Superannuation Bill

Sajid Javid Excerpts

Tuesday 7th September 2010 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I chair the PCS parliamentary group. It is a cross-party group that was formed a number of years ago, and several Members of Parliament on both sides of the Chamber tonight are members of it. I think it has been helpful for Members of Parliament to gain a knowledge, through the union, of what the union’s members undertake, how they effect their work and the role that they play.

PCS represents the largest number of civil servants, and certainly the largest number affected by the compensation scheme, and I want to add my name to the compliments that have been paid today, across the Chamber, with regard to civil servants and the role that they play. It is an admirable tradition, serving Governments of all political colours, with commitment and dedication that is second to none across the globe. It is slightly ironic that we praise them now, and yet, by the looks of it, in a month’s time we are going to lay off and make redundant the largest number of civil servants ever in our history, as a consequence of the comprehensive spending review. Anyway, we are all committed to the existence of a civil service that implements the policies of a directly elected Government.

There are certain measures that Governments introduce that can be described as land mine Bills. Judging by the type of the legislation or their subject matter, they might appear relatively innocuous at first, but they are political land mines that can permanently damage and taint an Administration. I think the art of good governance is to identify—perhaps from bitter experience—the potential disasters, those land mines, and avoid them. This Bill is a political land mine. It is potentially extremely potent and it is an explosive issue. I think it is potentially disastrous for this Government and I think, coming at it as an ex-bureaucrat myself, that it will undermine their ability to implement their overall programme. Why? Well, many Members have commented that they have discussed with constituents and civil servants and they have received representations, so many Members will share the feeling that I have. I think morale is being affected by this legislation and the way in which it is being handled. I think morale at the moment in the civil service is at an all-time low as a result.

The Government have been democratically elected and have the right to implement their policy programme, but every manager, whether in the public or the private sector, needs not only resources and clear objectives but a committed, dedicated and motivated staff. The imposition of the Bill is undermining that morale, that commitment, that dedication, that we so need among the work force.

There is a depth of feeling about the unfair way in which people are being treated in the civil service. I have met many PCS members, including many who are my constituents, and there is resentment of the Government’s political action on this issue. The most common response that I—and, I am sure, other Members—have met is the simple statement, “We didn’t cause this economic crisis, but we’re having to pay for it with our jobs and with cuts in our conditions of service, and this is the latest round of those cuts.” There is a real, palpable sense of grievance, particularly as the bankers who did cause the crisis are not just back in position, but have, in some cases, been appointed to higher positions. Some have even been appointed to ministerial positions in recent weeks. Bankers are coming back for their obscene bonuses and obscene pay. There does not seem to be any equity or equivalence of suffering. There is a feeling among civil servants that we are not all in this together.

[Sajid Javid (Bromsgrove) (Con)]

The hon. Gentleman will know that the budget deficit that this Government inherited from the previous Government is £155 billion, but even the structural deficit, which was there before the economic crisis commenced, was £128 billion. The country was already living way beyond its means. That is why his Government tried to make changes to the scheme, and it is a reason why we need to do so. It is no good trying to blame the problem on a particular profession. If he is going to pick a profession to blame it on, he should pick the political class represented in the previous Government.

[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.

--- Later in debate ---

[John McDonnell]

I believe that people who are made redundant should be properly compensated and, yes, I believe that the system put forward by the last Government was certainly affordable. I actually believe that the mechanism previous to that is still affordable. However, I accept that there was a need for reform. That is what the unions were negotiating on. It was not the PCS’s fault that the last scheme fell apart; the Government ruled that the process by which it was introduced was unlawful—it is as simple as that.

Let me return to the myth of a highly paid civil service that is promulgated, if not today, certainly elsewhere, including by the media. Yes, there are some highly paid civil servants, and we have dealt with that today. The unions themselves are at the forefront of highlighting the need to tackle high pay and bonuses. However, as had been said, the average civil service pay on which redundancy payments are based is £22,850 a year, compared with £24,970 in the private sector. There are 35,000 civil servants who earn less than £15,000 a year. Some 210,000 people—40% of the civil service—are paid £20,000; 350,000, less than £25,000. The bulk of our civil servants are on low or relatively modest pay.

The other tactic that is used—and it has been paraded again today by Ministers and Members in the debate—is a justification of the attack on the compensation scheme by divide and rule, playing public sector workers off against private sector workers. The Government have argued that many people in the private sector receive only statutory minimum redundancy payments or low-level additional scheme payments, but the reality is that most private sector workers are covered by some form of additional scheme, and are usually protected by its being written into their contract of employment. The fact that the level of many of those compensation payments is disgracefully low in some parts of the private sector is no justification whatsoever for undermining standards in the public sector. It is an argument for raising levels and standards in the private sector, even in these economic times.

The argument that when civil servants take on their job they weigh up the merits of going into the public or private sector has been made today. Wages in the public sector are lower, but the benefits are better, and usually more secure—that is the calculation that is made. If we compare civil service grades with jobs in the private sector, we can see that admin officers in the civil service earn 21% less than people in comparable jobs in the private sector.

[Sajid Javid]

I thank the hon. Gentleman for giving way to me again. The latest report by the Office for National Statistics in 2009 stated that the median weekly salary in the public sector was about £540 versus £470 in the private sector.

[John McDonnell]

I shall refer the hon. Gentleman to the figures, so we can base the debate on them. I repeat: average civil service pay is £22,850 a year compared with £24,970 in the private sector.

[Sajid Javid]

The hon. Gentleman might want to pick up the report from the House of Commons Library which contains the exact numbers: £539 a week in the public sector versus £465 in the private sector.

[John McDonnell]

I will not quote the figures again, but I refer the hon. Gentleman to the income data survey. I am happy to provide him with a PCS briefing that sets out the figures. [Interruption.] Well, the briefing is based on information independently issued by the income data survey.

In the executive grades, supervisors in the public sector—people with vocational qualifications—earn 18% less than supervisors in the private sector. The decision to go into the public sector, as I have said, is based on a judgment in the round about security, benefits, pensions and, yes, redundancy payments, which are described as accrued benefits that people earn over time. They are part of their wages. What is happening today is a Government unilaterally tearing up the contract that was entered into when many of these civil servants entered employment. I think that that will be open to challenge on the grounds of human rights compliance. Inevitably, members not just of the PCS but of other unions will wish to exercise their rights in law. What is happening is the worst of all worlds for civil servants.