Superannuation Bill

John Hemming Excerpts

Wednesday 13th October 2010 Commons Chamber

[Mr Maude]

Absolutely and unequivocally, yes. I shall talk a little about the process we have been through and where we are in the negotiations. I say clearly to the hon. Gentleman and to the House that if it is at all possible to achieve a fully negotiated settlement that is affordable and fair to the taxpayer and that meets the concerns of all the unions, we will certainly try to achieve such an agreement with all six unions. I shall say a little more about that in a while, but the answer is definitively yes.

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

In Committee, the hon. Member for Birmingham, Erdington (Jack Dromey) made some good points about individual exceptions in which even the terms proposed in the negotiations with the trade unions might be unfair to individuals who have been through particular hardship. Does the Minister agree that that can be resolved only through negotiation and that aiming to resolve it through legislation would be a mistake?

[Mr Maude]

My hon. Friend is completely right: there has to be flexibility. That is why I have always said that the caps imposed by the Bill are not right for a permanent system because they do not provide that flexibility. The scheme that has been brokered between the negotiators for five of the unions would provide much greater flexibility and would, I think, meet the concerns that he raises.

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[John Hemming]

Also in Committee, Dusty Amroliwala, the civil servant responsible for handling the scheme, said that he would have advised any Government to take that approach to break the legislative logjam. He also said that there had been no estimates of what the Bill would save because there was no expectation that what it proposed would be the end result. In that sense, does the Minister agree that this is part of the process of breaking the legislative logjam?

[Mr Maude]

Yes, indeed. If the result of the process that we have been through with the Bill is that it makes a negotiated settlement more likely, that will be extremely beneficial. I do not want the outcome of all this to be that the existing scheme remains in place with the crude caps that the Bill imports. What we want is a new, successor scheme, and there is now a serious prospect of that being achieved. If it can be achieved with the support and agreement of all six civil service unions, no one will be more delighted than I. However, if we have to go down the path of having a new scheme that is supported by fewer unions, that would still be better because it would mean that many of the concerns that have been raised would be met better than by the Bill. That would be infinitely better than the current scheme remaining in place, as it is simply unaffordable and unsustainable, as the previous Government openly accepted.

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[Tessa Jowell]

Let me come back on that point. When I was responsible for the negotiations, they were long, as the Minister outlined, and involved a serious and concerted attempt to reach a negotiated agreement. New clause 1 is a necessary way of dealing with the unexpected outcome of the judicial review earlier this year. Had we been returned at the general election, we would no doubt have had to amend the 1972 Act in the light of that, but the critical difference is that we would not have introduced legislation simply to impose a settlement in the absence of a clear commitment in the Bill to negotiation in good faith in order to try to achieve a proper agreement. That is why I stand by my description of the powers, as drafted in the Government’s new clause, as unbridled.

We recognise the need for an amendment to the Superannuation Act 1972. The High Court judgment made a clear case for ensuring that the Government are able to compel a settlement and that no union should be able to veto changes. That is a position that we would support.

[John Hemming]

The right hon. Lady’s amendment (a) would mean that the unions would have to consult their members in accordance with the rules before any new scheme could come in. Does she agree that that would provide the opportunity for a trade union to veto any changes merely by refusing to negotiate or consult its members?

[Tessa Jowell]

If the hon. Gentleman reads the amendment carefully, it will be clear to him that it is intended not to give the trade unions a veto, but to require a report to Parliament on the progress of the negotiations where the power is intended to be used, giving the effect of the imposition of a settlement in the absence of the agreement of all six unions.

[John Hemming]

The amendment states that the Minister must lay

“a report of the consultations that have taken place with the workforce and their recognised representative trades unions with a view to agreement”

and that the report should contain

“a statement that the representative trades unions have consulted their members in accordance with their rules”.

The report cannot include such a statement unless that has happened. That, in essence, would revert to a veto for the trade unions. I should think amendment (a) should not be moved.

[Tessa Jowell]

The approach is intended to ensure that what appears in the Bill when it receives Royal Assent represents a right and proper balance between the responsibility of the Government to secure a settlement and the entitlement of the trade unions to be properly consulted. However, as the hon. Gentleman may not quite be aware, in Mr Speaker’s wisdom he did not select that amendment for debate.

I return to our clear view that no one union should be able to veto a change to the civil service compensation scheme that is the result of negotiated agreement with the majority of unions. The Government’s ability to compel a settlement should be the course of last resort, once it is clear that common agreement cannot be reached—

[John Hemming]

rose—

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The handling of this Bill has been an absolute shambles, and it is with some sympathy that I say to the Minister that he is now in a hole. The Treasury is breathing down his neck and insisting that he makes whatever savings that earlier in the process he might have pledged, but that now will take a little longer to realise. We will oppose the new clause and press the House to a vote on our amendment 4, simply because the legislation before us will have a profound effect on the lives of thousands and thousands of civil servants, and they deserve better.

[John Hemming]

This has been a rather depressing debate, because the Opposition have demonstrated “oppositionism” at its worst. Everybody recognises that there is a problem and, basically, we cannot afford to pay six and two thirds years’ redundancy payments to some senior civil servants. The Government are trying to look after the low-paid, and our proposals are better than the Opposition’s. The Opposition’s amendment, which admittedly has not been selected, would have reinstated a veto for the trade unions on any proposals for change, something that the Opposition disagreed with when they were in government.

[Tessa Jowell]

Will the hon. Gentleman explain why the proposals in the Bill provide a better deal for low-paid civil servants earning less than £20,000 a year than the proposals in the February 2010 package?

[John Hemming]

I accept the shadow Minister’s point that the Opposition’s proposals are the same as those in the negotiations, but the whole point of the Bill is that it is not supposed to be the end result. Civil servants have not made any estimate of the savings as a result of the Bill, because it is not supposed to be the end result. This legislation is what the civil service has advised us to undertake in order to break the legislative logjam that the previous Government created. It is about making progress.

On the issue of how we manage the civil service, I think that we should try to look after our employees and aim to minimise redundancies. In the absence of the Bill, however, that would become harder and harder. One thing that must be recognised is that reorganisation has essentially come to a halt, because we will not be able to save money if we have to pay six years’ redundancy to somebody. Paying six years’ redundancy will mean that we increase the deficit.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

The hon. Gentleman keeps using the figure of six and two thirds, but will he concede that that is wholly inaccurate? Under the current terms, the maximum payment is three years. The six and two thirds figure to which he refers includes the enhanced pension that somebody would receive if they were over 50 years old. Will he therefore accept that his explanation is inaccurate?

[John Hemming]

The question is about what we add to the deficit—the actual cash costs. That is the key. The proposals that the previous Government tried to impose were struck down by a judicial review, so we have reverted to the original scheme.

In essence we are trying to reduce the deficit and reduce borrowing, and, if by making redundancies we increase borrowing, that will not get us anywhere at all. That is the reality of life. Underlying that, however, things can be done to reduce the full-time equivalent headcount without reducing staff—finding ways in which people can go part-time and so on. But, there is a legislative logjam that needs to be broken, and we need negotiations. Indeed, the 1972 Act requires them. The Public and Commercial Services Union argues in its briefing that there needs to be a trade union veto because there is no contract. However, those people who have contracts can find that their contracts are changed.

To be fair, I should take a very different view if there were any threat to pension rights. Pension rights are different, but an unaffordable redundancy scheme, in which we cannot reorganise organisations and save any money, is one that we cannot deal with in these circumstances—much that the priority has to be otherwise. To that extent, new clause 1 is the right way forward. I am surprised that the Opposition have taken the view that they would rather this were a money Bill than not, because their amendment would create the situation whereby it suddenly became a money Bill.

[Tessa Jowell]

We want the Bill to have full and proper parliamentary scrutiny in both Houses of Parliament.

[John Hemming]

I thank the shadow Minister for saying what her objectives are. In the past, the Opposition have often had objectives that they failed to achieve. Their objective was to remove the trade union veto, but the amendment would reinstate it. Their objective is for this not to be a money Bill, but by voting against new clause 1 they would, if successful, make it a money Bill. I accept that the shadow Minister has particular objectives, but what she does tends not to work; that is the reality of the situation.

We have to be effective in terms of running Government. We must do things that work—that achieve results. This Bill is about achieving results: it is about creating a situation whereby there can be negotiations with the trade unions in which we can deal with difficult cases where individuals are suffering particular hardship. In the Public Bill Committee, there was an attempt to negotiate through discussions with the trade unions. That was dreadful—it was almost impossible to get anywhere, and I find it rather sad that anyone tried. The reality is that negotiations have to work in a particular way; one cannot negotiate through a process of producing legislation. We need a blunt instrument that creates an environment in which a negotiated settlement can be arrived at. To that extent, I support new clause 1.

[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.

[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 Hemming]

Does the hon. Gentleman recall from the Committee that the senior civil servant responsible for the issue said that he would have advised any Government to take this sort of approach?

[John McDonnell]

That very civil servant’s advice landed the last Government in court, where they lost. I met him in the week before the general election and said to him: “You will lose in court because this is inaccurate advice on legal grounds, but in addition, it will not contribute to the conclusion of a negotiated settlement, and we’ll be back again within weeks”—and we were.

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[John Hemming]

Does the hon. Gentleman accept that this is not ideologically driven but driven merely by the difficulties of our current circumstances?

[John McDonnell]

I do not believe that many civil servants who will be affected by job losses believe that the Government are seeking to resolve this matter by negotiation, and I am trying to reflect those views. We in this House, and the Government in particular, need to go the extra mile to get back to an atmosphere where there is confidence among the people who may well be threatened with the loss of their jobs, and we need to convince them that there is the opportunity of a genuine negotiated settlement. As I said in Committee, our responsibility is to seek to create a climate in which a just, negotiated settlement can be engendered.

[John Hemming]

Does the hon. Gentleman accept that the fact that the Government are inserting a new clause that prevents this from being a money Bill is a sign of good faith from them?

[John McDonnell]

I will come to that.

There has been a litany of disasters during these negotiations. If we want to secure an agreement, we need to try to keep everyone on board. The puerile attempts to divide the unions have been completely counter-productive. The first attempt was to try to insinuate that the PCS negotiator had agreed the terms but had been overturned by the PCS executive. That was put to the PCS negotiator in the Public Bill Committee and it was denied, so it is not true. In fact, the PCS did what it always does as a democratic union—it takes the issues back to the executive. It is probably one of those unions that consults its members more than any other.

The second attempt to divide the unions was by the reference to five unions having agreed a settlement and only the PCS being excluded by refusing to do so. The Minister put out a press release that caused anger among the trade unions. The Prison Officers Association immediately issued a press release saying that letters written to the Minister, in confidence and without prejudice, were put in the public domain. The result is that this week the POA has rejected the deal.

It seems that four of the six unions were originally going to put the deal to their members, but the POA and PCS represent more than 90% of the people who will be affected. They are the unions that we have to convince if we want a negotiated settlement, and they are negotiating on behalf of their members based on what those members tell them through their executive.

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[John Hemming]

In a sense, it is sad not to see massive press interest in an issue that is very important to many people in this country. I am pleased to hear the Minister express the same views as I have expressed on the need to minimise the number of redundancies, and, if there have to be any, to maximise the number who go voluntarily through agreement so that we absolutely minimise the number of compulsory redundancies. This is about the way we manage staff—I have managed staff for more than half of my lifetime—and I believe it is important to work in consultation with people and to tell them what is going on. Discussions and negotiations are crucial. I very much welcome the Government’s approach to that.

The reality is that this process was started in July 2009 by the previous Government. This is a continuation of a process that everyone recognises was necessary. The Opposition now think that none of this should be done and they want to oppose it all. It is their prerogative to change their minds, but the reality is that we have to get on with it all and manage a very difficult situation. To that extent, we support Third Reading.