Superannuation Bill
Debate between Baroness Noakes and Lord Wallace of Saltaire(13 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Wallace of Saltaire
The caps, as the noble Lord will be aware, are there in case litigation were to prevent the new scheme going into operation, so that there would be an alternative. However, the caps can be repealed by negative order and the intention is that that order would be placed the day after Royal Assent, if all else is in play.
Baroness Noakes
Can my noble friend explain what kind of litigation might be anticipated and therefore the need for Clause 2? Clause 1 is self-contained and does away with the need for agreement in relation to a scheme, and Clause 2 has these caps, which are inconvenient because they will get in the way if they are not what we want to bring into effect. The Minister just explained that we might need these caps if there is litigation. What sort of litigation could follow once this Bill has been enacted, doing away with the need for consent?
Lord Wallace of Saltaire
Neither the previous Government nor this Government expected the challenge to the agreement presented by the PCS on the previous occasion. The outside possibility with which we are concerned is a successful challenge that might ask for judicial review under the Human Rights Act and might under certain circumstances go as far as the ECHR. That process could last for some considerable time.
Baroness Noakes
If it is the case that we are providing some kind of insurance policy against litigation that might take us all the way to the European Court of Human Rights—I think that is unlikely, but let us assume that that is going to happen—why are the Government providing caps that are so out of line with anything that they think they are going to agree? It is perfectly plain that Clause 2 is something to wave at the unions to say, “If you don’t agree, this is what we will do to you”. It is not a reasonable fallback position if Clause 1 is litigated. I am still very confused about the structure of the Bill, as I explained to the Minister at Second Reading.
Baroness Noakes
The noble Baroness, Lady Turner of Camden, has said twice this afternoon that the civil servants who are potentially affected by the Bill are often not very well paid. This may have been the case in the past, but all recent studies show that on pay levels up to £40,000 or £50,000—that is, “well paid”—public sector employees are better paid than their equivalents in the private sector. What may have happened in the past, and may have been part of this notional package whereby people say, “I accept low pay and get a better pension and redundancy”, has, over the years, been completely eroded. The terms and conditions are collectively out of balance with private sector comparators. In particular, pay levels at the lower levels are high.
Lord Wallace of Saltaire
There are, however, a substantial number of low-paid civil servants. I am rather surprised at the number of them earning less than £21,000, most of them working outside London. One of the Inland Revenue computer centres is half a mile from Saltaire, and I am well familiar with average rates of pay in the northern part of Bradford. The reason why the scheme is set to be biased in favour of those earning less than £23,000 is that there are a very large number of them. There are a small number of extremely well paid civil servants; the changes in the compensation scheme are also to limit the payouts to which they might be entitled.
The amendments of the noble Baroness, Lady Turner, seem designed to remove the substance of the Bill. To rehearse briefly, the intention behind the Bill is to bring to a close two years of negotiation by successive Governments with the trade unions, to change a compensation scheme designed nearly 40 years ago, which does not fit current conditions or circumstances.
Amendment 5 would, in practice, go further than the requirement in Section 2(3) of the Superannuation Act 1972, which, as I have explained, we have already needed to amend. First, under Section 1(3) of the 1972 Act, it is for the Minister to judge who should be consulted—
“persons appearing to the Minister … to represent persons likely to be affected by the proposed scheme”,
or with those persons themselves. However, rather than requiring the agreement of those who have been consulted on this basis, Amendment 5 would prescribe that consultation must take place with “the relevant trade unions” and, indeed, that these unions must agree.
We have already explained the efforts that successive Administrations of all parties have made, and which some of the trade unions have made, to reach such agreement. We are setting out in primary legislation and have reiterated in both Houses our commitment to meaningful consultation but, as I have described, our intention in adding Clause 1 was to remove any union veto on changes to the Civil Service Compensation Scheme. I cannot imagine that any of your Lordships will be surprised to learn that, after more than two years of consultation, the Government's view on this is resistant to change.
The second respect in which the noble Baroness's Amendment 5 would go further than the approach set out in the 1972 Act is that it would apply to any changes proposed to the Civil Service Compensation Scheme, not just to those changes that would have the effect of reducing benefits. This would create a new bureaucratic process, in which any change to the compensation scheme including, to pick a trivial example, a minor amendment to its title would require consultation and agreement from all the Civil Service unions. Amendment 6, which is grouped with this, seeks to remove from the Bill the main provisions covering the potential caps on the value of benefits provided under the compensation scheme. This guts the Bill.
The Government are determined that there is a fallback position that can be used and that, bearing in mind the lessons of the previous Administration's scheme, we are not left unable to progress due to some sort of unforeseen legal challenge to the details of the new scheme. We are therefore providing in Clause 2 to have in reserve the possibility of applying caps on the maximum value of redundancy payments under the Civil Service Compensation Scheme: a maximum of 12 months' pay for compulsory departures and 15 months' pay for voluntary departures. Putting these limits in primary legislation leads to greater legal certainty and democratic accountability and, as I have already remarked, the Government can, by negative order, raise the level of the caps, but cannot lower them. I hope that provides reassurance to the noble Baroness and that on that basis she will be willing to withdraw the amendment.
Lord Wallace of Saltaire
My Lords, I feel I should not reiterate the arguments that I have made already about the necessity of Clause 2. My feeling about this is that after two years of negotiations, any Government would have introduced such a proposal. Therefore, I do not want to push this in any partisan way. I am sorry that the noble Lord, Lord McKenzie, thinks that this has soured the negotiating environment. That is not my impression of the quality of the negotiations between the majority of the unions and the Government on this. We have made real progress and both the unions and the Government have been negotiating with clear commitment to reach a consensual agreement in the circumstances in which we find ourselves.
As I described at Second Reading in your Lordships’ House, the caps in this legislation serve several purposes. First, they set out a basis for discussion of reform of the compensation scheme with civil servants and with the trade unions representing them, comparable to best practice in the private sector. Secondly, they provide an interim solution if agreement cannot be reached. Thirdly, they provide a fallback if, following discussions and what we believe to be the conclusion of a new workable compensation scheme with terms improved beyond the caps, we find that we cannot implement it.
If we do not have this clause, we shall be in a state of legal uncertainty in which it is possible there might be a judicial challenge. Primary legislation provides much greater legal certainty, which may be important in the event of protracted litigation, where the case might be referred from one court to another. Therefore, I invite the noble Lord to withdraw his opposition.
Baroness Noakes
The Minister said that he did not want to rehearse the arguments he put up before, but I would invite him to rehearse them because that is where the crucial issue lies. The Minister gave three reasons for having Clause 2. One is as a basis for discussion, which is no basis on which to put anything in legislation. A second is as an interim solution if there is no agreement. As I understand it, once we have Clause 1, there is no necessity for agreement, so there is no necessity for an interim solution. The third item is a fallback, if for some reason the Government were not able to implement an agreement under Clause 1. So we come back to the crucial issue of whether Clause 1 is legally robust. If it is not, on what basis is it not legally robust, or potentially not legally robust? If that is the case, what are the differences between a potential lack of robustness in Clause 1 and a potential lack of robustness in Clause 2, if that is what one has to fall back on?
I do not agree with the noble Lord, Lord McKenzie of Luton, that these are punitive caps as I think they are relatively generous compared with what the private sector offers. The Government are indeed prepared to go further and offer a more generous scheme. I have no problem with the quantum but I seek to challenge why we have this clause. If it is just for a basis for discussion, it is no basis on which to legislate. We have to tease out why Clause 1 might be challenged and why Clause 2 would not be challengeable.
Lord Wallace of Saltaire
My Lords, logic might suggest that all we need in this Bill is Clause 1. I understand that point, but since the High Court judgment in May, it has become apparent that when the terms of the compensation scheme were subject to legal doubt, the purpose of restructuring within government might be stalled altogether, with consequential financial implications and uncertainty and consequent distress for staff. Having Clause 2 in reserve ensures that, if a scheme is subject to prolonged litigation, there is a provision which produces certainty and can be brought into force to prevent the process of government restructuring being put into limbo. Therefore, this is a reserve power which the Government are asking for which we hope will not be necessary. I stress again that it is a fallback in the event of refusal to agree followed by judicial challenge. The question then arises as to what the default position should be if a scheme is stalled by prolonged litigation. It is right that Parliament should decide in an Act of Parliament what the default position should be, hence Clause 2. I repeat: putting these limits into primary legislation leads to greater legal certainty and thus democratic accountability.
Superannuation Bill
Debate between Baroness Noakes and Lord Wallace of Saltaire(13 years, 11 months ago)
Lords ChamberRead Full debate Read Hansard Text
Lord Wallace of Saltaire
My Lords, I thank noble Lords for a serious and good-tempered debate. I should declare an interest as my wife was a civil servant for some time and my daughter is a civil servant. Many of us have great respect for the Civil Service as a whole, and I know that many noble Lords have similar close links to the Civil Service. I do not think that any of us intend to denigrate the Civil Service. The noble Lord, Lord Brett, referred to briefing. I regret to say that I do not think that anyone needs to brief the Daily Mail against the Civil Service. It has its established narrative and does not need prompting. One does not need to brief the Daily Mail against the Liberal Democrats either. It carries on with its narrative in the same way. It is unfortunately part of the way we are.
I reiterate that the aim of this Government—an aim which we share with the previous Administration—is to make the Civil Service Compensation Scheme affordable, sustainable and fair to civil servants and other taxpayers while, very importantly, providing protection for the lowest paid. It is our strong intention to do this through a negotiated settlement with the Civil Service unions. However, as the noble Lord, Lord Turnbull, remarked, the Bill is a regrettable necessity.
The noble Lord, Lord Newby, raised the question of whether we would like to be where we are. Of course we would much prefer to be in a different place. This is not—as the noble Lord, Lord Morris of Handsworth, described it—a political sledgehammer to crack a nut. It is not a question of legislation coming first and negotiations coming second. The current Government have been in active negotiation since they took office, and we remain in active negotiation. The previous Government were in active negotiation for 18 months. The legislation is here only because there is strong evidence that PCS has been dragging out the negotiations without a willingness to join the consensus which has been reached between the other unions and the employers about an acceptable package. Therefore we hope that the legislation will not be necessary, but it is here as a reserve power. So we have legislation as a reserve but negotiation as our strong preference. I regret to say that my understanding is that PCS has been very slow in replying to initiatives and has regularly delayed the date on which it will reply to government proposals. I understand that the PCS executive is at last meeting again today. We hope to hear further from them soon.
The noble Lord, Lord McKenzie, and the noble Baroness, Lady Drake, asked what the Government intend to do about Clause 1. We all understand that this is the most important clause in the Bill and that getting the language right is important for the Government and the unions. We therefore hope that consensus will be achieved by Committee stage on the exact language of this clause. We all also understand that consultation has a legal meaning. We need to get that absolutely right and, if possible, agree it with our trade union partners.
The noble Baroness, Lady Noakes, and others asked whether Clauses 2 and 3 are an appropriate use of legislative time and an important part of the Bill. We think that they are a necessary part of the reserve powers. These negotiations have been dragging on and the Government, like our predecessors, felt that it was useful to spell out a minimum level of support which would be there if we failed to achieve negotiated agreement. However, we much prefer to reach a negotiated agreement if we can. We are confident that—with the majority of the unions, but not yet with those representing a majority of the workforce—we are within sight of an acceptable agreement by consensus.
The caps set out in the Bill of 12 months’ pay for compulsory redundancy and 15 months’ pay for those who leave voluntarily under the scheme, represent the minimum below which the Government are clear that they should not go. The caps are a fallback if—following our discussions and what we believe to be the conclusion of a new workable compensation scheme, with terms improved beyond the caps—we find that, for whatever reason, we cannot implement the scheme. In other words, they are there to avoid having no choice but to revert to the old scheme, which looks increasingly like an historic anomaly and is not affordable.
Baroness Noakes
I am struggling with why, once we have Clause 1, which removes the requirement for consent, there is any requirement for anything else to be a fallback in Clause 2 with the underpinning of Clause 3. If Clause 1 takes away the need for consent and puts in place proper consultation, what is the necessity for any other part of this Bill?
Lord Wallace of Saltaire
I shall come in a moment to Clause 3, which is of course different. I am advised that Clause 2 is useful and necessary for spelling out the minimum that, under any conditions and without negotiation, the Government would offer. In answer to the point made by the noble Lord, Lord McKenzie, it is the Government’s intention to repeal Clause 2 by the time the new scheme is in force. Clause 3 allows for the Bill to lapse once the new scheme is fully in operation. That is the timescale under which we will allow the Bill to fall in the sunset clause.