Superannuation Bill

Alun Cairns Excerpts

Tuesday 7th September 2010 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

Like every Member of this House, I have received significant communications and representations from individuals and from the unions on this matter. Many of us will have significant numbers of public sector employees in our constituencies. I would say that Wales as a whole has a disproportionate dependence on public sector employees—quite obviously, including employees of the civil service—and the Vale of Glamorgan is no different.

It is quite sad for all those individuals and for the House that we are in this position today. The financial state of the nation has led us to this position. The unrealistic position taken by the unions has driven the Minister to introduce such a Bill, sadly without complete settlement with the unions. I was encouraged by some of the statements that he made about the negotiations and I shall come back to them a little later.

It is difficult to believe some of the payments that are made under the current system. In 2007-08, the Department of Health, in 76 individual cases, paid severance compensation of more than £7.8 million—an average of more than £102,000 per employee. I wonder how many of those who were made redundant or who took voluntary redundancy were then re-employed by the Department of Health as consultants, which would obviously have increased the costs to the public purse. In the Department for Environment, Food and Rural Affairs, there are two examples: in one, compensation in excess of £500,000 was paid and, in the other, compensation in excess of £1 million was paid. That position clearly cannot continue and is wholly unreasonable not only to those in the civil service who are paid at lower levels but to the taxpayer who must ultimately foot the bill.

When I discussed those levels of payments with some of the constituents who got in touch with me expressing concern about their own interests, they showed equal disdain towards the levels of compensation that are paid, and they would recognise the absolute need for reform. Such levels of severance paid at the higher level simply cannot continue. It is a burden on the taxpayer and, as has been highlighted, is prohibitive to the reform of the public sector when the taxpayer really needs every efficiency measure to be driven through. Not only is it prohibitive in terms of the level of payments and the high cost of making many of these individuals redundant, but it is prohibitive and damning for people at the lower levels who will have to be made redundant when those at the higher levels cannot be laid off because it would be unaffordable, even when many of their roles have become redundant as a result of the evolution of the Department or because of new technology. The Bill goes further than the previous proposals, but as the financial situation of the country is much worse than was previously stated, the bill must be affordable, and that imperative has obviously influenced my right hon. Friend the Minister in introducing the Bill in such a form.

I do have concerns about the effect on civil servants at lower levels of the pay bands, and we need to recognise their interests. I was encouraged by my right hon. Friend, who highlighted his concerns and the need for negotiations. I would look to the trade unions, particularly the PCS Union, to see that statement in a positive light and negotiate, in the interests of those at the lower levels, a settlement that is in the interests of the whole of the civil service and, obviously, of the taxpayer.

In research and when chatting to constituents, it was highlighted to me that at the Department for Work and Pensions, someone who is at the maximum of the lowest pay band—band B—earns between £15,000 and £18,000. To put that in perspective, a fraud officer—an individual who we expect and hope would save some money for the taxpayer over the coming years—is a band C. That demonstrates how much responsibility can reside at the lower levels of some civil service pay bands. Currently, if made compulsorily redundant, such an officer would receive three times their salary if they were older than 42 and had more than 20 years’ service. Before the court judgment, the intention was to provide such officers with the equivalent of two years’ service, and now it is to provide one year’s salary in compensation.

I am encouraged by my right hon. Friend’s statements to the effect that he is interested in negotiating at this level. I recognise the difficulties in sharing some of those concerns with the House, because it is obviously not the place to negotiate with Ministers, but I ask him, in the summing-up, to go as far as he can in sharing the objectives that he would like to achieve in the interests of people at the lower levels of the salary and responsibility grades.

I would advise the right hon. Member for Dulwich and West Norwood (Tessa Jowell), who was asked a question about the average for private sector redundancy pay, that it is in the region of £9,000, which we should recognise is less than is being offered, and in the affordability debate we need to recognise the generosity of that.

Interestingly, the 2009 civil service statistics show that 36% of civil servants earn less than £20,000 and 58% less than £25,000. Clearly, there is a need for some sort of protection at the lower levels. The Government have taken positive steps—when they formulated their policy on the pay freeze, they protected those at the bottom end of the scale, and I think that principle should carry through to this Bill and to the negotiations that my right hon. Friend is undertaking.

[Mark Durkan]

The hon. Member will recall that, when the Minister was asked to say at what level he thought people were low paid, he said he could not say. It would not be for him to say—it would be almost impertinent to suggest that outside the negotiations—but the hon. Member has rightly recalled that the coalition Government had no problem deciding that £21,000 was the threshold at which people should be protected from the pay freeze.

[Alun Cairns]

I have no doubt that that would be part of the negotiations, but I wholly accept the point that my right hon. Friend has made that one does not start negotiations at the point where one expects to finish, bearing in mind the actions that the PCS Union and some of the other unions involved have taken to date. However, the point about the £21,000 threshold that the hon. Gentleman highlighted demonstrates the compassion and support shown by the Government, and I have absolutely no doubt that that compassion and support can and will be shown towards civil servants in the negotiations that are led by my right hon. Friend.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Considering that there are ongoing negotiations, does not the hon. Gentleman agree that the Government are using the Bill effectively as a battering stick to coerce the unions during those negotiations?

[Alun Cairns]

I am grateful to the hon. Gentleman for the question, but I think the Government have been left in an extremely difficult situation—a sad situation, as I highlighted—from the outset. We have such a large deficit. A decision is needed on this question, particularly given the reforms and cuts that are likely to follow the comprehensive spending review, so I look positively at the action that my right hon. Friend is taking to resolve that position to bring certainty to those people whom I have rightly sought to champion.