Draft Restriction of Public Sector Exit Payments Regulations 2020
(4 years, 3 months ago)
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The Committee divided: - Ayes: 10 / Noes: 7 - Question accordingly agreed to.
The Chief Secretary to the Treasury (Steve Barclay)
I beg to move,
That the Committee has considered the draft Restriction of Public Sector Exit Payments Regulations 2020.
It is a pleasure to serve under your chairmanship, Sir Christopher. I know that you have a long-standing interest in the topic of the draft regulations, and I am pleased that you will oversee the debate.
Each year, hundreds of millions of pounds are spent on exit payments to public sector workers that exceed £100,000. The money funding these payments comes from taxpayers. The draft instrument will fulfil the Government’s 2015 manifesto commitment to end six-figure pay-offs by capping public sector exit payments at £95,000.
The concern over high exit payments is shared by many across the House. For example, the right hon. Member for Warley (John Spellar), an Opposition Member, said in the House as recently as 13 March 2020:
“The hon. Gentleman is rightly drawing attention to a significant problem. Is there not another aspect to it, which is that many of these individuals, quite frankly, should not be being given any payments, because they should actually be being sacked for failure to perform their jobs? They are taking sums of money and then transferring to other parts of the public sector, where they will have a repeated pattern of failure. Is there not a need for a real change in culture”.—[Official Report, 13 March 2020; Vol. 673, c. 622.]
I am sure that view, expressed by an Opposition Member, is shared by many other colleagues in the House.
Public sector workers play a vital role in the running of our economy. Earlier this year, we accepted the recommendations of the independent pay review bodies and announced a significant real-terms pay increase for around 900,000 public sector workers. However, we must ensure that all aspects of public sector pay and remuneration deliver value for money for the taxpayer. There are many recent examples of employees leaving their role and receiving six-figure packages funded by the taxpayer, and it is our view that these large exit payments do not deliver that aim, not least given the wider economic impact of coronavirus.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Although I do not think there is disagreement on the need to tackle excessive exit payments, why are the Government choosing to include harassment and discrimination payments in the scope of what they seek to do?
Steve Barclay
I will come on to the distinction between those on large payments, where I think there is a degree of consensus in the House, and how the waivers will address some of the concerns that the hon. Gentleman and other Opposition Members expressed in the previous debate on this issue. I will come on to that if he gives me a moment, and if he then wants to come back with an intervention, I will be very happy to accept it.
Exit payments are important to an employer’s ability to reform and to react to new circumstances. They are also an important source of support for individuals as they find new employment or as a bridge to retirement age. That is why the Government are taking forward these important regulations to cap public sector exit payments at £95,000. The level of the cap amounts to almost six times the maximum statutory redundancy payment. On an average salary of £24,897, the average person would have to work almost four years to earn £95,000, while someone working 35 hours a week on the national living wage would have to work around six years to earn £95,000—and that ignores the fact that the first £30,000 is paid tax-free. As such, it is clear that a £95,000 cap will still offer a significant level of compensation while ensuring value for money for the public finances. In fact, I think that the majority of our constituents would regard it as a generous amount.
Patricia Gibson (North Ayrshire and Arran) (SNP)
The Minister has talked about trying to address some concerns. What can he tell Members about how he will address the concerns expressed by the nuclear workers who were given specific guarantees about their pensions that have been repeatedly overridden?
Steve Barclay
I very much welcome that intervention, because that concern was raised by a number of Opposition Members when we debated this issue in the House previously. We have agreed a waiver that will apply to nuclear decommissioning as part of the draft regulations. I will come on to the wider point about how the waiver will apply, but the exemption that applies to nuclear decommissioning illustrates that we have taken on board some of the concerns that Opposition Members have raised.
I am grateful to all members of the public, employers, unions and others who submitted their views as part of the consultation process. The consultation in April 2019 received more than 600 responses, which helped inform the final regulations following the earlier consultation in 2015, which had more than 4,000 responses. I am also grateful to many of my right hon. and hon. Friends for their representations during the development of the policies.
The Government’s intention was made clear at the start, which was to apply the cap to all public sector workers. As the 2015 consultation stated, it would apply to
“all bodies classified within central and local government and non-financial public corporation sectors as determined by the Office for National Statistics for National Account purposes, with a small number of exceptions.”
The 2019 consultation stated:
“The government is proposing a staged process of implementation across the public sector. The first stage will capture most public sector employees, before extending the cap to the rest of the public sector in the second stage. Prioritising in this way will ensure most exit payments in the public sector are limited to £95,000 without further delay, while work continues on expanding the scope of the regulations.”
To ensure fairness and consistency and to give taxpayers confidence that their money is being spent properly, it is right that all public sector bodies are immediately in scope, with limited exceptions, such as the one I just referred to. The consultation in 2019 proposed capturing public sector bodies in two stages. Many of the responses objected to that proposal. We have therefore revised the proposal and reverted to applying the cap to all public sector bodies at once. The Government’s intention to cap exit payments has now been in the public domain for more than five years, providing public sector bodies and employees with sufficient time to communicate their views, including through the consultation process, and to prepare for the implementation of the cap.
Neil Coyle
The Minister raised the point about fairness, and he says this matter has been in the public domain since 2015. Why, then, has no equality impact assessment been undertaken? How many people are affected and when will the Government provide the EQIA?
Steve Barclay
It depends on different circumstances as to how many people will be affected. A key issue is that the proposals do not affect individuals’ accrued pension rights. A concern was raised in the previous debate about the impact on pension rights. Again, that is one of the issues we have listened to and taken on board. It is important to note that accrued pension rights are not affected by the regulations. In the vast majority of cases, the cap will have no effect on the exit package of an individual, because individuals retain any right to receive an unreduced pension, provided their overall exit payment falls below the cap of £95,000, which applies in most cases.
However, the Government believe it is right to include all payments related to exit within the scope of the cap. The option of an employer-funded early retirement, known as pension top-up payments, is often the most costly element of an exit payment. It is ultimately funded by the taxpayer, so it is right that it is included.
Neil Coyle
The Minister is being very generous in giving way. The measure states that all payments will be taken into scope. A very practical example is the case of the Birmingham women who received unequal pay for many years. The 174 women took the case to the Supreme Court and won. For some full-time care workers, the payments would have been more than £100,000 just to catch up on the unequal pay they had experienced for many decades of service in a difficult job. Why are the Government including that in these regulations?
Steve Barclay
I agree with the hon. Gentleman. I took that point away from the previous debate and was concerned to show the House that we had listened. In fact, it echoes the next line of my speech: I do accept that in some circumstances it will be appropriate for employees to receive an exit payment of more than £95,000.
Steve Barclay
I am always generous in taking interventions. I was trying to answer the hon. Gentleman’s legitimate challenge, but I will of course take the hon. Lady’s intervention.
Patricia Gibson
May I just ask the Minister, for the purpose of clarity, whether he is saying that he will exempt nuclear decommissioning workers? Magnox is on the list here, so unless the Minister has been very clear and I have not listened properly, I wonder whether he will clarify that point.
Steve Barclay
I am very happy to share with the hon. Lady the detail of that waiver as it relates to the pensions of Nuclear Decommissioning Authority workers. The waiver will apply in respect of the Nuclear Decommissioning Authority. That includes—
Steve Barclay
If the hon. Lady will allow me to answer the question, I was going to read out the exact legal prose. Sometimes we are accused of not being precise enough, so I was going to go straight to the legal text for her. It says:
“made to or on behalf of an employee…who is employed…by a company or other body holding a site licence granted under the Nuclear Installations Act 1965 for one or more nuclear-licenced sites…and on a site that is subject of a decommissioning programme agreed between the NDA and the BEIS Secretary of State, and…whose employment is terminated”—
details follow accordingly. So there is an exemption there.
I will come back to the point made by the hon. Member for Bermondsey and Old Southwark. In fact, the hon. Member for Newcastle upon Tyne North, who has not as yet spoken, said in the previous debate that she accepted the wider principle of exit payment caps, but had some concerns. We have sought to look at, and listen to, the concerns that Opposition Members have raised. I accept that there are some circumstances in which it is appropriate for employees to receive an exit payment over £95,000, including where imposing the cap would cause genuine hardship. We are committed to ending taxpayer-funded six-figure payouts for the best-paid public sector workers, but it is appropriate that the waiver system can be exercised with ministerial discretion if it is felt that implementing the cap would go against the original principles and result in hardship.
Steve Barclay
Let me just finish the point. The waiver may also be used to give effect to urgent workplace reforms. It applies where a payment is made as a result of the application of TUPE regulations, or where the payment is made to settle a grievance related to whistleblowing, discrimination, or health and safety-related dismissal. This mechanism is very important in allowing us to review how the cap is being applied and to ensure that we remain consistent with our original aims for the regulations. I hope that this system will address many of the questions that hon. Members have.
Does the hon. Gentleman want to come in one final time?
Neil Coyle
I just want a clarification on the waiver process. Do the Government intend to make it the case that a local authority has to seek permission from a Minister in the Department to honour a legally decided case of discrimination and make the payment that a court has ordered? Is that the process that local authorities and other public bodies will have to follow?
Steve Barclay
That is a very valid question. In a whistleblower case, for example, there is no requirement on the local authority to submit a business case for approval. There are mandatory causes for exemption. However, where a discretionary exemption is sought, such as on a restructuring, it is necessary to submit a business case.[Official Report, 2 November 2020, Vol. 683, c. 1MC.]
Steve Barclay
The hon. Gentleman shakes his head, but I simply remind him that as a Minister, I constantly get requests when bodies want to exceed the £150,000 payment. They are quite happy to submit business requests for that, so I do not see why it is onerous to say that the same applies to seeking consent when looking to restructure, and to exempt in that way.
In other parts of the United Kingdom, devolved Administrations have already acted to implement their own policy on severance payments. The Scottish Government have implemented a £95,000 cap on payments made by devolved bodies by updating the Scottish public finance manual. It is right that this Parliament does the same by approving these regulations. As we respond to the financial impacts of covid-19, the inappropriateness of large exit payments is reinforced. Ensuring that rewards are proportionate and taxpayer money is spent fairly must be prioritised. The regulations are carefully designed to end excessive exit payments, and will come into force 21 days after they are made. I commend them to the Committee.
Wes Streeting (Ilford North) (Lab)
It is a pleasure to serve under your chairmanship, Sir Christopher. Although no one believes that huge exit payments from the public sector are right, and it is an issue that needs to be addressed, we are concerned about the way the Government are implementing the regulations. They are unnecessary, premature, unhelpful, place burdens on the public sector that are disproportionate to their purpose and, in some cases, present perverse disincentives, too.
I will outline those points in more detail. The Minister referred in particular to regulations implemented on a similar basis by the Scottish Government. Committee members will be aware, particularly if they were in the Chamber last week, that when it comes to challenging the Scottish Government, I certainly do not pull my punches with the SNP, but it would only be fair to acknowledge—as the Minister ought to have done—that one of the big differences between the approaches of the Scottish and UK Governments is the exemption of pension strain payments from the cap, which, as we have heard from many representations by trade unions and representatives of chief executives in local government, is one of the key problems and challenges when it comes to implementing the regulations.
Of course, that is not the only challenge. Without index-linking, the threshold will slowly reduce in real terms, catching more and more public sector workers within its scope. That sets in motion a steady ratchet on public sector workers. If the cap is necessary—the Minister has outlined the case for that on many occasions—it would be right for it to be linked to public sector pay, so that there is no erosion of the level of cap in real terms.
The provisions are presented as an attempt to exercise restraint on payments to the very highest paid public sector workers. However, as highlighted by so many of the responses and representations made by trade unions—who are not, by the way, famous for defending excessive levels of high pay, but are absolutely steadfast in defending public sector workers who receive ordinary or, in some cases, modest levels of pay—this is not something that will simply affect the highest-paid workers. It will catch an awful lot of ordinary workers on ordinary levels of pay, as a direct result of including pension strain payments in the cap. If the Government’s intent is simply to prevent higher-paid workers being paid large severance payments, a simple index-linked earnings-level exemption would provide that without most of the problems that the waivers create.
As my hon. Friend the Member for Bermondsey and Old Southwark said, there is no equality impact assessment for the scheme, and the list of included and exempted bodies also causes concerns. Why is the judiciary exempted, but not staff of the Crown Prosecution Service? The staff of those elements of the justice system have very different demographic profiles. As we heard very strongly from the TUC, the decision not to undertake a comprehensive equality impact assessment gives serious cause for concern. The TUC is of the view that the Government may well be in breach of their obligations under the public sector equality duty. The union GMB argued at the time that the Treasury’s 2016 equality impact assessment was seriously deficient. It is now also out of date. GMB is also concerned about the public sector equality duty.
The Minister mentioned the waiver process, which seems cumbersome and overcentralised, as all decisions by local authorities need approval from the Treasury. I would have thought, given some of the examples of public sector waste and profligacy as a result of Government incompetence and the bad management of contracts that we outlined this morning, that the Minister would welcome some of his time being freed up to ensure that more taxpayers’ money is more wisely spent. Maybe the regulations might keep his eyes focused on the wrong issue, so that we end up in a position whereby the Treasury is penny wise but billions of pounds foolish when it comes to some of the spending commitments and priorities that the Treasury has outlined in recent weeks and months. Although it is the Labour online conference week, I will not dwell too much on that, Sir Christopher, because you will no doubt rule that it is out of the scope of the regulations, and rightly so.
To go back to the ongoing consultation—led by the Ministry of Housing, Communities and Local Government —on changes to the local government pension scheme that are necessary to give effect to the provisions, if the Committee approves the regulations, local government employers will find it difficult to agree redundancy packages with staff and unions in the meantime, because of concerns about the legality of the exit payments. A £95,000 cash payment and no access to pension is not permitted by the regulations governing early access to unreduced pension in the local government pension schemes.
There is also a wider point about local government unions. I should say, having been in local government as an elected member, that I am also a member of Unison, which represents members of local government. Local government unions have in their collective bargaining on pay and conditions deliberately favoured positive pension concerns and priorities over other issues. Local government workers have given up other benefits to keep those pension terms. The regulations are an arbitrary attack on terms that have been secured through agreement between unions and employers.
The regulations also provide inadequate recognition of contractual notice periods. Although they exempt up to three months’ pay in lieu of notice, the Government will know that some public sector staff are contractually entitled to six months’ notice. COT3 settlements, which are ACAS-arranged compromise settlements, are mostly included in the scope of the cap—but not employment tribunal awards. That will have the utterly perverse effect of incentivising people to go to tribunal, and flies in the face of the Government’s push towards early conciliation, creating a much more costly process for everyone.
It would be helpful, particularly given the intervention made earlier by my hon. Friend the Member for Bermondsey and Old Southwark, to clear up the issue about settlements in discrimination cases, and how they are treated. It would also be helpful if the Chief Secretary would elaborate on why health and safety settlements are not exempted from the cap. They are unlimited if people go to tribunal. The Government need to clear up the issue of where they stand on settlements in discrimination and health and safety cases. Both are treated as unlimited if people take them to the employment tribunal.
As we have already argued, the inclusion of pension strain costs means that long-serving workers on lower salaries, and not just the highest-paid, will be caught out. The Local Government Association has given figures and examples showing how, on its estimate of the methodology for calculating pension strain costs, the cap of £95,000 would, as a result of the pension strain issue, hit certain people leaving with a severance payment. They would include a woman leaving the scheme at age 55 on 31 March 2019, after 35 years’ service, earning £23,500—not a particularly large amount of money—with a severance payment based on statutory weeks multiplied by actual weekly pay, multiplied by 1.5.
Moving on to people leaving with a redundancy payment, the LGA highlights the example of a woman leaving the scheme at age 55 on 31 March 2019 after 35 years of service, earning £25,100, with a redundancy payment based on a maximum weekly pay of £525. Therefore, the idea that it is only the highest-paid public sector workers who are targeted simply does not hold water.
There are some basic questions about fairness and impact. It is no good Members standing on their front doorstep clapping the public sector workers among their fellow residents on the street, and getting their mobile phone out to enjoy a few retweets, if in the middle of the pandemic we arrive back in Parliament to attack the conditions of the very public sector workers who are supporting our country through the crisis. For those reasons we cannot support the Government. We shall oppose the statutory instrument and it is a source of deep regret that the Government have listened, as the Chief Secretary said, to some concerns, but that they have not addressed some of those fundamental concerns we have raised this afternoon.
Patricia Gibson
I shall try to be brief. I support what has been said by the hon. Member for Ilford North, who is concerned about equality impact assessments, and how the measure has unintended consequences that have not yet been addressed. No one—not the Scottish National party and probably not any other party—has any objection to the general principle of a public sector exit payment cap. However, I note that the measure before the Committee gives rise to concern about waivers in cases of unfair dismissal and health and safety-related detriment. The waiver process is a matter of concern.
The SNP does not—and I certainly do not—support the statutory instrument. It is singularly unfair to those in the nuclear decommissioning industry. Those workers have suffered cuts to their pensions in the recent past, and that is a cause of profound concern to all those in the industry, not least those in my constituency who are employed at Hunterston. Some history, if you will give me latitude, Sir Christopher, is important. When the nuclear estate was privatised in the 1980s, the Tory Government under Margaret Thatcher gave guarantees requiring the new private sector employers to continue to provide pension benefits for those employed at the time of privatisation. The phrase used at the time to describe that settlement was,
“at least as good as those they were receiving in the public sector.”
Where we have had revisions to the pension arrangements of nuclear decommissioning workers on more than one occasion in fairly recent years, we know that commitment has been abandoned. Now there is the prospect of these exit payment caps.
The UK Government have decided that, because the Nuclear Decommissioning Authority is classified as public sector, these schemes fall under public sector arrangements, but clearly these pensions are not public sector pensions. Decommissioning sites are now in the private sector and, unlike for every other public sector worker, redundancy is an inherent part of their job.
The Minister seems to have said and to have put on the record today that all nuclear decommissioning workers will be exempted from the public sector exit payments cap. We should have had sight of that commitment—if I have understood him correctly and that is his commitment. We should have had that commitment long before now, and we should have had commitments and guarantees to employees of Magnox Ltd and others affected by the Enterprise Act 2016.
I note that Magnox is specifically mentioned, but the way I read this, the provisions on relaxing the cap contained within the regulations are not adequate and not sufficient to give comfort to nuclear decommissioning workers that they are indeed exempted in the way I know the Minister wishes them to be, and as they should be. The regulations should be drawn specifically to exclude those workers in nuclear decommissioning and I would like to see more specificity on that.
It seems that, because of that lack of specificity, we have been asked to agree on something here today in which there is a lack of clarity, from what I can see. We know that nuclear decommissioning workers do a very highly skilled job and that their job is sometimes dangerous, but to be caught up again, after all the cuts to their pensions in recent years, in attacks on their pensions through these public sector exit payments regulations is not acceptable. As we speak, it is creating disincentives for people to work, to be recruited and to stay in that industry, and it is extremely bad for morale.
Nuclear decommissioning workers who have contacted me, and who I know will have contacted any MP who has a nuclear plant in their constituency, are concerned. I am sorry to say that, when it comes to their pensions, they are right to be concerned, because it can be seen that the agreements they thought they had with the UK Government over several decades and the guarantees they were given are not being honoured.
When I raised this with the Chief Secretary to the Treasury three years ago, I was told that,
“it is necessary to have terms and conditions that reflect the modern situation that applies across the economy as a whole.”—[Official Report, 17 January 2017; Vol. 619, c. 769.]
How does that square with the cast-iron guarantees made to these workers when the nuclear estate was privatised? They were not told that those cast-iron guarantees were actually written on water.
The problem is that these workers are classed as public sector workers, but their terms and conditions are not devolved to the Scottish Parliament, as they are for other public sector workers. Scottish nuclear workers still have their severance and early retirement terms dictated by the UK Government, but the goalposts have clearly been moved when it is deemed financially beneficial for the Government or the industry, while the pension interests of the workers always seem to be a secondary consideration.
The Office for National Statistics has classed Magnox as a public sector organisation despite the fact that it works on sites that have been privatised. The draft guidance from the Government uses the definition of a public authority contained in the Freedom of Information Act 2000, which includes bodies specifically listed in schedules to the Act, publicly owned companies and any other body designated as a public authority by the Secretary of State. Interestingly, Magnox is not listed in the schedules, and that is because it is privately and not publicly owned. Consequently, the Freedom of Information Act does not apply to Magnox, except where stipulated in employee contracts with the Nuclear Decommissioning Authority, and so neither do the IR35 reforms.
We have confusion and concern among nuclear decommissioning workers. That continues, and it is not acceptable. As we pontificate over these exit payment caps, I urge the Minister to remember that any change and any further attacks on these workers is a betrayal of the guarantees that they have had. We have been told today of waivers or exemptions—I am not even quite sure what the Minister is suggesting—but Magnox’s inclusion in part 1 of these regulations makes anything he says now equivocal. We need a clear statement that the measures will not affect nuclear decommissioning workers. That is a simple ask that needs a yes or no answer, and I look forward to the Minister giving me that yes or no answer.
Steve Barclay
I thank colleagues for their engagement in the debate. As I have already remarked, the Government are strongly of the view that the regulations are important in delivering value for money. It is right that the cap on public sector exit payments comes into force without further delay to stop the excessive payouts that are, unfortunately, all too common.
The hon. Member for North Ayrshire and Arran asked me to clarify the position on nuclear decommissioning, which has been a much-debated issue. Indeed, there was extensive debate during the passage of the primary legislation about the inclusion of nuclear decommissioning workers in the scope of the regulations. As we have set out many times—most recently by ensuring that the cap covers all of the public sector at once—the cap should apply to all public sector organisations with very limited exemptions. The defining feature of that is what is set by the Office for National Statistics.
We are able to exercise our own judgment, but for the most part, the scope has been guided by the ONS, which makes objective judgments, independent of Government and the regulations. The ONS classification is what means that the Nuclear Decommissioning Authority and its site-licensed companies are in the scope of the regulations, but we have a mechanism to waive certain pension-related payments upon redundancy, and that is what has been decided—I read that out for the benefit of the hon. Lady. In short, the Nuclear Decommissioning Authority has a waiver, but the organisation is classified by the ONS, which is why it is within the scope of the cap—that is the interaction between the two.
The hon. Member for Ilford North started by generously acknowledging that we have listened and addressed some issues of concern. There are some areas of misunderstanding: an equalities impact assessment was issued with the primary legislation. He then said that on the one hand, we do not need the regulations, but that on the other, he was against excessive payments. I would argue that the whole purpose of the regulations is to curb the excessive payments that he, I and a number of colleagues across the House agree are not value for money.
The hon. Member for Bermondsey and Old Southwark—
Steve Barclay
I will take his intervention before I address his question and then I can answer them both at the same time.
Neil Coyle
I appreciate that. If the Chief Secretary believes that the issues are resolved, why has the British Medical Association—the organisation that represents the health workers that he clapped on Thursdays—already sought a judicial review against the regulations because they extend the scope of the enabling statute? How does he square the circle when the regulations mean preventing some contractually agreed payments and tribunal award, and which the BMA says represents an unlawful extension of the primary legislation?
Steve Barclay
The reality, without wanting to stray into the issue of litigation, is that this is a cap on payments, so a body representing members may have concerns about that. The issue before the Committee is what constitutes value for money for the taxpayer. I remind the Committee of the fact that payments can be more than six times the national living wage and four times the average earnings. During the time of coronavirus, those are very substantial payments. You will be familiar with, Sir Christopher, some of the payments that were read out on the Floor of the House—those of NHS managers for example, who receive very large payments and then reappear elsewhere in the NHS very shortly.
Wes Streeting
Of course, it is easy to point to those examples. I wonder how the six-figure pay-off to Mark Sedwill could have been considered value for taxpayer money, and how much the wider cull of top civil servants under the Government is costing the taxpayer.
Steve Barclay
I was going to come to local authorities, but to address the issue of senior civil servants, that flowed from the decision to split the role of the Cabinet Secretary and the head of the civil service with that of Sir Mark’s other role as National Security Adviser, which meant that he was stepping down before the end of his tenure. It was therefore appropriate that Sir Mark was compensated in line with the civil service compensation scheme, and the sum is in line with the normal rules governing civil service pensions and compensation. Since 2015, in anticipation of the introduction of a cross-public sector cap on exit payments, any civil service exit costing more than £95,000 requires approval by Cabinet Office Ministers to ensure that it provides value for money to the taxpayer. As someone who worked with Sir Mark, particularly in my role as Secretary of State for Exiting the European Union, I place on the record what a fine public servant he was and how much I valued working with him during his time in office.
The hon. Member for Bermondsey and Old Southwark, who made a number of interventions—I hope that comment is not untoward—also raised a legitimate point about local authorities. As I say, it is something I looked at in particular. Local authorities’ ability to restructure should not be dependent on six-figure taxpayer-funded payouts. Councils will still be able to restructure and exit staff in any way they wish, provided the sum of any exit payment does not exceed £95,000. The Government accept that there might be instances where it is in the interests of urgent workplace reform to relax the restriction imposed by the regulations, so there is flexibility within the system.
Finally, the hon. Member for Ilford North raised the issue of index-linking. The point is that we want to retain the flexibility to revalue the cap both upwards but also downwards. If one looks at the economic consequences of coronavirus, ensuring that there is flexibility in the system is a prudent way to manage the public finances.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I have listened carefully to everything the Minister has said. I appreciate the arguments that he has put forward, but we should remember that, in the time of covid, many of the people who will be affected by the proposed changes are on relatively moderate salaries and have given years of their lives dedicated to public service, and will be giving everything to help get through this covid crisis. I want to put on the record that it is vital that the Government keep the measure index-linked so that it does not erode over time and vital that all the promises that the Minister has made today do not become meaningless within a few years.
Steve Barclay
I acknowledged earlier that in a previous speech the hon. Lady accepted the principle of capping excessive payments, but raised concerns to which I listened intently. I join with her in paying tribute to the work that so many have done across the public sector, but at the same time it is important to get value for money. For that reason, I commend the regulations to the Committee.
Question put.