Superannuation Bill

John Hemming Excerpts

Tuesday 7th September 2010 Commons Chamber

[Mr Maude]

No. The effect of the legislation will be identical on all civil servants. Under the Bill, the cap would apply uniformly to civil servants. I shall come in a moment to the negotiations that are going on in parallel, because that will deal exactly with the hon. Gentleman’s point.

[John Hemming (Birmingham, Yardley) (LD)]

Obviously we do not want to make civil servants redundant. Does the Bill not make it less likely that lower-paid civil servants will lose their jobs, so in 10 years’ time they will still be employed within the civil service?

[Mr Maude]

My hon. Friend is exactly right and puts his finger on an important point. Because it is so disproportionately expensive under the current scheme to make redundant long-serving and high-paid civil servants, instead of one civil servant who earns 10 times the average—there are some—losing their job, 10 or more lower-paid civil servants might lose their jobs to save the same amount of money. We are seeking to address exactly that issue.

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[Mr Maude]

I am reluctant to start conducting those negotiations in public. It would be regarded by the unions, which I think are engaged in good faith in these discussions—certainly, all the indications are that they are engaged in good faith in these private discussions in order to achieve an agreed outcome—as bad faith were we to start to explore them here. All I would say at this stage is that we completely and genuinely understand the need for additional protection for lower-paid workers, of whom there are many in the civil service, and we will seek to achieve that.

[John Hemming]

Does the Minister agree that the difficulty is that the Government need to act and cannot allow one of six trade unions simply to veto all changes, and that if the Government are therefore to put something through, they need negotiating room to offer something better in the negotiations? Obviously, this Bill will not be as good as a final deal that could be agreed with the trade unions.

[Mr Maude]

That is completely right. My hon. Friend puts his finger precisely on the point. Our view is that one union cannot be allowed to prevent necessary reform of a scheme that is unsustainable and unaffordable—and, of course, that is precisely the view taken by the last Government. The order laid by the right hon. Member for Dulwich and West Norwood, which came into effect, I think, in April this year—before it was rapidly quashed by the judicial review sought by the Public and Commercial Services Union—was made on the basis that one union could not be allowed to hold up the necessary process of reform. However, I stress again that we seek genuinely to negotiate additional protection for the lower paid.

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[Tessa Jowell]

There is all the difference in the world between a settlement that recognises reasonably the proper expectation of the lowest-paid, and the proposals in the Bill. That is the difference that the hon. Gentleman needs to understand.

[John Hemming]

Will the right hon. Lady give way?

[Tessa Jowell]

I am going to make a bit of progress.

In the current environment in which many civil servants are understandably concerned about their jobs, it is even more important for any reform package to be achieved in full consultation and, wherever possible, agreement with the work force. As a result of the Equality Act 2010, which formed such an important part of the last Government’s legislative programme, the Bill is subject to an equality impact assessment, which I took the time to study.

Against the commitments to full consultation and transparent negotiation, we might look at some of the evidence in the equality impact assessment. It asks:

“Does this policy affect the experiences of staff? How? What are their concerns?”

For staff, the following answer is given:

“Exit terms are set out in Civil Service Compensation Scheme, to be capped at levels set out in the Bill.”

That is a perfectly fair statement of fact. The impact assessment then asks whether the policy affects the experiences of staff networks and associations. The answer given is: “As above”—for staff—but also:

“(no consultation due to urgent need for affordable provisions).”

The answer for trade unions is the same:

“As above (but no consultation due to urgent need for affordable provisions).”

When the equality impact assessment looks at the impact on voluntary organisations, the conclusion is that that is “N/A”—not applicable. The impact on race is also deemed not applicable, as are the impacts on faith, disability rights, gender, sexual orientation and age. The impact assessment also asks:

“What were the main findings of the engagement exercise and what weight should they carry?”

That, too, is said to be not applicable.

“Does this policy have the potential to cause unlawful direct or indirect discrimination? Does this policy have the potential to exclude certain groups of people from obtaining services, or limit their participation in any aspect of public life?”

That is not applicable as well.

“How does the policy promote equality of opportunity?”

That is not applicable also. I could go on.

That is not by any stretch of the imagination a proper assessment of the impact of the proposals on the work force, taking account of the obligations that sit on the coalition Government to recognise equality of opportunity.

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[Tessa Jowell]

The hon. Gentleman asks a fair question, but it is his responsibility to test that. However, because compared with the existing situation these proposals in effect levy the greatest penalty on the longest-serving, and almost inevitably the oldest, civil servants, there is at least a prima facie case for considering whether they are age discriminatory. I draw no conclusions, but I say to the House that I consider that the equality impact assessment has not taken full account of the impact of the proposed measures across the work force. The Opposition consider the terms put forward to be both unfair and punitive.

[John Hemming]

The right hon. Lady often uses the word “unfair”. I assume that she employs her own staff in her parliamentary office and that they are subject to the statutory scheme, with a maximum of 30 weeks’ pay. How does she argue that that, which was set by Parliament, is fair compared with the scheme the Government proposed in February this year?

[Tessa Jowell]

For the very simple reason that, in order to meet the terms of the judicial review, the proposals in the Bill are removing entitlements, expectations and accrued rights from staff who have a reasonable expectation of receiving them. That is why they are unfair.

[John Hemming]

Will the right hon. Lady give way?

[Tessa Jowell]

No, I am going to make progress because many Members wish to speak in the debate.

We argue that no adequate protection is offered to the lowest-paid, with a junior official in a job centre receiving no more protection than a permanent secretary of a Government Department. In introducing the Bill, the Government have insufficiently consulted their employees. The scant information in the equality statement makes that very clear.

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[John McDonnell]

The hon. Gentleman came to the House at the last election, so he may not know that I was probably not the most vociferous supporter of the economic policies of the previous Government. I was a critic, and if he looks at the alternative Budgets that I provided annually—which this House rejected, but never mind—he will see that there would have been no deficit if I had implemented them. There would have been a redistribution of wealth and an increase in taxation, which would have enabled us to afford the public expenditure that our society requires.

I am not a Keynesian; I am a Marxist—[Laughter.] Well, it is interesting how true some of the predictions in “Das Kapital” are coming. Even if one takes a Keynesian position, the last thing one would do at this point in time is reduce aggregate demand and cut jobs, wages and conditions of service. It flies in the face of reality to lay off large numbers of civil servants, and then cut the income and compensation arrangements that they receive. Anyway, Mr Deputy Speaker would rule us out of order if we went into another economic diatribe.

[John Hemming]

The hon. Gentleman appears to be arguing, relatively coherently, for no change whatever to the terms and conditions of public servants. Is that what he is arguing, or is he arguing that some change is reasonable? If so, what change would be reasonable?

[John McDonnell]

I recognise that a range of negotiations need to take place. In the last set of negotiations with the previous Government, there were various issues to do with changes tackling age discrimination in particular. My view—we have to come on to the reality of the negotiations that will have to take place—is that we can create a climate of opinion in this House and elsewhere that will enable those negotiations to come to fruition, and that we should protect the lowest paid, in particular, as best we can. That has been the commonly voiced demand in the Chamber today.

[John Hemming]

Does the hon. Gentleman agree that the best way to protect the low paid is to protect them from redundancy?

[John McDonnell]

Yes, and that is why I have consistently put forward alternative economic policies and strategies.

Let me press on, if I may. This is a serious debate, and I am trying to get across the feelings expressed to me through the PCS parliamentary group. As I say, I have met PCS members, I have attended meetings of the executive, I have been on picket lines, and I have been at various meetings around the country. There is anger about the proposals in the Bill—I shall come on to that—but also about the way in which the issue has been handled by Ministers.

In interview after interview, and even in the Chamber today, Ministers and Government Members have focused, in their descriptions of the compensation scheme, on payments to the highest-paid civil servants; it has almost been a portrayal of “Yes Minister”-type permanent secretaries, retiring to their Whitehall clubs on large-scale pay-offs. There are some individual examples of that, and they have been quoted today, but PCS is one of the leading unions that has pointed out that issues around high pay within the civil service have undermined the equitable distribution of rewards in the public sector.

Time and again, including today, we have had repeated the example of some civil servants receiving up to six years’ wages as a redundancy settlement. Let us get this point on the record as best we can: if I may refer Members to the Library note, of 500,000 civil servants, only 4,400 are in the senior civil service. The maximum compensation for most is capped at three years’ pay under the compulsory scheme, and two years’ pay under the flexible, voluntary scheme. For a small number of people who joined the service before 1987 with reserved rights regarding severance payments, payments are higher.

Ministers were asked by the Public Accounts Committee and, I believe, in parliamentary questions on the Chamber Floor, for information on the number of individuals currently getting a package worth six years’ salary. We were told that the information was unavailable because it could be provided only—there is a sense of irony here—at disproportionate cost. The six-year allegation is consistently used, even today. I would welcome some facts on how many people we are talking about and what the costs are.

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[John Hemming (Birmingham, Yardley) (LD)]

I am 50 years old and have employed people for about half my life. My company was quite lucky relatively recently; we consulted with staff and were able to agree a deal under which there were no redundancies. However, I had to make redundancies in the early 2000s, and it is not a nice thing to go through, although obviously it is a lot worse to be made redundant.

We need to be aware that at the end of this process some people will lose their jobs. The challenge in politics is the national cake, and to some extent the political process can affect how that is divided. Our difficulty now is that we have to get a time machine and borrow from our children some slices that will be baked in future so that we can put them towards the national cake today. The real challenge is how we get, over a period of time, to the stage at which the amount of cake baked every year is the amount consumed every year.

How do we do that in a just manner? The Opposition have argued that our attempt unilaterally to challenge the contract with the civil service is unfair, whereas their attempt unilaterally to challenge the contract with the civil service was fair. They have argued with our proposals, but those are far more generous than the conditions for the staff of Members of Parliament, for instance. Those staff are all hard-working, but they are subject to the statutory redundancy scheme. Birmingham city council also operates the scheme. My wife works for British Waterways, a public body that also operates that scheme.

Basically, the Bill creates a negotiating position that means that the trade unions cannot veto any agreement. That is the normal situation for employers. Employers can present their staff with a new contract, and the staff have either to take it or leave it. That is what has happened in all the pay and grading reviews in local government across the country. Pretty well all local government employees have gone through the process of being presented with a new contract. What is happening now is that a new contract is being presented. We have said that we are aiming to protect the lower-paid. The most important thing to try to do is protect people against unnecessary redundancies. That is the critical thing.

If six years’ redundancy has to be paid to somebody, how can things be reorganised in a cost-effective manner? They cannot. Even paying three years’ redundancy creates a major problem because it costs more that year to make somebody redundant than to continue to employ them. That means that those not covered by the redundancy schemes are the ones to whom people go to find the savings. That does not seem fair.

[Chris Williamson]

The hon. Gentleman is arguing that we should indulge in a race to the bottom—it is about the lowest common denominator.

[John Hemming]

I do not think we should indulge in a race to the bottom. It needs to be recognised that this is the Government’s opening position. People who argue that we should propose the final solution here in Parliament are obviously no good at playing poker; one does not reveal one’s hand. We cannot expect the Minister to say, “We’ll settle for X.” The Government need to have a negotiating position, and the trade unions cannot be in a position whereby they can veto it—that would be absurd.

We need to think about our employees. I have always been concerned about the people whom I employ personally, and in the same way we should be concerned about those whom we employ collectively through UK plc. Options that may not cost the Government much money could be looked at to improve the situation. For example, constituents of mine who are civil servants have raised the issue of two civil servants living in the same household who are both under the threat of redundancy. I ask the Minister to consider whether it would be possible for one such civil servant to nominate the other, so that if one of them were made redundant the other would be protected against redundancy. Then at least the household would not lose both incomes, but only one. That would be an example of flexibility. It would not necessarily cost the Government any money, but it would protect people from the worst aspects of this process.

Similarly, in certain circumstances people might like to move towards a job share if the Government were willing to pay them a sum of money for that reorganisation, which might cost less than voluntary or compulsory redundancy. That would reduce the wages bill and the deficit without necessarily putting people in a very difficult personal position. We need to work with employees to try to minimise the effect on people.

[Mrs Mary Glindon (North Tyneside) (Lab)]

As a former PCS worker and someone who until April this year was earning £15,300—I worked in the Child Support Agency for 18 months—I find some of the things you are saying quite offensive. Every worker has a right to work—surely you do not make decisions about whether a husband or wife, or a partner in the household, has that right.

Furthermore, if the Bill is rejected tonight, proper consultation might be re-entered into. I took industrial action against our former Government. I voted for that action having been consulted by the union and following the procedure that the Government started with us in 2009. I e-mailed the then Minister and went through all that process. What you are saying is contradictory. You are saying that people should be consulted, but only after a decision has been made. Do you not think—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Address the Chair, and briefly, please.

[John Hemming]

I am suggesting that the Government could try to ensure that there are not two redundancies in the same household, whatever circumstances we are in. We all accept that redundancies are going to occur in the public sector, so why cannot we try to minimise the effect on households by ensuring that both partners need not be made redundant?

Similarly, there are opportunities whereby people can transfer to the private sector. Obviously the objective is to help people to find jobs in the private sector. A severance fee, equivalent to voluntary redundancy in some senses, paid when people find a job in the private sector could be a way of reducing costs to the public sector but doing so in a way that does not make public servants suffer. At the end of the day, we should be thinking about the effect on the public servants who work hard for this country. We need to recognise that and work in partnership with them.

There are all sorts of opportunities within my own company. I have had people take sabbaticals in the past. In certain circumstances the employer will say, “We can plan for that person to go away for a year and then come back.” It suits them to do that, it has reduced the cost to the public purse, and it is in the interests of the employee. Possibilities can be considered, in partnership with the work force, that improve the situation so that everybody wins.

As a consequence of the reduction in the national cake—gross domestic product or however one wishes to see it—we face a very difficult situation that has to be dealt with. The Labour party has proposed its own version of a unilateral contract change and we have a different version, but something needs to happen. I will support the Government tonight, because I agree with the exact proposals put forward in the Bill. We need a negotiating position so that the trade unions cannot veto any changes, and I have responded clearly to my constituents by saying that I do not think the trade unions should have a veto on contractual changes. The time has hit 20 minutes past, so I shall finish by saying that I shall support Second Reading.