Enterprise Bill [HL]

Debate between Baroness McIntosh of Hudnall and Baroness Hayter of Kentish Town

Wednesday 4th November 2015 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, Amendment 53ZH is in my name and that of my noble friend, Lord Stevenson. I will also speak to the other amendments in the group, which go to the heart of the exit payment problems.

It is not that we are particularly against what the Government said that they wanted to do in curtailing the very large exit payments made to a tiny handful of public servants who then re-enter the service of the state, albeit in a different guise. Indeed, as I am sure the Minister does not need reminding, the original words in the Conservative Party’s manifesto—on page 49, I think, if she has a copy here—were:

“We will end taxpayer-funded six-figure payoffs for the best paid public sector workers.”

Best paid? No, the cap will affect those with long service rather than those on the highest pay—hence our probing amendment to discover what exactly the Government are out to achieve. This is not aimed at the “best paid” of our public servants. The Cabinet Office confirmed that some earning less than £25,000 a year could be affected because of their long service—that is, serving the public, often for salaries below those in the private sector.

We assume that this was not the Government’s initial intention, especially given that they said in their memo to the Delegated Powers and Regulatory Reform Committee that the regulations would only prevent “vast benefits” being paid to “a few individuals”. That is not what we have, so why has it changed? Has the Government’s intention changed or is this just poorly thought-out legislation, which ends up hurting long-standing rather than highly paid staff?

Will the noble Baroness give the explanation that I think is due to us and, indeed, to all public servants? Does she consider that £25,000 equates with “best paid”? Has the intention changed, so that the Government want long-serving workers to be caught? Is this just a rather nasty, crafty little device that they have alighted on simply to help to reduce the deficit, given that the Chancellor seems to be having difficulty with it, by hanging that deficit around the neck of their own employees? Or is this just mistaken drafting, which the Minister will be happy to amend on Report?

As I suggested, the impact assessment suggested that the cap could save “low hundreds of millions” over given years, as if anticipating relatively small numbers being caught. However, no formal impact assessment was undertaken,

“as there are no obligations or costs imposed on business”.

Of course, an impact assessment is always possible and the impact on the people concerned, or indeed on the efficiency of government, should have been a central concern, although it was clearly not to Ministers.

We will come later to the particular impact of “strain payments”, but in the mean time we would like some clarification of why the particular figure was chosen. Was it simply to be under the “six-figure” that had been mentioned in the press? What thought was given to the impact across the public service? Were medium-or even lowish-income employees meant to be caught by it? Also, why is there a disparity with the NHS figure?

Furthermore, if the Government are really intent on dealing with the mischief of some super-payouts in this rather crude formulaic way via a cap, then not only should the Minister consider whether the figure is correct, but she should also give a commitment to index-link the amount before even Foreign Office cleaners are included. The Local Government Association supports the amendment to ensure that the figure is re-evaluated on an annual basis, so as to take into account differences in pay increases in separate areas of the public sector.

I am sure that the Committee is familiar with the figures as to who could be caught by the cap. According to the Cabinet Office, more than 20,000 in the main Civil Service and many more in arm’s-length bodies would be. It is the combination of age, and length of service rather than high pay that trap these people. The examples given have included a librarian, with a career average salary of £25,000—perhaps 34 years with the council when its library closes—and she is redundant at 55. It is a bit late to start a new career, and there are not a lot of private libraries to which she can move. She will be caught by the cap. Similarly, a 52 year-old tax inspector, or indeed a prison warder, who has worked for 25 years, or a 50 year-old health and safety officer with 20 years’ experience, or a 56 year-old school inspector after 16 years with Ofsted, or perhaps with FOS, if PPI ever got sorted.

Other groups include educational psychologists, mostly employed by local government, earning between £40,000 and £50,000 a year. They do not consider themselves the “best paid” in society, and I share their view. However, again, they will be caught, not because of their pay rate but because, if they are over 55, of the so-called strain payments—money which, of course, does not go to the person concerned but to the pension scheme, as we will come on to in later amendments. Can the Minister therefore say what thought the Government gave to the public servants who do such valuable work for all of us?

The cap as it is in the Bill at present covers compulsory redundancies, where of course the individual has no choice as to whether to walk and no opportunity to weigh up the pros and cons of leaving the service, but will simply lose the rights and reasonable expectations built up over a career. They—and we—deserve to know why this figure was chosen, and whether it really was aimed at these “good and faithful” colleagues. I beg to move.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I inform the Committee that if this amendment is agreed to I cannot call Amendments 53ZJ to 54BC inclusive by reason of pre-emption.