Oral Answers to Questions
Harriett Baldwin Excerpts(14 years ago)
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Mr Letwin
I have of course heard about the Palingswick house events, but it is hugely in the interests of the hon. Gentleman’s constituents that there should be a free school there, as it will improve education standards, I have no doubt. That is of course entirely a matter for the local council, not for the Government, because we believe in localism, but I understand that the council intends to find other ways to house the voluntary and community groups that are involved, and I am sure that it will do so with his help.
Harriett Baldwin (West Worcestershire) (Con)
May I draw your attention to my entry in the Register of Members’ Financial Interests, Mr Speaker, and ask the Minister what the likely timetable will be for local voluntary organisations to access the big society bank?
Mr Letwin
My hon. Friend has a distinguished record in financing voluntary and community groups, and the big society bank will make a difference to that area. The bank is a quite a complicated proposition, and we have to organise it and find the funding for it, but my right hon. Friend the Minister for the Cabinet Office and Paymaster General is at work on that at the moment. Although we hope to be able to progress it at a reasonable rate, I certainly do not want to give my hon. Friend the impression that it will happen overnight, but I anticipate it being up and running in the not too distant future.
European Council
Harriett Baldwin Excerpts(14 years, 1 month ago)
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The Prime Minister
The right hon. Gentleman makes a good point, which is that we should not amend those benchmarks, but the Europe 2020 document is slightly disappointing, because Europe’s real problem is that it has become uncompetitive, has expensive welfare systems and overbearing pension systems and is not complete as a single market. We need a more robust conversation in Europe about how we get growth—how we reform and improve the structure of our economies to get growth. Europe 2020 is only part of that, and we should be more ambitious for next year.
Harriett Baldwin (West Worcestershire) (Con)
As another happy Back Bencher, may I convey the thanks of the British taxpayer for the hundreds of millions of pounds that the Prime Minister saved us over the weekend? However, I should be interested in the clarification of an issue. The problems in the eurozone are likely to occur between now and 2013. What is the extent of Britain’s liability under the emergency arrangements signed up to by the previous Labour Chancellor?
The Prime Minister
I am glad to hear that my hon. Friend is a happy Back Bencher. The answer to her question is that a mechanism was established under article 122 of the Lisbon treaty, allowing the European Union to spend the headroom between its budget and the money it can spend under the previous financial deal on such bail-outs. The headroom was €60 billion, some of which has been used with respect to Ireland, and the mechanism is established under qualified majority voting. That is the problem we face, so we are dealing with that in the fastest way we can by saying that, when the new mechanism comes in, it will rule out action under the old mechanism. Of course, as they like to say in Limerick, we shouldn’t have started from here.
Public Services (Social Enterprise and Social Value) Bill
Harriett Baldwin Excerpts(14 years, 2 months ago)
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Harriett Baldwin (West Worcestershire) (Con)
I am grateful for the opportunity to speak on this interesting private Member’s Bill, and it is an honour to follow the right hon. Member for Salford and Eccles (Hazel Blears) because she obviously knows such an enormous amount about this topic. I draw the House’s attention to my entry in the Register of Members’ Financial Interests. For the last couple of years, I have had the privilege of sitting on the board of the Social Investment Business—a social enterprise itself—which has been a fascinating place from which to observe some of the issues and challenges in the social enterprise sector.
The social enterprise sector is not widely known or acknowledged by the public. If we asked people in the street to define a social enterprise, I think that most people would look fairly blank, but the right hon. Lady gave us some excellent examples of social enterprises in her constituency, and most people will have heard of organisations such as Jamie Oliver’s Fifteen. It is a restaurant that runs on a commercial basis, but it helps young people who are struggling to get into employment by training them as chefs. People have also heard of organisations such as Cafédirect and The Big Issue—the latter being a social enterprise in which the commercial magazine helps homeless people to earn an income. However, social enterprise still has some work to do in engendering public knowledge, understanding and acceptance of what it does.
From the perch that I have occupied for the last couple of years, it has been fascinating to observe some of the issues and challenges for the social enterprise sector. In particular, I have chaired the investment committee, which has disbursed the money from the Futurebuilders fund, which was almost £200 million of Government funding that was designed to be used in loans to completely unbankable social enterprise organisations. If social enterprises were trying to win contracts from public sector organisations, the Futurebuilders money was designed to be the last resort. If organisations had already been to the banks, applied for grants and pursued all the other sources of potential funding, but still needed that last little bit of funding to make the project viable—the unbankable funds—the Futurebuilders fund could help.
The fund has now been fully disbursed and, for the last five or six years, it has been a portfolio of loans. I wonder whether hon. Members wish to guess what the annual default rate has been—in this very tough financial period—on that series of unbankable loans to social enterprises.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
My guess is that it would be less than 1%.
Harriett Baldwin
That is an extremely low rate, but in fact the annualised default rate has been just over 1%. The case has been proven that a portfolio approach can be taken to investment in such social enterprise organisations.
I am sorry that my hon. Friend the Member for Wycombe (Steve Baker) is no longer in his place, because he and I have enjoyed many lively debates on many different topics and I would have pointed out to him that we do have an arrangement in this country whereby the Government spend money on behalf of taxpayers—and that is an accepted fact. This Bill would helpfully draw to the attention of the procurer who spends public money the existence of social enterprises, which might offer an attractive alternative to the state building its own apparatus or to a private sector provider.
Nadhim Zahawi
I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on introducing this Bill. Two Fridays ago in Stratford-on-Avon we held a big society day. Local government attended and we had standing room only. Two things emerged. First, what Government can do is to provide—in business terms—the mission statement. Secondly, that mission statement then needs to be implemented locally in, perhaps, diverse ways. That is where the gap in the debate may occur.
Another point that emerged from the big society day was the overlap between social enterprises and voluntary providers. We need to send a message to them that in such cases it would be of benefit to both if they worked together more closely, which could make them more successful in bidding for some of this money.
Harriett Baldwin
I thank my hon. Friend for that informative intervention. I, too, represent a constituency that has many shining examples of big society organisations. From my perch on the investment committee at the Social Investment Business, I have been able to see many different social enterprises across the land that are flourishing—from Salford to Stratford—and that would be helped by being brought to the attention of public service procurers in other areas. By outlining the need for a national strategy, my hon. Friend the Member for Warwick and Leamington has introduced a very helpful Bill.
As we all know, there is allegedly no money left, so it will probably not be as easy as it was to help the social enterprise sector. I am sure that the right hon. Member for Salford and Eccles would agree that even had her party been elected to government it would have found it difficult to provide similar amounts for funds such as the Futurebuilders fund as they did before. Therefore, we need to emphasis the role that foundations, philanthropists or people who would like to invest in an ethical individual savings account could play by providing a portfolio of funding to help to draw on the experience that Government money has developed over the years, as well as the low default rate and good rate of return.
Dan Byles (North Warwickshire) (Con)
What I find most interesting about my hon. Friend’s speech is that she is making the clear point that social enterprise is not the same as charity, and that it can be a financially and economically sustainable model.
Harriett Baldwin
Indeed. I do not want to rule out the possibility that charities may want to use loan finance from time to time; obviously, they often do. My point is that, in this sector, we do not need to rely solely on help from Government procurement and funding. I want to put on record that if it is to continue to experience rapid growth, there is also a role for other providers of capital. We have had the fascinating example of the social impact bond. I believe that contract involved a charity, rather than a social enterprise, which was looking at a way of reducing reoffending rates. The rate of return that investors could earn on the social impact bond was a function of how successful the charity was in delivering on that contract. That is another creative and innovative way to find more money to help the social enterprise sector to grow.
With the Minister in his place on the Front Bench, I would like to take the opportunity to refer to a policy that the Conservative party was considering in opposition—the role of the social enterprise zone as a means of the Government helping social enterprises in particular areas to attract money from private investors through additional tax breaks.
This is potentially a very powerful and excellent Bill, and I am delighted to urge all my colleagues and all Opposition Members to support it.
Steve Baker (Wycombe) (Con)
I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on the way in which he introduced the Bill. I strongly agree with the spirit of his remarks. It is only on the margin that I find myself disagreeing either with my hon. Friends or with the right hon. Member for Salford and Eccles (Hazel Blears), who is no longer in the Chamber. Where I am ambivalent is on a few philosophical points. Although I realise that philosophy may not be as fashionable in this place as it once was, I hope that Members will forgive me if I dwell on some of the philosophical aspects for a few moments.
As I said in an intervention earlier, it is my view that all enterprise is social. I believe that society is co-operation, and that in a society based on the division of labour, we necessarily cannot have a gift economy. We cannot have a planned economy. It is necessary for unhampered market prices to fall for us to discover people’s revealed preferences. We talked about values earlier. Values are so important, and so unique to the individual. They are about more than money, and yet people reveal the intrinsic, inherent values that they hold in their minds only when they disburse their own money. I do not just mean when they buy fripperies for themselves; I mean when they give to charity, and when they buy gifts for others. There is nothing dishonourable about spending one’s own money in line with one’s own values.
For a long time Labour Members have been appealing to reason. They have believed that if only the state had enough power, or the right power, or this, that and the other—if only it had a national or local framework—and if only enough power were exercised in society, things would be rational and reasonable and stable and static, and they would become better. I put it to the House, however, that the experience of the last 100 years has been that that has not happened.
I am rather reminded of the scene in “The Lord of the Rings” in which Boromir, I believe, turns to Frodo and begs to be given the Ring of Power because he would use it for good. I am afraid that the limits to the use of this Ring of Power—state power—are highly circumscribed. They are circumscribed, because society is a dynamic process of information discovery. It is simply not possible for the state to obtain the information that it needs in order to co-ordinate society by decree, or indeed to intervene powerfully in society to produce good outcomes. It is impossible because the information that is necessary is dispersed in the minds of millions, indeed billions, of people; it is impossible because the information is tacit, it is practical, and it could not be transmitted even if it were accessible; it is impossible because society is a dynamic process, and information is therefore discovered through the changing process of social interaction; and it is impossible because the very act of the state’s intervening to fulfil the whims of politicians and officials prevents information from being discovered.
Some people listening might recognise these as arguments advanced in the past under the heading of “The Fatal Conceit”. I fear that in our benevolent intent, with our good will, and given all those great things that we have heard today about building a better society, we are in danger of holding on to that fatal conceit: the conceit that the state, if only it could obtain enough information, could co-ordinate society.
The right hon. Member for Salford and Eccles pointed out that the state is often in the way of the very social entrepreneurs whom she wishes to see succeed, and that she wishes to see the system change in order to get it out of people’s way and get it behind them. But I ask the House how much longer we are to continue in the fallacious belief that if only we could change the way in which the state coercively determines what people are to do with their own lives, things would become better.
The right hon. Lady mentioned charities and mutuals, and we could also discuss co-operatives and friendly societies. I would not disagree at all with her intent in respect of such organisations. I think that they are healthy, I think that they are honourable, and I think it is a great pity that the labour movement was key in stamping them out. We are bearing the cost of its follies in that regard. I have no objection whatever to mutuals or co-ops or, indeed, trade unions. What I have an objection to is the use of coercive power to organise society.
Provided that those traditionally leftist labour movements are organised to sustain themselves by making a surplus, and provided that they are not bailed out with taxpayer’s money—we might well mention the banks, but perhaps that is for another day—I will support them. I will gladly support mutuality, co-operatives and, of course, charities. However, we have talked about the public ownership of capital goods. Labour Members have worried that capital goods might be—heaven forbid—privatised, but what is privatisation? Could it be that a mutual owning its own capital goods is private in some sense? Perhaps we need a new word, because to me “public” does not necessarily mean “state”, and “society” does not necessarily mean “state”.
I should be very happy indeed if assets—capital goods—currently owned by the state were put into the genuine ownership of mutuals. The question is not whether those assets should be put into genuine ownership outside the state; it is how ownership can be transferred in such a manner that justice is done. There is no doubt in my mind that many of those assets have been acquired by the state unjustly, but far be it from us to double the injustice by selling them in an inappropriate way, and then disbursing the capital gains by spending to live today.
In short, what concerns me is that we are lapsing into something which might best be described as communitarianism. It sounds so laudable. Oh, it does: it sounds so laudable—as did socialism, back when socialism meant Marxism. It always sounds so laudable. But the fact is, whether Labour Members like it or not—and I am afraid that the same applies even to some of my hon. Friends—in the end, when we come up with a national plan, a national social strategy, and local authority strategies for social enterprise, inevitably we must use the coercive power of the state in an attempt to direct society, a task that is impossible through the very nature of society itself.
Harriett Baldwin
It is a pity that my hon. Friend was not present when I made some comments about his earlier interventions, but let me ask him now whether he takes his philosophical position so far that he does not believe that the state should spend any taxpayers’ money. That seems to be the logical end point of his philosophical disquisition. Most of us would agree that we raise taxes coercively, and that we spend them; why should we not spend some of them on social enterprise?
Steve Baker
I am grateful to my hon. Friend for giving me the opportunity to say this. Given that I sit in this place as an elected politician, of course I believe that there is a role for democratic politics and for government. What I am expressing, however, is a deep scepticism based on solid theory, and indeed on the practice of the last 100 years, about any attempt to organise society using the state. I believe that such attempts are generally a mistake. That is not to say that the practice should be eliminated—far be it from any Member of the House of Commons to suggest that—but the fact is that it has not been a great success.
My hon. Friend is absolutely correct in saying that we are currently taxing and spending to an enormous degree, but we must make up our minds about whether that is healthy. It seems to me that the degree to which society has power is determined by the degree to which the state has power. The more power the state takes to itself, the less power society will have. I am afraid we must face up to the reality that, while the state is spending more than half of national income, human social co-operation is largely directed by the coercive power of the state.
My hon. Friend may well say that the logical conclusion is as she described, but I think that that was recognised by the old Liberals of the 19th century. Indeed, I wish that the new Liberals of the 21st century would pick up the same point. However, I do not suggest that we should go there immediately; I am referring to the direction of travel.
Oral Answers to Questions
Harriett Baldwin Excerpts(14 years, 3 months ago)
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The Deputy Prime Minister
First, let me apologise if the hon. Gentleman had been waiting for a meeting; I am keen to ensure that one is fixed as soon as possible.
I was not in any way seeking to promote smoking. It is a very bad habit, and I would never advocate it to anybody else.
Harriett Baldwin (West Worcestershire) (Con)
T8. The coalition programme for government calls for a commission to be established to look into the West Lothian question. Please will the Deputy Prime Minister update the House on the establishment of that commission?
The Deputy Prime Minister
My hon. Friend the Parliamentary Secretary, Cabinet Office, who has responsibility for constitutional affairs, will lead on that and he will announce our intention to set up a commission on the long-standing knotty problem of the West Lothian question by the end of the year.
Superannuation Bill
Harriett Baldwin Excerpts(14 years, 4 months ago)
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John McDonnell (Hayes and Harlington) (Lab)
Following the final comments by the hon. Member for Birmingham, Yardley (John Hemming), I fully agree that we have been trying to create an environment in which agreement can be reached. However, if I were a civil servant watching this debate, with the prospect of the large-scale redundancies that will happen after the comprehensive spending review, I would almost despair. It will be extremely difficult for all of them to come to terms with the loss of their jobs. As a manager in the public sector in a former life, I have always found that people are realistic as long as their views are respected and they are involved in the discussions and negotiations, which have been entered into in a spirit of good will. To achieve that, we need to create a climate of good will where people feel that their views are being heard.
Despite my having opposed every cut of every job in recent years under the previous Government, we were told in the Public Bill Committee that 80,000 jobs were lost but there were only 80 compulsory redundancies. The negotiations that took place on the basis of the protocols established with regard to redundancies and transfer between Departments resulted in a system whereby large-scale compulsory redundancies were avoided. The Minister referred to past practice under the previous Government. As I said, I did not support the cuts that went on, but I genuinely think that they were committed to a negotiated settlement. In my view, had it not been for the interference of No. 10 and the Treasury—this is almost like history repeating itself—we would have obtained a negotiated settlement that all unions would have accepted. However, the settlement was imposed, and I opposed that. The PCS took the then Government to court because it believed that the accrued rights of its members were being interfered with contrary to law because it was an imposed settlement, not an agreed one. It was proved right in the court of law, and we have to come to terms with the reality of that.
Harriett Baldwin (West Worcestershire) (Con)
I am interested in the hon. Gentleman’s point of view on this. Does he believe that it is possible for the Government to negotiate to a satisfactory conclusion with the PCS given its position in all the negotiations?
John McDonnell
I do. I will come to that in a few minutes.
The position of the unions in the Public Bill Committee represented an attempt to acknowledge their responsibilities to their members. The PCS was in a similar position whereby, if it had not taken the Government to court to assert its members’ rights to their accrued rights and to consultation and agreement, it could have been taken to court by any individual member for failing to undertake its duty to its members.
Under the previous Government, there was a genuine attempt to negotiate a settlement. Under the current Government, I have found in my discussions with civil servants—not only PCS members but members of the other unions—that there is uncertainty among many of the people who may well be affected by the cuts to come as to whether the Government genuinely want a settlement, and anxiety that the Government are seeking to provoke a dispute. I listened to the Minister’s words, and I am grateful for them: they were positive and tried to create the climate in which a negotiated settlement can be achieved. However, the pattern of negotiations and ministerial statements in the past few months has not engendered an atmosphere in which a negotiated settlement can be brought about. That is why the Opposition have tabled their amendments. Every trade union representative at the Public Bill Committee made it clear to us that it was unprecedented for a Government, in the midst of negotiations, to introduce a Bill to impose a settlement in this way. It has never happened before in negotiations between a Government and the public sector.
John McDonnell
I meant 90% of the trade union members with whom the Government are negotiating.
May I tell the Minister what the POA has said about his words? Its general secretary Steve Gillan has said:
“I am annoyed that Mr Maude has leaked without prejudice discussions but I believe this has been deliberate in an attempt to drive a wedge between the POA and PCS. The POA will not allow him to do so.”
The Minister’s actions have meant that the union has now rejected the deal. Those actions were not responsible, and they were in contrast to the words of comfort that he has used here today and elsewhere in trying to engender a good industrial relations climate.
As my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) said, Members need to understand the strength of feeling among PCS, POA and other trade union members about the impact that the changes will have on their lives. We have had heart-rending cases submitted to us by people who have entered into mortgages, for example, believing that they had the security that even if they lost their job, they would have redundancy pay that would cover their mortgages. Now, they might lose their homes. We have heard of other people who were expecting significant compensation related to their salaries, one of whom would now lose £90,000 as a result of the Government’s proposals. No wonder people are angry and concerned. That is why they want their Government and their trade unions to come together to agree a fair way forward.
Harriett Baldwin
May I ask again the question that I asked earlier? Can the hon. Gentleman see a way for the PCS to agree to any negotiating position?
John McDonnell
Yes I can, and the PCS has written to the Minister again recently asking for meetings. I believe that one meeting has taken place, so there is potential. However, we cannot expect a negotiated settlement to take place when tactics are used that undermine the confidence not only of the PCS but now of the POA. That lack of confidence is now infesting other unions as well.
Richard Graham
The right hon. Lady asks in which ways the Bill’s provisions are better. My understanding is that under the new deal that is being negotiated, a lower-paid civil servant—for example, one on a salary of £10,000—would receive up to 24 months’ statutory redundancy payment based on a salary of £23,000, which is better than the deal put on the table by the Labour party.
Harriett Baldwin
One theme that has come up in all debates on the Bill, including in Committee, was that we want better treatment for the low paid. I agree with my hon. Friend. I would have thought that the Opposition would welcome the low-pay aspects of the Bill and the improvement in the negotiating position.
Richard Graham
My hon. Friend is absolutely right.
If I may continue where I left off—
Superannuation Bill
Harriett Baldwin Excerpts(14 years, 5 months ago)
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Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
May I declare an interest? In the Chamber tonight, I am representing thousands of civil servants who live and work in my constituency, home to Her Majesty’s Revenue and Customs, the Department for International Development and the Department for Work and Pensions. Many other constituents work in the Scottish Court Service, the Scottish Prison Service, the Forestry Commission and many other Departments, agencies and non-departmental public bodies throughout Scotland.
I have another interest to declare: I was a civil servant between 1982 and 1992; I became a full-time official with the Civil and Public Services Association, a predecessor of the Public and Commercial Services Union; and then I became a senior full-time official for the PCS. I know all the protagonists in this debate very well indeed, including the aforementioned Mr Serwotka.
The motto of the new coalition Government is, “We are all in this together,” and I should like to put that to the test by asking them to put their motto into actions rather than words, because, despite what was said amid the heady atmosphere of the Queen’s Speech debate, every Member recognises that we have to tackle the fiscal deficit. The difference—well, there may be more than one—between Opposition and Government Members is how we do so. The Opposition believe that there are other options, that the Government are going far too far, far too quickly and that the damage that occurs will create more problems for the economy.
The proposal before us is the first real acid test of the Government’s plans for deficit reduction, because we all know that the whole economy of the United Kingdom benefited from the economic bail-out. The private sector, the public sector and what people call the third sector all benefited, and in order to reduce the deficit every part of the economy must contribute. I shall argue strongly that that contribution must be proportionate and depend on how much people can afford. For example, the bankers, who perpetrated the biggest crime against our country’s economy, must pay the most in order to rebalance our books.
We know from the Budget that people will be asked to pay a 20% VAT rate, and that there will be what Opposition Members regard as a puny levy on the banks. We must also consider the proposal before us, and taking matters in the round I have reached the judgment that we are not all in this together, because we are asking those who can least afford it, those who are vulnerable and public sector workers to pay the largest price. That is the collective impact of the proposal. Despite what the Minister said, that is the message that the Government are sending out. I appreciate his point about the negotiations, but, having taken part in many negotiations over the years, I now recognise when I had the upper hand and when the employer did, so I recognise that in the current negotiations the employer—the Government—has very much the upper hand.
Ministers still have an opportunity to reach a common-sense resolution for the civil service compensation scheme, however. A lot of inaccurate information has been put out in the press, and there is a great deal of confusion about the difference between severance and early retirement. For example, on the BBC’s “Today” programme, I heard that some civil servants would receive six and two-thirds years’ payments after they had been made redundant. That clearly confused severance with retirement, because severance is simply based on length of service and salary, and the maximum payout under the current CSCS scheme is three years. In respect of retirement, the terms are for the over-50s, involving an enhancement, through added years, to their pensions.
The Labour Government’s comprehensive proposal to the civil service unions would have saved between £500 million and £650 million—not inconsiderable amounts of money, I hope Government Members will agree—and protected all the different bases in respect of early severance and early retirement.
Harriett Baldwin (West Worcestershire) (Con)
I want to clarify the hon. Gentleman’s point about severance, because the Library research paper states that early severance can cost “6 years’ pay” under the 1987 terms. Is that the case?
Mr McCann
The hon. Lady is absolutely correct, but earlier contributors made it clear that that refers to a very tiny proportion of the civil service staff; the vast majority are under the terms that I have given the House—[Interruption.] The hon. Member for West Suffolk (Matthew Hancock) shakes his head, but it is absolutely true that the vast majority will receive severance terms based on a maximum three years’ payout. [Interruption.] His colleagues nod in agreement, so he seems to be in the minority.
Harriett Baldwin (West Worcestershire) (Con)
I wish to add to the comments of Members on both sides of the House my recognition of the work that our civil servants do throughout the country. I have spent my working life so far in the private sector. Until I read about this legislation and the background negotiations that brought us to this point, I had not realised that there were still jobs in this land in which people could expect at redundancy to receive a payment of several years’ pay. As we heard, in rare cases people can receive up to six years’ pay. Most of my constituents would be astonished to learn that some who are faced with redundancy—it is inevitably shocking and stressful—are cushioned by a payment of several years’ salary.
I thought I might share with the House some observations from the labour market in the private sector. Redundancy is always a very difficult decision for an employer to take. In my experience, most employers will try very hard to help employees to move within the organisation or reduce their hours. There are many examples in the current downturn of people accepting less work and remaining employed. We acknowledge that redundancy is very expensive, not only financially but in human terms, and that all good employers will go out of their way to try to avoid it. However, we can also see that in a flexible, modern and changing economy, redundancies will occur. Therefore, the provisions are significantly more generous than one would see in private sector employment today.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I can think of many privatised companies, as I am sure many colleagues can—I am thinking of British Energy and others—that have generous, multi-year severance packages, so it is wrong to say that we find them nowhere in the private sector.
Harriett Baldwin
I thank the hon. Gentleman for his intervention. I have obviously been in completely the wrong line of work, given that I was unaware of such significant redundancy packages.
We all recognise that people are reluctant to make employees redundant, and that they would make every effort to move people to new jobs. However, the Minister made an important point when he said that when redundancies need to happen, people want to avoid the situation in which the most recently hired and lowest paid are let go because decision making is distorted by the packages that must be offered to more highly paid people who have been with a company for a long time.
We can also acknowledge that when redundancies are made in the civil service—I gather that in the three years from 2005, there were 16,500 redundancies, which cost the public purse about £1 billion at an average of about £60,000 per redundancy—the money must be found from the taxpayer. I differ from my colleagues who said that the decision to introduce the Bill was made because of the deficit. I submit that even if we did not have a deficit, the sums of money being paid out in redundancy would seem no less huge.
We have talked a lot about fairness in today’s debate. Is it fair that some of the taxes paid by an individual who finds work after being made redundant in the private sector—the average redundancy payment in the private sector is approximately £9,000—go to pay significant redundancy payments in the civil service? We all agree that something must be done, and as the right hon. Member for Dulwich and West Norwood (Tessa Jowell) said, the CSCS is simply not appropriate for a modern civil service.
It would be right to do something about the situation in good times, just as it is right to do something in tough times, but it would clearly be better, as everyone agrees, if the unions and the Government successfully negotiated a change. It would be more attractive if the redundancies that are being discussed were voluntary. It is often the case that managing a redundancy process that has a significantly more generous voluntary element makes the process much less painful for the work force. In addition, it would be better if we negotiated a change so that the public sector is more vigorous and stronger when new jobs are created. It is one of the counter-intuitive laws of economics that companies that have very generous severance terms tend to hire fewer people than companies that are more flexible. It is also counter-intuitive that the mobility of staff within organisations that have more flexible employment terms is improved. That can often help with morale and job satisfaction.
We have spoken today about protecting the lowest-paid, but perhaps we should talk less about protecting them and recognise that the more junior staff are often able to move up. In other words, instead of talking about protecting junior staff, let us talk about promoting and creating more opportunity for mobility for them within the organisation.
It is also been observed that similar counter-intuitive laws of economics apply to countries. Countries that have more flexible employment laws have much stronger periods of job creation when they move into economic recovery.
I agree with colleagues on both sides of the House that it is a shame that we have to discuss the Bill and that it would be much better if we came to a successfully negotiated conclusion. Let us hope that while the Bill goes through Parliament, the negotiations bring about a more reasonable scheme that is both affordable for the public purse and fair to the very many valuable public servants who are covered by the current scheme.