Restriction of Public Sector Exit Payments Regulations 2020

Baroness Eaton Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Eaton (Con) [V]]

I declare my interest as a vice-president and former chairman of the Local Government Association. I am pleased to speak this afternoon.

The regulations before us bring into force the exit payment cap legislated for in 2015. I supported the principle of ensuring the best value for money by making payments to employees back when the House agreed this legislation, and that remains the case today. However, I have to raise concerns about the unintended consequences of the implementation of the regulations.

As my time is limited, I will focus on timing, which has been mentioned in part before. The regulations will come into force before the Ministry of Housing, Communities and Local Government is able to bring into force its changes to the pension regulations. The concern is that without the MHCLG regulations, the timing could lead to employees continuing to receive full pension payments despite the cap. This is because the exit payments the Government are seeking to limit are often made up of pension entitlements.

These regulations prevent the council paying the scheme the full cost of the employee’s redundancy entitlement but do not remove the employee’s legal right to the full pension payment. Therefore, the gap between what the council will pay and the amount that the employee will receive will need to be made up by the Local Government Pension Scheme until such time as the MHCLG pensions regulations are passed. That is clearly not the Government’s intention, and I would be grateful if the Minister could use this opportunity to provide some reassurances about the situation and about the legal confusion that today’s regulations are likely to cause.

As I said at the start, I support in principle the Government’s aim of ensuring that taxpayers’ money is spent wisely. In my time as a council leader, I took pride in how efficiently and effectively my council was run. However, it cannot be sensible to create entirely avoidable uncertainty for council employees or to put additional strain on the Local Government Pension Scheme and limit councils’ ability to restructure or reorganise at a time when local government faces significant financial pressures and many councils are looking to work differently. I hope that the Minister can use the opportunity today to reassure the House on the timing of the regulations, as they are causing a lot of concern in local government.