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Mr. Deputy Speaker: Order. Before the Minister replies I must inform the House that all the interventions--it is not a matter for the Chair to criticise

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them as they are in order--are ruling out hon. Members who wish to speak and who have taken the trouble to write to the Speaker to ask to speak.

Mr. Curry: I like to give way as I think that that helps the debate, but in view of your stricture, Mr. Deputy Speaker, I shall now try to move to the conclusion of my speech. I shall answer the question of the hon. Member for Sherwood (Mr. Tipping) because I had anticipated it. If he has patience, we shall get there--with the tolerance of his colleagues.

The compensation package that we have adopted, as contained in the regulations, means that local government employees under the age of 50 on being made redundant as part of normal staffing changes, can now receive compensation equal to the maximum of two weeks pay for each year of local government service over the age of 23. In addition, each year of service over the age of 42 counts for five weeks pay, leading to a total equivalent to 66 weeks pay. Those improvements also apply to redundancies due to reorganisation, with the important proviso that in this circumstance it is mandatory for local authorities to pay the maximum amounts available.

Secondly, we have also provided that extra powers are available to provide benefits to those aged 50 and over made redundant as a result of reorganisation. At the employers' discretion, such employees' pensions can be increased if they have five or more years service, or they can receive the lump sum compensation payment--up to 66 weeks pay in some cases. For those with between two and five years service, we are making available the option of additional compensation in lieu of immediate payment of pension.

In formulating the regulations, we had helpful and detailed assistance from the Local Government Staff Commission in England and the Staff Commission for Wales. The Staff Commission was expressly asked to consider whether there should be a special scheme for staff made redundant as a result of reorganisation and, if so, whether the arrangements should be discretionary or mandatory. After consideration, it advised that there should be a special scheme, and that is now provided. It also recommended that the scheme should be mandatory--a proposal that has been implemented in respect of staff under 50. A special mandatory level payment has been included as one of the options for the over-50s.

Other recommendations by the Staff Commission--for example that the age group of 45 to 49-year-olds should be targeted for the highest payments and that the age service banding should closely follow that used in previous reorganisations--have also been followed. In some respects, such as the 18- month period for the reorganisation terms in England, we have bettered what the Staff Commission recommended. Two recommendations of the Staff Commission were not followed in full. Those were that the maximum limit for payments should be set at 82 weeks and that it should be mandatory for over -50s to receive maximum added years enhancement to their pension and pension lump sum.

The precedent of the GLC and the metropolitan counties abolition is prayed in aid. However, the 82 weeks maximum was available in 1986 only to a very limited group of employees. In fact, employees had to be aged exactly 49 and to have over 25 years service to qualify

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for that amount. Anybody aged less than 49 could not receive 82 weeks and received similar amounts in 1986 to those available under the regulations. A 45-year-old with 27 or more years service would receive 66 weeks pay under both the 1986 regulations and under our new regulations.

We have targeted the maximum 66 weeks to employees aged between 45 and 49-- the very group that the Staff Commission and other consultees asked us specifically to earmark for higher compensation payments. The 66 weeks maximum was settled upon only after full account was taken of all the relevant factors. I am sure that it is the right level--it is more than two and a half times better than the compensation previously available to local government employees. Taken together with the other measures that we have introduced or are proposing--including our proposed compensation for detriment, the consultation period for which closed yesterday--those regulations provide a very much improved and flexible statutory-based compensation package.

The other recommendation of the Staff Commission which we have not fully followed is that staff over 50 years of age should receive mandatory payment of added years, which results in higher pension payments. I believe that this would be an expensive imposition on local authorities' discretion. Under our proposals, employing authorities may choose to pay maximum added years if they believe that the case for doing so is justified. We have also provided the alternative of a lump sum payment according to personal circumstances. Such a single sum may be more welcome to individuals than relatively small increases in continuing pension payments. Local government employers and their employees now know where they stand on redundancy payments and they can plan for the future. The decisions themselves are for the councils to make. We have provided a proper statutory protection for staff affected by reorganisation and for all local authority staff affected by change. If the motion to reject the package is successful, not only will the package for staff affected by local government reorganisation fall, but so will the great improvement in the security of all local government staff. It will also mean that pensioners who stand to receive compensation for cuts in their pensions will be immediate losers. I trust that the House will firmly reject such an outcome.

Mr. Dobson: Before the hon. Gentleman sits down--

Mr. Deputy Speaker: Order. Has the hon. Gentleman given way?

Mr. Curry: Congeniality is second nature to me, as you know, Mr. Deputy Speaker.

Mr. Dobson: As I understand it, the hon. Gentleman accepts that the pensioners who retired in good faith feel that, one way or another, they have been swindled out of the pensions to which they and their employers thought that they were entitled. Can he tell us why he is not proposing a scheme which will restore to each and every one of them by right the money that they have lost as a

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result of the judgement? Why does he accept that some of them will not get full restoration, and why is he leaving the decision to the discretion of the councils?

Mr. Curry: First, the hon. Gentleman talks about pensioners being swindled. I think that one has to be cautious in using that sort of terminology when speaking about something that has happened as a result of a court ruling. The pensioners may feel that they were dealt with unjustly, but one must be careful how one reflects that feeling.

Secondly, we have provided for 66 weeks in the regulations which cover those people affected by both reorganisation and the normal run of changes in local authorities' competences and employment. It seems reasonable that, if 66 weeks is applied to those cases, it should apply also to the generality of cases, so that everyone is on the same footing. I think that it is a perfectly reasonable position, and the overwhelming number of pensioners will receive full compensation under that methodology.

11.7 pm

Mr. Clive Betts (Sheffield, Attercliffe): I wish to comment on the North Tyneside follow-up and the regulations. The Minister must be much clearer about the position of pensioners who were affected by the genuine and proper decisions taken by local authorities, generally on the basis of legal advice.

Will the Minister assure the House that people who entered into agreements with local authorities that they would retire under a certain compensation package will not have that package reduced as a result of the regulations? It is most improper for the House to pass regulations that will have the effect of reducing the pensions of people who entered into an agreement with their local authorities in good faith.

While I am on that subject, I take strong exception to the comments of the hon. Member for Newbury (Mr. Rendel). He spoke of people who "should have known better"--presumably referring to the local authorities which made the decisions at the time. My local authority received advice from our legal officers and from counsel on the subject before we reached a decision. Certainly members of both the leading political parties took that decision seriously. The fact that the hon. Gentleman's colleague on the committee at the time walked out halfway through the meeting and refused to pass a vote on the subject is probably not untypical of the way in which the Liberal party behaves in such circumstances.

Let me also comment briefly on the issues that affect the current reorganisation of local government and the compensatory arrangements for redundancy. First, it is disappointing that the Government did not concede the general issue that was put to them by the local authority associations and the unions--that staff transfer orders should have applied to all staff. It would have been much easier to have sorted out all the arrangements for redundancy, retirement and compensation had that approach been taken.

The problem now is that staff are in totally different positions. Some are subject to staff transfer orders, some have chief officer open interviews and others have priority interviews. They do not know whether redundancy rules will apply to them. In direct service organisations, for example, staff still do not know whether their jobs will

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exist after the reorganisation, although private contractors that employ people have contracts with the authorities, and the new authorities will have to honour those contracts. That is wrong, and something should be done to sort it out.

Equally, the Government have not issued any proper advice on the Transfer of Undertakings (Protection of Employment) Regulations 1981 and that certainly will affect people who are made redundant. It is time the Government sorted it out. Clearly, it is a substantial mess. A general staff transfer order would have resolved that problem and allowed the redundancy issues to be sorted out in a more ordered and proper way.

I am one of the few people in the House who can think back to 1986 and say that I was party to the issues which applied to the metropolitan county reorganisation from both sides. I was both a councillor and an employee, one of Sheffield city council and the other of the South Yorkshire local authority, so I saw the regulations from both sides and generally they worked pretty well. The question that the Minister has not answered tonight --he tried to answer it by explaining that only a small group of staff would benefit if the maximum number of weeks was 82 and not 66--is why a system which worked in 1986 has now been changed. He did not say why the Staff Commission, which recommended that exactly the same rules that applied in 1986 should apply now, was ignored. His argument that 82 weeks applied only to a certain number of staff was surely taken on board by the Staff Commission when it recommended that 82 weeks should be the maximum period. Why did he demur from the Staff Commission's decision?

Mr. Rendel: Will the hon. Gentleman give way?

Mr. Betts: I shall not give way to the hon. Gentleman as he has had his say and I am aware that others want to speak.

The Minister also did not answer why the Staff Commission recommended that the scheme for the over-50s should be mandatory. Why did the Minister not accept that recommendation? It was good enough in 1986; why is it not good enough for staff in 1995?

Those questions certainly need answering because they affect people who are not responsible for the changes. They are not staff who have been inefficient or unproductive, but staff who are affected by a political change beyond their control. They want some degree of certainty and a feeling that their interests are being recognised and looked after.

Finally, the Minister said nothing about the funding of the scheme. I agree that the scheme should be mandatory because--rightly or wrongly--the House is compelling reorganisation on local authorities. I support some of the changes, but the House is making the decisions, so the scheme should be mandatory.

The House should also make provision for the proper funding of the arrangements. All that we know for the next financial year is that the Government will top-slice £50 million of capital to allow local authorities to borrow to try to fund the schemes. We also know that money is topsliced, so every other authority in the country will suffer.

My authority represents about one hundredth of the population of the country, so if one subtracts one hundredth of the cost of £50 million from its own

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borrowing, it will lose £500,000 of borrowing to help fund the reorganisation schemes. My local authority, therefore, loses more than its total allocation of borrowing for social services in the city of Sheffield.

Is it not time that the Government accepted their own responsibilities and decided to fund the schemes? Will they guarantee that the sum of £50 million for 1995-96 will be substantially increased for 1996-97, when the majority of those costs will fall? Will they guarantee to provide borrowing facilities for those authorities and not do it at the expense of the other authorities in the country?

11.14 pm

Mr. Anthony Steen (South Hams): Although there is not much point in speaking for a minute or two, I thought that the House might like to hear me.

First, I do not understand why, having just adopted the Jopling recommendations, we sat until late last night. We are sitting till midnight tonight, all Wednesday morning, afternoon and evening, on Thursday and on Friday morning. The more the House sits, the more rules and regulations it passes. These regulations are a good example of filling the time available- -it is Parkinson's law. My hon. Friend the Minister beautifully and convincingly explained the reason for them, but we should not be passing more and more regulations and sitting later into the night than we did last year. We are passing more regulations in Committee upstairs, in the Chamber and in the basement, despite the Government's commitment to reducing regulations. I would like my hon. Friend the Minister to assure me that these are the last regulations that he will introduce this Session.

11.15 pm

Mr. Roger Berry (Kingswood): Part III of the regulations concerns local government reorganisation and compensation for resulting redundancies. I was involved in local government for 12 years before entering the House and I have grave reservations about the redundancy implications of reorganisation in my county of Avon.

If there are to be redundancies, it is essential to provide a fair system of compensation and ensure that the package is realistically funded. Neither is the case. It is accepted that the maximum compensation payable to staff aged 45 to 49 will be 66 weeks' pay, assuming full service from the age of 18. Few staff will be eligible for that maximum. Even then, those terms are significantly worse than those offered when metropolitan authorities were abolished in 1986. If 82 weeks' pay was thought acceptable compensation then, why should a significantly lower amount be acceptable today? The proposed compensation is worth less than the civil service scheme and is vastly poorer than that offered under the last reorganisation in 1974.

Mr. Rendel: Will the hon. Gentleman give way?

Mr. Berry: I would love to give way, but I am told that there is no time.

The proposed redundancy package is a poor deal for local government staff who have given good service to their communities. The scheme will not attract many voluntary redundancies, but it will lead to more compulsory redundancies from reorganisation. Even though the terms are an insult, local councils will have

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difficulty finding the money to fund them. There will be no new money to cover the costs of reorganisation, but only limited powers to borrow.

Most redundancies will occur in 1996-97 and 1997-98. No guarantee has been given that councils will be allowed to borrow in those years as they will need to do. Any redundancy costs that cannot be funded from additional borrowing will have to be met from more cuts in services or higher council tax, if that is allowed.

The regulations provide worse compensation than for any other previous local government reorganisation. They are not fair and will not encourage voluntary redundancies. They will result in further cuts in services and jobs, and they should be opposed.

11.17 pm

Mr. Win Griffiths (Bridgend): Labour Members have explained compellingly why we oppose the regulations and want them annulled. The Minister did not touch on the Transfer of Undertakings (Protection of Employment) Regulations 1981, which are vital to Wales because only one of its counties is unaffected by the possibility that workers on the transfer will not be covered by them. As this Government-inspired scheme of local government reorganisation will affect the whole of Wales, there should be no nit-picking over the interpretation and application of TUPE.

The Government's record of interpreting TUPE shows them to have been wrong on virtually every occasion. Rather than engage in a prolonged dogfight, at the end of which the Government will be proved wrong, they should, for the sake of fairness and completeness, accept that TUPE applies to all workers in reorganised local government in Wales.

I come next to arrangements for the proper funding of the local government reorganisation. There seems to be a major debate about the exact number of people likely to be made redundant as a result of the reorganisation. Touche Ross, employed to carry out a survey of the possible consequences for jobs, suggested that about 900 people employed in central services and administrative tasks--out of a total of about 6,000--would probably lose their jobs in Wales. The Secretary of State for Wales, however, is on record as saying in the House that he expects very few people to become redundant, because of the scope for retraining and finding new jobs for people in the new unitary authorities. If this is true, it would appear that few savings will be made from these local government changes, yet savings were ostensibly the Government's reason for effecting the reorganisation. There will be a mandatory scheme for some staff, and the Welsh Office will be prepared to provide supplementary credit approvals to cover those schemes. The Welsh Office will take account of the consequences in future years when the capping criteria are determined. For the discretionary schemes, however, no supplementary credit approvals will be provided. When local authorities apply discretionary schemes, they will not be counted for capping criteria purposes, so authorities will be in danger of being capped for trying to give their employees a fair deal. Given that the Staff Commission has recommended mandatory schemes to cover all

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workers who are made redundant, or who choose redundancy, the Government should be prepared to withdraw the scheme tonight and to make further changes.

The shadow Environment Secretary has already cited the huge differences between the Welsh Office redundancy scheme and the one for local government workers. The Minister of State made no attempt to justify the fact that workers in the Welsh Office will receive double what their counterparts in local government will get. I hope that, even at this late stage, the Government will be prepared to withdraw the regulations and to introduce others based on the 1986 scheme. It has been claimed that the lower limit of 15 months for the scheme to work in Wales--as opposed to 18 months in England--resulted from consultations with local authorities; but local authorities in Wales at the time were under the impression that the period of 82 weeks would also apply to the new scheme. The Welsh Office has therefore reneged on that part of the agreement, while retaining the 15- month period. That is yet another reason why the regulations should be withdrawn and a new scheme introduced in their place.

11.23 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones): I shall try to answer all the points raised in this short debate. The House will understand that I feel the greatest sympathy for my hon. Friend the Member for South Hams (Mr. Steen), who expressed reservations about what we do here, and when we do it. I think, though, that we are making good progress with the timing. The Government do not agree that it would be right to annul the Local Government (Compensation for Redundancy) Regulations 1994. The package that they contain is a fair and good one. Local authorities have a certain legal framework to provide equitable and affordable compensation to their employees in a variety of circumstances. Part II of the regulations--I think that the hon. Member for Newbury (Mr. Rendel) called it the least unacceptable part--gives councils an opportunity to structure flexible severance packages to suit local needs, at levels that are significantly above those that applied before 28 December. These improved arrangements stem directly from discussions with the local authority associations. A higher overall limit may be preferred by some, but councils, just like anybody else, must live within their means, precisely as my hon. Friend the Member for Bromsgrove (Mr. Thomason) was seeking to emphasise. The Government took the view that the tariff in part II was at the right level.

Opposition Members tended to concentrate on part III of the regulations. They say that the terms on offer for the staff who lose their jobs because of local government reorganisation are worse than those that would have been available in previous reorganisations, and are worse than those available in the civil service. Civil service pay has traditionally been set to take account of the greater job security that civil servants have, and compensation payments were set at a correspondingly higher level.

What the Opposition do not say is that the compensation for local government employees is now higher than it is for certain other groups of public sector

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employees; nor have they recognised that compensation is just one aspect of terms and conditions: it is the whole package that should be compared, not just elements of it. The Government take that wider view, and terms and conditions in local government, taken as a whole, are no worse or better than in other parts of the public sector. I accept that the compensation terms that applied when the Greater London council and metropolitan councils were abolished involved higher payments only for particular long-serving staff aged 49. That does not mean that the precedent must always be followed slavishly. The detriment consultation scheme, on which we have been consulting, would provide for potentially higher detriment payments than were available in 1986. The key feature of part III of the regulations is a mandatory scheme for staff aged under 50. That was the principal recommendation of the staff commissions for Wales and for England, and our decision to follow it has been widely welcomed.

I acknowledge that the commissions went further and recommended that there should be mandatory "added years" for staff aged over 50 who can receive an immediate pension. The Government did not feel able to accept that recommendation. We have instead provided councils, in these regulations, with a range of options for dealing with staff over 50. It would not make sense to provide a range of options but then decree that one of them--the most expensive, naturally--should be mandatory.

The hon. Members for Rhondda (Mr. Rogers), for Holborn and St. Pancras (Mr. Dobson) and for Bridgend (Mr. Griffiths) all sought to allege that Wales has been treated worse in these arrangements than in previous reorganisations. I must remind them that the consultation paper issued last June said that the scheme should apply in Wales only for the calendar year 1996. We received 13 comments on that proposal.

Of those proposals, eight of the responses argued that the period should be extended beyond the calendar year 1996 to 31 March 1997. That is precisely what we have done. We responded to those consultations. Normally, it is claimed that we do not listen to consultations, but on this occasion, we did precisely that. I want to put it into perspective because, to stress the importance of the point, we also had responses from 15 district councils and four county councils in Wales. Not one of them mentioned the point about the term, nor did a joint response by the Local Government Management Board, the Council of Welsh Districts, the Assembly of Welsh Counties and the Wales Trades Union Congress.

The hon. Member for Sheffield, Attercliffe (Mr. Betts) was concerned that part IV of the regulations provide a legal basis for councils to make compensatory lump sum payments to pensioners who have suffered reductions in the North Tyneside case. They have waited some time for these provisions. The regulations do not attempt to restore the illegal payments that were made previously, but I hope that authorities will exercise their discretion fairly and sympathetically within the terms of the regulations. As my hon. Friend has already made clear to the House, we have brought forward the right package, and I commend it to the House.

Question put:--

The House divided: Ayes 265, Noes 296.

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Division No. 48] [11.30 pm


Column 260

Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Alton, David

Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Barnes, Harry

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

Beith, Rt Hon A J

Bell, Stuart

Benn, Rt Hon Tony

Bennett, Andrew F

Benton, Joe

Bermingham, Gerald

Berry, Roger

Betts, Clive

Blair, Rt Hon Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N (N'c'tle upon Tyne E)

Bruce, Malcolm (Gordon)

Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Menzies (Fife NE)

Campbell, Ronnie (Blyth V)

Campbell-Savours, D N

Canavan, Dennis

Cann, Jamie

Carlile, Alexander (Montgomery)

Chidgey, David

Chisholm, Malcolm

Church, Judith

Clapham, Michael

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ann

Cohen, Harry

Connarty, Michael

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Corston, Jean

Cousins, Jim

Cox, Tom

Cummings, John

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Cunningham, Rt Hon Dr John

Dalyell, Tam

Darling, Alistair

Davidson, Ian

Davies, Bryan (Oldham C'tral)

Denham, John

Dewar, Donald

Dixon, Don

Dobson, Frank

Donohoe, Brian H

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