Draft Restriction of Public Sector Exit Payments Regulations 2020

Patricia Gibson Excerpts

Monday 21st September 2020 General Committees

[Steve Barclay]

I will come on to the distinction between those on large payments, where I think there is a degree of consensus in the House, and how the waivers will address some of the concerns that the hon. Gentleman and other Opposition Members expressed in the previous debate on this issue. I will come on to that if he gives me a moment, and if he then wants to come back with an intervention, I will be very happy to accept it.

Exit payments are important to an employer’s ability to reform and to react to new circumstances. They are also an important source of support for individuals as they find new employment or as a bridge to retirement age. That is why the Government are taking forward these important regulations to cap public sector exit payments at £95,000. The level of the cap amounts to almost six times the maximum statutory redundancy payment. On an average salary of £24,897, the average person would have to work almost four years to earn £95,000, while someone working 35 hours a week on the national living wage would have to work around six years to earn £95,000—and that ignores the fact that the first £30,000 is paid tax-free. As such, it is clear that a £95,000 cap will still offer a significant level of compensation while ensuring value for money for the public finances. In fact, I think that the majority of our constituents would regard it as a generous amount.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

The Minister has talked about trying to address some concerns. What can he tell Members about how he will address the concerns expressed by the nuclear workers who were given specific guarantees about their pensions that have been repeatedly overridden?

[Steve Barclay]

I very much welcome that intervention, because that concern was raised by a number of Opposition Members when we debated this issue in the House previously. We have agreed a waiver that will apply to nuclear decommissioning as part of the draft regulations. I will come on to the wider point about how the waiver will apply, but the exemption that applies to nuclear decommissioning illustrates that we have taken on board some of the concerns that Opposition Members have raised.

I am grateful to all members of the public, employers, unions and others who submitted their views as part of the consultation process. The consultation in April 2019 received more than 600 responses, which helped inform the final regulations following the earlier consultation in 2015, which had more than 4,000 responses. I am also grateful to many of my right hon. and hon. Friends for their representations during the development of the policies.

The Government’s intention was made clear at the start, which was to apply the cap to all public sector workers. As the 2015 consultation stated, it would apply to

“all bodies classified within central and local government and non-financial public corporation sectors as determined by the Office for National Statistics for National Account purposes, with a small number of exceptions.”

The 2019 consultation stated:

“The government is proposing a staged process of implementation across the public sector. The first stage will capture most public sector employees, before extending the cap to the rest of the public sector in the second stage. Prioritising in this way will ensure most exit payments in the public sector are limited to £95,000 without further delay, while work continues on expanding the scope of the regulations.”

To ensure fairness and consistency and to give taxpayers confidence that their money is being spent properly, it is right that all public sector bodies are immediately in scope, with limited exceptions, such as the one I just referred to. The consultation in 2019 proposed capturing public sector bodies in two stages. Many of the responses objected to that proposal. We have therefore revised the proposal and reverted to applying the cap to all public sector bodies at once. The Government’s intention to cap exit payments has now been in the public domain for more than five years, providing public sector bodies and employees with sufficient time to communicate their views, including through the consultation process, and to prepare for the implementation of the cap.

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[Steve Barclay]

I agree with the hon. Gentleman. I took that point away from the previous debate and was concerned to show the House that we had listened. In fact, it echoes the next line of my speech: I do accept that in some circumstances it will be appropriate for employees to receive an exit payment of more than £95,000.

[Patricia Gibson]

rose—

[Steve Barclay]

I am always generous in taking interventions. I was trying to answer the hon. Gentleman’s legitimate challenge, but I will of course take the hon. Lady’s intervention.

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[Patricia Gibson]

May I just ask the Minister, for the purpose of clarity, whether he is saying that he will exempt nuclear decommissioning workers? Magnox is on the list here, so unless the Minister has been very clear and I have not listened properly, I wonder whether he will clarify that point.

[Steve Barclay]

I am very happy to share with the hon. Lady the detail of that waiver as it relates to the pensions of Nuclear Decommissioning Authority workers. The waiver will apply in respect of the Nuclear Decommissioning Authority. That includes—

[Patricia Gibson]

An exemption?

[Steve Barclay]

If the hon. Lady will allow me to answer the question, I was going to read out the exact legal prose. Sometimes we are accused of not being precise enough, so I was going to go straight to the legal text for her. It says:

“made to or on behalf of an employee…who is employed…by a company or other body holding a site licence granted under the Nuclear Installations Act 1965 for one or more nuclear-licenced sites…and on a site that is subject of a decommissioning programme agreed between the NDA and the BEIS Secretary of State, and…whose employment is terminated”—

details follow accordingly. So there is an exemption there.

I will come back to the point made by the hon. Member for Bermondsey and Old Southwark. In fact, the hon. Member for Newcastle upon Tyne North, who has not as yet spoken, said in the previous debate that she accepted the wider principle of exit payment caps, but had some concerns. We have sought to look at, and listen to, the concerns that Opposition Members have raised. I accept that there are some circumstances in which it is appropriate for employees to receive an exit payment over £95,000, including where imposing the cap would cause genuine hardship. We are committed to ending taxpayer-funded six-figure payouts for the best-paid public sector workers, but it is appropriate that the waiver system can be exercised with ministerial discretion if it is felt that implementing the cap would go against the original principles and result in hardship.

--- Later in debate ---

[Patricia Gibson]

I shall try to be brief. I support what has been said by the hon. Member for Ilford North, who is concerned about equality impact assessments, and how the measure has unintended consequences that have not yet been addressed. No one—not the Scottish National party and probably not any other party—has any objection to the general principle of a public sector exit payment cap. However, I note that the measure before the Committee gives rise to concern about waivers in cases of unfair dismissal and health and safety-related detriment. The waiver process is a matter of concern.

The SNP does not—and I certainly do not—support the statutory instrument. It is singularly unfair to those in the nuclear decommissioning industry. Those workers have suffered cuts to their pensions in the recent past, and that is a cause of profound concern to all those in the industry, not least those in my constituency who are employed at Hunterston. Some history, if you will give me latitude, Sir Christopher, is important. When the nuclear estate was privatised in the 1980s, the Tory Government under Margaret Thatcher gave guarantees requiring the new private sector employers to continue to provide pension benefits for those employed at the time of privatisation. The phrase used at the time to describe that settlement was,

“at least as good as those they were receiving in the public sector.”

Where we have had revisions to the pension arrangements of nuclear decommissioning workers on more than one occasion in fairly recent years, we know that commitment has been abandoned. Now there is the prospect of these exit payment caps.

The UK Government have decided that, because the Nuclear Decommissioning Authority is classified as public sector, these schemes fall under public sector arrangements, but clearly these pensions are not public sector pensions. Decommissioning sites are now in the private sector and, unlike for every other public sector worker, redundancy is an inherent part of their job.

The Minister seems to have said and to have put on the record today that all nuclear decommissioning workers will be exempted from the public sector exit payments cap. We should have had sight of that commitment—if I have understood him correctly and that is his commitment. We should have had that commitment long before now, and we should have had commitments and guarantees to employees of Magnox Ltd and others affected by the Enterprise Act 2016.

I note that Magnox is specifically mentioned, but the way I read this, the provisions on relaxing the cap contained within the regulations are not adequate and not sufficient to give comfort to nuclear decommissioning workers that they are indeed exempted in the way I know the Minister wishes them to be, and as they should be. The regulations should be drawn specifically to exclude those workers in nuclear decommissioning and I would like to see more specificity on that.

It seems that, because of that lack of specificity, we have been asked to agree on something here today in which there is a lack of clarity, from what I can see. We know that nuclear decommissioning workers do a very highly skilled job and that their job is sometimes dangerous, but to be caught up again, after all the cuts to their pensions in recent years, in attacks on their pensions through these public sector exit payments regulations is not acceptable. As we speak, it is creating disincentives for people to work, to be recruited and to stay in that industry, and it is extremely bad for morale.

Nuclear decommissioning workers who have contacted me, and who I know will have contacted any MP who has a nuclear plant in their constituency, are concerned. I am sorry to say that, when it comes to their pensions, they are right to be concerned, because it can be seen that the agreements they thought they had with the UK Government over several decades and the guarantees they were given are not being honoured.

When I raised this with the Chief Secretary to the Treasury three years ago, I was told that,

“it is necessary to have terms and conditions that reflect the modern situation that applies across the economy as a whole.”—[Official Report, 17 January 2017; Vol. 619, c. 769.]

How does that square with the cast-iron guarantees made to these workers when the nuclear estate was privatised? They were not told that those cast-iron guarantees were actually written on water.

The problem is that these workers are classed as public sector workers, but their terms and conditions are not devolved to the Scottish Parliament, as they are for other public sector workers. Scottish nuclear workers still have their severance and early retirement terms dictated by the UK Government, but the goalposts have clearly been moved when it is deemed financially beneficial for the Government or the industry, while the pension interests of the workers always seem to be a secondary consideration.

The Office for National Statistics has classed Magnox as a public sector organisation despite the fact that it works on sites that have been privatised. The draft guidance from the Government uses the definition of a public authority contained in the Freedom of Information Act 2000, which includes bodies specifically listed in schedules to the Act, publicly owned companies and any other body designated as a public authority by the Secretary of State. Interestingly, Magnox is not listed in the schedules, and that is because it is privately and not publicly owned. Consequently, the Freedom of Information Act does not apply to Magnox, except where stipulated in employee contracts with the Nuclear Decommissioning Authority, and so neither do the IR35 reforms.

We have confusion and concern among nuclear decommissioning workers. That continues, and it is not acceptable. As we pontificate over these exit payment caps, I urge the Minister to remember that any change and any further attacks on these workers is a betrayal of the guarantees that they have had. We have been told today of waivers or exemptions—I am not even quite sure what the Minister is suggesting—but Magnox’s inclusion in part 1 of these regulations makes anything he says now equivocal. We need a clear statement that the measures will not affect nuclear decommissioning workers. That is a simple ask that needs a yes or no answer, and I look forward to the Minister giving me that yes or no answer.