not just PCS members but members of other unions who settled for the deal previously. The last thing that we want in this period are forms of industrial conflict exacerbated by a parliamentary Committee.

Large numbers of people will inevitably lose their jobs as a result of the comprehensive spending review, and if they feel that they will not get a just settlement they will take whatever action is available to them, which will be either industrial action or legal action, as we have already been told. Neither route will create the sort of industrial relations climate that the country, let alone the Government, will need to get through this period.

I therefore urge Members to support the group of amendments because it sends the appropriate signal to negotiators, and the Bill currently does not. In that way, we could play a constructive role in the negotiations, even though I never wanted to be in this position in the first place.

Photo of Jack Dromey Jack Dromey Labour, Birmingham, Erdington

The hon. Member for Birmingham, Yardley is right that, in the best traditions of Public Bill Committee hearings, evidence given is evidence that should be assessed in reaching a decision on the proposals in the Bill.

After the public hearings earlier this week, I was contacted by a long-serving civil servant who works in what is called the Joint Support Chain Services in Plymouth—it used to be the Defence Storage and Distribution Agency. He is employed in the explosives business trade. I know Plymouth well; I have been there 100 times. It is a city with great naval traditions. It is the city of Drake and of Devonport dockyard. It was bombed fiercely by Hitler’s bombers during the war, but gave outstanding service to the Crown then and has done ever since. Those who work in the Ministry of Defence regard themselves very much to be servants of the Crown and the armed forces.

That individual, who is employed in vital work in processing ammunition for the front line in Afghanistan, said:

“I am nearly 50 years of age. I have a wife and two dependants aged 12 and 15. Our family has never incurred any credit card debts. We pay our mortgage faithfully each month on time, never having missed a payment. We have no other outstanding debts; we are in many ways old-fashioned in that we purchase only that which we can afford. I do my job to the best of my ability, as do my work colleagues. I was due to receive £60,000”— many of those employed in Plymouth now face redundancy—

“less tax, when I lose my job. I would have used this money to pay off the remainder of my mortgage. The rest would have cushioned my family until I found other work. But what work will there be in such a place as Plymouth, left abandoned by the Westminster-centric-driven politicians? Nowadays I feel ashamed to say that I’m a Civil Servant. I believe that people will think that I’m lazy, inept, incompetent, a waster, that this country is burdened by the  likes of me and the sooner I’m rid of the better. I am not responsible for, nor have I contributed to the greed, that has so damaged our country. Yet it is the likes of me that will pay.”

In the debate on Tuesday, a Government Member referred to public perceptions. The problem is that public perceptions, many of which are myths, have been fed because of a lack of leadership by Government. It is important, therefore, that the evidence before Committee is properly assessed when we reach a decision. The notion that civil servants are well paid, with gold-plated pensions, and in secure jobs is simply not true.

Reference was made on Second Reading and in the debate on Tuesday to public sector comparisons. That is wrong, because the civil service is at the lower end of the public sector. A crude, public-private comparison is therefore not appropriate. There has also been a failure to understand the nature of employment in the civil service. For example, there are many more low-paid jobs in the private sector, and many of those at the bottom end of the civil service have already been contracted out.

Photo of Claire Perry Claire Perry Conservative, Devizes

I appreciate the various comparisons about pay, which I am sure we will debate at great length and for which there is information from both sides. I understand, however, that the Bill considers only one matter, which is the maximum redundancy pay for a civil servant.

Is there any evidence other than that which has been presented by the Government? That shows that cash payments within the narrower civil service are generally approximately three years’ pay and can be up to six years’ pay, whereas the statutory minimum for redundancy in the private sector is for 30 weeks’ and, typically, the best practice is for 12 months’. Ignoring the wider compensation structure issues, which both sides would like to discuss, does the hon. Gentleman agree that in the specific case of redundancy pay, which is what the Bill addresses, there is a relatively large discrepancy in favour of civil service sector workers?

Photo of Jack Dromey Jack Dromey Labour, Birmingham, Erdington

The hon. Lady has drawn a misleading comparison, because it is not right to focus on but one part of the total package of terms and conditions of employment. That is why, on Second Reading, I quoted an excellent senior army officer, who spoke to me when I first dealt with the Ministry of Defence many years ago. He said that although staff were paid little, at least they could look forward to a decent pension and they would probably be supported if they were made redundant. We must therefore consider the matter in the round. If the hon. Lady wishes to draw comparisons, I, too, am happy to do so.

In the civil service employment structure there are many more graduate jobs—they comprise more than 20%, compared with 15% in the private sector. Graduates who are working in the private sector get 3.4% more than those who are employed in the civil service. We heard on Tuesday that workers in call centres in the private sector get 14.3% more than people who are working in the civil service.

In the debate earlier this week there was a suggestion that the civil service has been inured to these tough times, but nothing could be further from the truth. On pay, the comparisons are clear. In the year to March 2010, the Office for National Statistics Figures show a  3.6% increase in the private sector, but a 2.8% increase in the public sector. Predictably, there was a 5.2% increase in the finance sector. The Incomes Data Services estimates for the year ahead show that pay will rise in the private sector.

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. I am always reluctant to curtail remarks, particularly when I have, effectively, given hon. Members a free rein, but the debate concerns superannuation and redundancy; it is not about pay. The time has come for me to ask the hon. Gentleman to confine himself to discussing clause 1.

Photo of Jack Dromey Jack Dromey Labour, Birmingham, Erdington

I have no problem with that, because I hope that in the debate thus far, we have cleared the undergrowth of myth that has been fed by the Government in their seeking to justify this shameful measure. It is simply not true that civil servants somehow enjoy a privileged existence that should be brought to an end during tough times.

I come straight to the amendment. I found the debate the other day interesting, because, after Second Reading, I sensed that there was genuine hope on both sides of the House that an agreement could be reached at the next stages that would prevent the dangerous precedent of unilaterally, by way of a statute of Parliament, altering the terms and conditions of employment to their detriment. I hope that the “blunt instrument”, in the unfortunate words of the Minister for the Cabinet Office and Paymaster General, will not be used against civil servants during the next stages.

If Government Members mean it, and if the Government mean it, we are on test. I ask the Minister to facilitate negotiations in the way that the amendment seeks to do, and then to put the unions on test in those negotiations. My judgment, as somebody who handled such issues for many years, is that if there is support on both sides of the House for a move of that kind at this stage—putting the offer that was made in February of this year back on the table—that would lead to a quick negotiation, perhaps a reconfiguration of the package, because the point has been fairly made about the interests of the lower-paid, and a settlement then being reached. I ask the Minister, “Why not?”

We need an act of good faith on behalf of the Government. A clear message has been sent that change is necessary and that the current arrangements need reform, which has been embraced on all sides. My judgment is that all six unions would respond to an initiative of that kind.

In conclusion, it is a serious matter. The lasting damage that will be done to the morale of the good men and women who serve the Crown, and who are proud of the job that they do, should not be underestimated for one moment. It will be a stain on Parliament if we do not take the initiative now. I stress again: if there is a genuine view on both sides that that package might form the basis of a settlement, let us allow that to happen.

Photo of Richard Graham Richard Graham Conservative, Gloucester 9:45, 16 September 2010

One of the things that I have found hardest during our debate in this Committee is the inconsistency in the position of Opposition Members. For example, the right hon. Member for  Dulwich and West Norwood answered a question earlier by saying that it would not have been appropriate for the PCS to have revealed its negotiating position during a public Bill debate, but she put that very question to the representative of the PCS by asking whether that representative would be optimistic that the PCS

“would find an accommodation that would not lead to a further judicial review or leave the Bill’s provisions as the only available option on the table?”––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 57, Q128.]

All parties have said that the current status quo is not sustainable. That does not mean, in answer to the emotional speech by the hon. Member for Birmingham, Erdington, that Members on the Government side of the House do not recognise the invaluable contribution made by civil servants across the land, in whichever Department they work. We all do, and that has been stressed by both Ministers and Back Benchers. But given that we all accept that the status quo is not sustainable, and given that Labour Members in the previous Government were unfortunately unable to arrive at a negotiated solution with the unions, it seems curious that, as the hon. Member for Birmingham, Yardley pointed out, the shadow Minister wants to rule out negotiations by trying to achieve the same result with an amendment to the Bill, which would produce exactly the same position as the previous attempt at a Bill, which failed with the result of a judicial review. The advice given to the Government is that it would be much harder for a judicial review to be had if primary legislation was enacted.

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

The hon. Gentleman is developing his remarks, and I will deal precisely with his point. As I said on Second Reading and in the oral evidence session in the Public Bill Committee, the six trade unions have accepted the principles of the February settlement. [ Interruption. ] I am very reliably informed that they have accepted the principles as a basis for further negotiation. However, it is perfectly reasonable for a single official, without having the authority of his executive committee, to be unable to give the precise assurance that the Minister—rather generously—sought in his question. We want the February package put back on the table as a basis for negotiation, and with all due respect, we can be optimistic about the will of the six unions to reach a negotiated settlement.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I simply do not share the right hon. Lady’s confidence in the ability of the PCS to achieve a sensible negotiated settlement without the blunt instrument of the Bill, for two reasons. First, she mentioned that the PCS negotiators had effectively accepted the principles of the deal that she and her colleagues put to them earlier this year. Two days ago, I put precisely that point to the PCS and I was told:

“That would have been untrue. We did not accept the original deal.”

I again asked the witness whether he was denying that his

“own negotiators came away from the meeting with a positive recommendation.”––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 60, Q135-136.]

He answered, “Yes”. On that basis, and given what the right hon. Lady has said and what other hon. Members believe, I am not convinced about that good will.

Photo of Richard Graham Richard Graham Conservative, Gloucester

May I finish this point? In his evidence to the Public Administration Committee, the deputy general secretary of the PCS spelt out that

“the sticking point for us in the last negotiations was over the level of protection there was to the lower paid in the Civil Service”.

However, in his evidence, Geoff Lewtas from the same trade union said that, in that agreement,

“it was really only some of the lower-paid whom we felt were adequately protected”.––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 58, Q128.]

Those two statements are completely incompatible. The deputy general secretary says that the sticking point was that the lower-paid were not adequately protected, but his colleague says that only some of the lower-paid were adequately protected. It is not possible for any Labour Member to believe that both those statements can be true.

Given that the right hon. Member for Dulwich and West Norwood and the Minister gave the PCS representative two opportunities to state that the union would effectively accept the negotiated deal that it had turned down in February, and given that the judicial review still applies, it will not be possible without the Bill to solve the problem that all parties agree needs to be resolved. It is a blunt instrument—that is absolutely correct—that is on the table to oblige that trade union to see its way forward to a rational result for the benefit of its members, especially the lower-paid, which we all want to see. I will, therefore, not be voting for the amendment.

I will happily give way to the hon. Member for Birmingham, Yardley.

Photo of Gregg McClymont Gregg McClymont Labour, Cumbernauld, Kilsyth and Kirkintilloch East

I have two or three points to make. First, we have often heard complaints from the other side of the debate about the unions’ failure to say definitively whether they would accept the February 2010 agreement, but we have heard nothing—it is fair to make this comparison—from the Government on what they are prepared to accept. It is unfair to expect the unions, outside of a negotiation, to say what they would accept when we do not ask the same question of the Government. The Government want to use the Bill, which is a blunt instrument, to force the unions to the negotiating table, but why is such emphasis placed on demanding that the unions explain what they will accept, when we do not ask the same of the Government? There is a case for considering that slightly unfair.

Secondly, the hon. Member for Gloucester, who was speaking for his side of the debate, said that he wanted to put it on record that civil servants make an invaluable contribution. The problem with his position is that this blunt instrument, as it stands, seems to put a value on their contribution, and that value is an extreme deterioration in their terms and conditions. I gently say to the hon. Gentleman that the tax workers in Cumbernauld in my  constituency do see the Bill as an attack on them, and homilies on their invaluable contribution are not likely to get very far with those employees.

Finally, returning to the numbers involved, the matters under discussion are really important for lower-paid civil servants. According to the Bill, as I understand it, a civil servant earning £22,000—the median earnings in the civil service—who is made compulsorily redundant will receive £22,000. Under the February 2010 agreement, that civil servant would have received £60,000, which is a profound difference and is a huge amount of money to such workers. I do not know how long it has been since most Committee members have earned such a sum, but £22,000 is not a lot of money.

Photo of Claire Perry Claire Perry Conservative, Devizes

Several of us have earned less than that in the past five years.

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. The hon. Lady may not intervene from a sedentary position. If she wishes to intervene, she must ask to make an intervention and, if permitted, rise to her feet.

Photo of Gregg McClymont Gregg McClymont Labour, Cumbernauld, Kilsyth and Kirkintilloch East

I am happy to give way to the hon. Lady, if she wants to express her enthusiasm.

Photo of Claire Perry Claire Perry Conservative, Devizes

I am grateful to the hon. Gentleman for giving way, and I apologise for my sedentary intervention.

I want to provide a real-world context for this discussion. I submit that many workers in the private sector earning approximately £22,000, or less, would be delighted with a payout of £66,000 and consider it to be extraordinary largesse. I reiterate that this compensation package ought to be placed on a fair footing, which, during the previous Administration, the right hon. Member for Dulwich and West Norwood repeatedly and determinedly attempted.

It is interesting to hear the stories of how much money individuals will lose, but the fact remains that there is an enormous discrepancy between this specific element of the compensation scheme and the prevailing norms for millions of private sector workers.

Photo of Gregg McClymont Gregg McClymont Labour, Cumbernauld, Kilsyth and Kirkintilloch East

On a point of fact, the sum would have been £60,000, not £66,000. I understand that the compensation was £60,000 or three years’ pay, whichever was the lower.

I am delighted—this will be final point—that the hon. Lady has raised a comparison with the private sector, because she is absolutely right. In the occupational classification produced by the ONS, the bottom three categories make up 30% of the private sector. Those categories make up only 10% of the public sector, which is why, as my hon. Friend the Member for Birmingham, Erdington pointed out, we are comparing apples with pears.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley 10:00, 16 September 2010

The example that Karen Bell of Prospect cited would receive £51,000 under the current scheme, £42,500 under voluntary redundancy if the Bill went through, and £11,000 under statutory redundancy. The figure of £42,500 is much closer to the current scheme than statutory redundancy, which many people in the country face—not that I am arguing that we should level down in any way.

I disagree with my hon. Friend the Minister on one point, in that I do not see the proposals in the Bill as being on the table. I understand that negotiations are ongoing, and that in the Committee we should not aim to put anything on the table, and we should not pressurise the trade unions to say what their views on negotiations are. Dusty Amroliwala, who will hopefully not be affected by the scheme but who is almost certainly covered by it, has said that he would advise any Government to use a legislative approach to remove the trade unions’ veto on an agreement, which is what the proposals achieve. They achieve it in a way that is not massively aggressive, as I have just cited in an example.

I do not, however, see this as being on the table; obviously, the Minister can confirm whether that is the case. My understanding is that negotiations are continuing—as they should—with the objective of getting a flexible deal that would, hopefully, protect people from redundancy with flexible approaches, such as moving towards part-time working.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I am grateful to the hon. Gentleman for giving way, especially as I forgot to give way to him earlier. I absolutely agree with what he is saying. We are not trying to put something on the table; we are trying to have something on the table that would allow the changes to the current status quo to happen if negotiations, unfortunately, were to fail. I am absolutely convinced of the Government’s good will in those negotiations and that we all share the hon. Gentleman’s view on achieving a much better result than the Bill provides for, especially for the lower-paid. But the Bill needs to be there to ensure that the status quo is changed, given the lack of results so far.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

There is a further point. I still do not see it as being close to being on the table, but one issue has been raised with me. If anyone were made redundant under the scheme and then the scheme were to be improved through negotiation and a settlement, there would be a question about what happens to those who were made redundant under this scheme. We should be concerned about such people. My personal priority is still to minimise redundancies. If we end up losing better people who can get jobs in the private sector, but people remain employed in the public sector, there will be less unemployment, and I think less unemployment is a good thing to aim for.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

It is a great pleasure to serve under your chairmanship, Mr Gale. This morning is a first for both of us, in a couple of respects. I have noticed with great interest the generosity that you have shown in the Committee to new Members of the House and I am hopeful, up to a point, that that may be extended to new Ministers as well. We will see—I do not want to test that too far.

The hon. Member for Hayes and Harlington, with characteristic candour, said he wished we were not in the place that we are today. That is also the Government’s view—he may not believe that, but it is the truth. We are discussing amendments to clause 1, which introduces austere caps on the level of payment possible to staff departing on voluntary terms, who will receive payments calculated under the current terms, but limited to a maximum of 15 months’ pay. For those leaving on being formally dismissed, the limit will be 12 months’ pay.

It is important to set the clause, and the Bill, briefly in context. The first point of context is the urgent need to reduce public expenditure, and I am not going to indulge in any partisan knockabout as to why we are in that place. That would not be appropriate given the substance of what we are now addressing. As the hon. Gentleman said, the human consequence is that we are on the brink of an inevitable significant reduction in head count within the civil service. That is an extremely difficult and delicate process, which needs to be managed properly, fairly and, we submit, within a framework of certainty to both those given the difficult job of managing that process and those who have to live with some of the consequences of those decisions.

The second point of context is that there is a clear need to reform the civil service compensation scheme. One of the striking points of the debate has been the cross-party and cross-Committee consensus on the need for reform of a scheme that is unaffordable, inappropriate and—to our way of thinking—out of kilter with the experience of so many of our constituents.

The right hon. Member for Dulwich and West Norwood was right to open her remarks by setting an emotional framework for the Bill of tremendous anxiety and insecurity. We believe it is time to deliver some certainty, because uncertainty is one of the great fuellers of insecurity. There has been uncertainty around this agenda of reform for two, arguably three, years and it is time to bring that to a close.

In making the case for the amendments, I thought the right hon. Member for Dulwich and West Norwood was suggesting that—based on our frank language in calling the Bill a blunt instrument—our motive is to end this process with the Bill. That could not be further from the truth, however, and that phrase should not be taken at face value. The Minister for the Cabinet Office and Paymaster General, my right hon. Friend the Member for Horsham (Mr Maude), used an emotive phrase—that the Bill is a blunt instrument—quite deliberately, because it is a blunt instrument. It is designed to do something simple, straightforward but controversial, which is to change the pace and dynamic of the negotiations, which have dragged on.

The Committee knows that we are here because of the trigger of a court judgment which crystallised the problem underlying this negotiation, which is that the process of negotiation can be held to ransom by one union. The Bill, as we have clearly stated, is not where we expect to end up. It represents a de minimis position, from which we expect to move forward and which we are now negotiating in very good faith.

Photo of Jack Dromey Jack Dromey Labour, Birmingham, Erdington

Reference was made by Government Ministers and Back Benchers side earlier this week to a genuine desire to reach agreement. Reference was also made to the retabling of the February 2010 package. As a genuine move towards reaching agreement, would the Government be prepared to table that offer, on the basis that they expect a settlement to be quickly reached?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

If I may, I will address the amendments specifically, because they are seeking to do what the hon. Gentleman is discussing, which is, to use the language of the hon. Member for Hayes and Harlington,  to send a signal to the negotiation process. Our view is that that is not the appropriate way forward. We have been clear about this—we are conducting a twin-track approach. The Bill sets out a de minimis position and, in parallel, there is a serious negotiating process under way. Those conducting the negotiations on behalf of the union are aware of the Government’s position and where the Government are flexible in relation to the Bill. Those negotiators need no signal from the House in that respect; they are receiving those signals on an almost daily basis in the meetings that are taking place.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

I ask what is perhaps a slightly difficult question. It is possible that the Bill will come into force and people will be made redundant before there is an agreement. In those circumstances, would the Government consider, as part of that agreement, a scheme whereby anyone who was made redundant under the terms of the Bill gets the terms that may be agreed later? That is a difficult question to answer without notice, but there are people who are concerned that they may be made redundant under the Bill, while a better settlement is reached later which they would miss out on. Would the Government consider a measure to assist those people?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

That is a reasonable question, but I will not be drawn into a detailed answer, because that might be part of the negotiation process. When that point has been raised before—not least by the hon. Member for Hayes and Harlington—it was pointed out that if the Bill is designed to be a catalyst for a faster, more serious process of negotiation the onus is on concluding that negotiation as quickly as possible, not least to mitigate the risk that the hon. Member for Birmingham, Yardley has mentioned.

The amendments have been tabled with the most honourable of motives, by someone who has probably more knowledge of the complexity underlying the tortuous process than any other member of the Committee and to whom my right hon. Friend the Minister for the Cabinet Office and Paymaster General has paid warm tribute in the House for her work over a long period of time in trying to reach an agreement. Effectively, her amendments encourage us to go back to February 2010. My right hon. Friend has already expressed the problem with that approach in evidence to the Public Administration Committee.

We have a number of objections, but the most important one is that no deal was done on that basis, and no evidence suggests that a deal can be done on that basis. We have discussed the response of the representative from PCS to my direct question on 14 September. No deal was done on that basis, however, and therefore no hard reason exists why we should continue to proceed on the basis of that package.

As my right hon. Friend has said, that was then; the new coalition Government have stated their aim of bringing the scheme more into line with schemes in the private sector. We have been honest in saying that the February package does not meet that objective, so it fails the affordability test.

Moving in the direction that the right hon. Member for Dulwich and West Norwood suggests would remove incentives for the trade unions to negotiate. We have a problem with the way in which it removes incentives for  voluntary departures or for people to step forward and look at the voluntary compensation packages. We have discussed that, and a difference of view exists on its merits. We would like managers to have more options that people can choose from, and we would like managers to have more flexibility and the ability to tailor packages for individuals in such difficult situations. For those reasons, we will not support the amendments.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

We are dealing with two issues here. First, we must consider the signals that the Bill and the amendment send to negotiators. The Opposition argue that the signal that would be sent by the amendment would create a climate that is more conducive to a settlement, because PCS—whatever has been said previously—has said that the principles in the amendment are the basis for a negotiated settlement.

Secondly, we must avoid tipping the balance that would provoke a union, but more likely an individual, to take the Government to court over accrued rights. Any individual who feels that they are losing so much of their accrued rights has more incentive to resort to court action. I remind the Committee of the comments of the hon. Member for Harwich and North Essex (Mr Jenkin), who chairs the Public Administration Committee, on Second Reading. He cautioned that a successful legal challenge would cause the Government considerable difficulty because they would be required to compensate large numbers of people who had been made redundant under terms that were found to be illegal, which would involve considerable cost. We need that balance in the settlement not only regarding what union members will accept but what will least provoke a legal action, as a result of which the Government would incur significant costs over the long term.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I understand the point that the hon. Gentleman has made, and I know that the amendment has been tabled with sincerity. There is a balance to be struck here, but the Government have opted for a bold approach to try and break a deadlock and reach a position of certainty. This relies on a twin-track approach, which is why we do not wish to be drawn into amending the Bill. The point of the Bill is to be a catalyst or a blunt instrument to set out the Government’s minimum position. We do not expect the process to end in this place. There is a serious, almost daily process of negotiation in which, and the representative of the PCS was keen to put this on record, the PCS is actively involved. Those who are negotiating do not need a different signal from this Bill. They know the Government’s position, because they are negotiating it daily.

In a response to a query from the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, my right hon. Friend the Minister for the Cabinet Office set matters out with some caution and showed where there is some flexibility around the terms for voluntary compensation. The key issue, which is at the core of these amendments and at the core of all the concerns expressed by the House on Second Reading, is the treatment of the lower-paid.

Photo of Jack Dromey Jack Dromey Labour, Birmingham, Erdington 10:15, 16 September 2010

The Minister made reference to asking a direct question, and both he and other Government Members were entitled to ask a direct question of the  unions on Tuesday. May I then ask him a direct question? When several of his hon. Friends suggested that if the package on offer this February were put back on the table it might form the basis of a settlement, did they mean it?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I think all I am going to say in response is what I wanted to say in response to what I believe is the core concern underlying the amendments, which is the treatment of those people at the bottom of the pay scale, of whom there are large numbers. The answer is the same. However uncomfortable hon. Members are with the process—I understand their frustration—there is a twin track. There is the blunt instrument of a Bill which sets out a minimum position and there is a separate negotiating process which I understand—I should stress to the Committee that I am not involved directly—is progressing in a serious and productive way. As was made very clear by the Minister for the Cabinet Office, the principle is that those negotiations will be conducted in private and there is no greater supporter of that principle than the unions negotiating on behalf of their members. It is not appropriate for me to be drawn on the details of those negotiations or on what the Government are prepared to accept.

The right hon. Member for Dulwich and West Norwood has served the Committee well in throwing yet another spotlight on the core issue, which is that whatever negotiated settlement emerges from this, it has to be judged on the basis of how it treats those at the bottom of the pay scale. All I will say to the right hon. Lady— and it is all I can say and I know it will be frustrating—is that for the Government, that is the test. The people who are absolutely at the top of the tree in terms in our considerations are the lower-paid, and we are happy to be judged on the basis of how they emerge from the negotiated settlement. I must conclude by saying that we cannot support the amendment.

Photo of Tessa Jowell Tessa Jowell Shadow Secretary of State (Cabinet Office) and Shadow Chancellor of the Duchy of Lancaster, Shadow Minister (Olympics and London)

The debate on the Bill’s central clause has been a bit of a dance around several different. My hon. Friend the Member for Hayes and Harlington put it well when he said that a clear message must be sent to the negotiators. I welcome the progress that I sense the Committee has made on better understanding the respective positions.

I listened carefully when the Minister made it clear that the provisions that we oppose represent, from the Government’s point of view, the de minimis position. Again, I hope that he will reconsider that position, particularly in the light of Mr Boreham’s evidence. In question 51, Mr Boreham said:

“The one-year cap would be at the aggressive end of current practice”.––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 19, Q51.]

Obviously, he was reflecting the changing nature of the labour market in light of the economic situation, but he also said:

“It would be pretty typical in the private sector to have a cap. Historically, it might have been as high as two years”.––[Official Report, Superannuation Public Bill Committee, 14 September 2010; c. 20, Q54.]

The Government should therefore not be afraid that our proposals are out of step with what is happening in other parts of the sector.

The Minister referred to the proposed measures as “blunt” and “bold”. Labour Members consider them to be brutal, for reasons that I hope have been clearly stated by my hon. Friends. We are grateful for the extent to which he has heard them. We recognise that the situation is highly dynamic; we also recognise that we are in the unusual position of not returning for Report and Third Reading for three weeks, during which time it is highly likely that progress will be made. We argue that the provisions in the February package should be put back on the table as the framework for negotiation, given the protection that they include for the lowest-paid, their capacity to contribute substantially to deficit reduction and the extent to which they address the problem of age discrimination, which the Bill will arguably—it is open to question—exacerbate.

That is our proposition. We have sought to capture its elements in our amendments to the Bill. We have had a full discussion reflecting the complexity of the issue, but at the centre is respect for the decency and integrity of our civil service and the decency and sensitivity that must attach to the realistic and reasonable expectations built up by civil servants in various sectors, in many cases over years of dedicated and professional service. With your leave, Mr Gale, and that of the Committee, and on the basis that we can return to the issue on  Report, when I hope that we will begin to see the constructive fruits of our advocacy of the February package, I beg to ask leave to withdraw the amendments.

Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill.

The Committee divided: Ayes 10, Noes 7.

Division number 1 Decision Time — Clause 1

Aye: 10 MPs

No: 7 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly agreed to.

Clause 1 ordered to stand part of the Bill.

The Chairman adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at One o’clock.