The Parliamentary Secretary, Cabinet Office (Mr. Pat McFadden): I beg to move,

I welcome you to the Chair this afternoon, Mrs. Dean, and I hope that we can proceed in fairly good order in considering this important and slightly complex measure, a draft of which was laid before the House on 25 January.

It might help if I set out the background to the complex interplay between the relevant legislation and our European obligations. The legislation has a long and complex history: it stems originally from the Actof Settlement 1700 and was reinforced by the Aliens Restriction (Amendment) Act 1919, which provides that

The British Nationality Act 1981 defines an alien asa person who is neither a Commonwealth citizen, a British protected person nor a citizen of the Republic of Ireland.

During the second world war, defence regulations permitted the temporary employment of aliens if no suitable British subjects were available. That was replaced by the Aliens’ Employment Act 1955, which provides that

either to posts outside the UK or exceptionally in other circumstances under cover of an alien’s certificate signed by the responsible Minister. The European Communities (Employment in the Civil Service) Order 1991 and the European Economic Area Act 1993 opened up Crown employment to nationals of the European economic area with the exception of public service posts, which are defined in article 39(4) of the EC treaty.

Civil service posts are of a varied nature and mostof them, such as those responsible for general administration or service delivery, do not require a special bond of allegiance to the state and need not be carried out by a UK national. For the purposes of recruitment and employment, such posts are known as non-core or non-reserved posts. According to a survey conducted in 2005, about 82 per cent. of home civil service posts are designated as non-reserved. In addition to British nationals, such posts are open to citizens of the Commonwealth countries and EEA nationals of other member states. Some family members who are not EEA nationals might have consequent employment rights, as might others who are granted an alien’s certificate.

The circumstances in which a certificate under the Aliens’ Employment Act may be granted are strictly defined so that in recent years the number of aliens employed at any one time has been very small. For example, in 2005-06, only 67 aliens’ certificates were in force throughout the home civil service, many of which were concerned with the Gurkhas and the proper servicing of that area of government.

Article 39 of the EC treaty, to which I referred, guarantees to workers from member states the right to reside and take up employment freely in other member states. However, article 39(4) provides an exception to those free movement provisions by enabling each EU member state to reserve for its own nationals employment in the public service. The treaty does not define those posts, but the European Court of Justice did—broadly, they are posts involving direct or indirect participation in the exercise of powers conferred by public law, and duties whose purpose is to safeguard the general interests of the state or other bodies and which, therefore, require special allegiance to the state.

Currently, about 97,000 public service posts in the home civil service are reserved for UK nationals, of which about 79,000 are within Her Majesty’s Revenue and Customs. Moreover, additional restrictions have been placed on the nationality of those who can be appointed to public service posts. For example, until1 June 1996 the posts were also open to Irish citizens on the grounds that they were not statutorily barred from employment in any post in the civil service. The rules were administratively changed on that date to exclude all future new-entrant Irish nationals from employment in the posts, to ensure that they were treated in the same way as nationals of any otherEU member state.

The civil service nationality rules have been a source of frustration over the years. They are administratively difficult to apply, and the Government’s long-term aim has been to remove the statutory restrictions on employing aliens in the civil service and replace them with a general power to make rules imposing nationality requirements, which would of course have to be exercised compatibly with EC treaty obligations and EC law. That can be achieved only through primary legislation, but previous attempts have met with little success. Given the difficulties, the Cabinet Office has been considering alternative legislative vehicles for making the changes.

Section 2(2) of the European Communities Act 1972 presents an opportunity to make changes to current legislation that, although not as wide-ranging as those envisaged under primary legislation such as private Member’s Bills presented over the years, would allow Departments and agencies and particularly HMRC to open up a much larger percentage of posts to non-UK EEA nationals. That will benefit the UK’s civil service, which will be able to employ the best people on merit, through fair and open competition and from a wider pool of talent.

The draft order was drawn up after an extensive consultation exercise. It deals with the change in status of certain posts in civil employment under the Crown, including in the home civil service and the Northern Ireland civil service, to make them more accessible to nationals of EEA countries who are already eligible to apply for most other posts. I stress that it does not cover immigration or work permits, and it will not affect the requirement of those non-UK nationals specified to obtain leave to remain and to work in the UK before they can take up employment. It will apply to the whole UK.

Article 2 will amend the Aliens’ Employment Act 1955 to provide decision makers with a more detailed test to apply when determining which posts should not be open to EEA nationals. As the 1955 Act does not apply to Northern Ireland, an amendment to the European Communities (Employment in the Civil Service) Order 1991 is provided in article 3 and will achieve the same effect for Northern Ireland.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): I would be happy for my hon. Friend the Minister to write to me if he does not know the answer to this question. In relation to restricted posts, there usedto be a problem whereby the definition of British citizenship was fine for the first generation, but people whose parents were non-British citizens were excluded. That led to the bizarre situation in which if somebody had a mother who became a British citizen, their mother could do the job but they could not as their mother had been a foreigner. Has there been any change to that definition?

Mr. McFadden: The matter is replete with such anomalies. I shall either return to my hon. Friend’s question later in the debate or, if I do not have the answer, write to her.

With regard to Northern Ireland, at a practical level there is a considerable pool of relatively local but non-UK talent on our doorstep. It is organisationally undesirable for the Northern Ireland civil service routinely to have to turn away suitably qualified people on the grounds of nationality. That is a frequent occurrence, and from the perspective of efficiency alone the Northern Ireland civil service is keen for a change to allow it greater flexibility in recruitment.

I wish to comment on security, which is important to the civil service. The draft order will not diminish national security in allowing EEA nationals into posts that were formerly open only to UK nationals. All persons taking up employment or holding office in a civil capacity under the Crown will continue to be subject to the usual important security checks governing such appointments.

I should also make the point that nationality requirements are not the same as security requirements, which can be imposed on any potential recruit irrespective of nationality. There is an occasional misunderstanding that security check clearance means that the post must automatically be in the public service category and hence reserved, but that is not the case. Security clearance may be required for public service or non-public service posts. The main purpose of vetting is to provide an assurance of the reliability and trustworthiness of the individuals—factors that are not necessarily connected with their nationality.

I emphasise, too, that it will remain a matter of policy to restrict access to certain posts to UK nationals where that is strictly necessary. The draft order provides revised criteria for doing so. First, it sets out a more limited number of categories that might be reserved in the future. They can be regarded as a subset of the categories that the European Court of Justice has indicated are likely to be within the public service. Secondly, a tighter and clearer definition through the order will, we hope, ensure greater consistency between Departments and agencies. Thirdly, except in relation to posts in the security and intelligence services, Ministers must consider the justification for reserving a particular post. The order does not affect the position that enables the security and intelligence services to reserve all their posts for UK nationals.

It has been necessary, too, to include certain broader categories in the definition of reserved posts. They are set out in the order as posts whose functions are concerned with access to intelligence information received directly or indirectly from the security and intelligence services or through access to other information that, if disclosed without authority or otherwise misused, might damage the interests of national security or might be prejudicial to the interests of the UK or its citizens.

To conclude, the order is not being made in response to any new European legislation or directive. Instead, its purpose is to increase the efficient running of the civil service by making the criteria for reservingposts more specific and relevant to the business of Departments and agencies in response to the evolving civil service agenda. We believe that the effect of the order will be to maintain the capacity of Government to reserve those posts that strictly need reserving, as set out in the criteria, and to allow us to free up for a greater pool of talent those posts that could benefit in the future.

Mr. Henry Bellingham (North-West Norfolk) (Con): I, too, welcome you to the Chair, Mrs. Dean. I thank the Minister for his full, comprehensive and capable explanation of the complex history—it is indeed complex. We support in principle what the Government are trying to do. I might have a problem, because I am due to speak in the next debate and I shall have to rush out of the Committee if it goes on for more than about 10 minutes, but I have a few quick questions for the Minister.

Obviously, we support opening up many more posts to non-UK and EEA citizens and the revised criteria for restricting access to certain posts to UK nationals. That makes sense. As far as the civil service in Northern Ireland, the measures in respect of that part of the civil service and the problems that were experienced in recruiting suitable people are concerned, I assume that the Minister was referring to citizens from the Republic of Ireland who, post-1996, were prevented from joining our civil service on the same terms as UK nationals. How many Irish nationals were affected by that over the period of 10 or so years? I do not know whether he has any statistics on that matter.

The Minister mentioned the Ankara agreement, which grants rights to Turkish nationals. How many Turkish nationals are we talking about overall? Are there many working in our civil service apart from those who are in locally recruited posts that are attached to our embassy and consulates in Turkey?

The explanatory memorandum mentions the problem of recruitment of staff to reserved posts, which causes difficulty for the efficient running of the civil service. Will the Minister give us some idea of the extent of the problem? Are we talking about unfilled posts? Has the problem been gradually getting worse? Perhaps he will elaborate. He explained the background to the problem, but he did not tell us how extensive it was. As things stand, the job market is reasonably vibrant. The more vibrant it is, the more difficult it will be for the public sector to recruit able people. If that situation were to turn for the worse, it would be a great deal easier for the civil service to recruit able people who are currently going into the private sector. What consultations took place withthe civil service unions? Was concern expressed, or were the proposals overwhelmingly endorsed and welcomed?

Finally, I would like to ask a question on the subject of reserved posts that involve access to intelligence information or are concerned with border control and decisions on immigration, which obviously includes the security services, the Secret Intelligence Service and GCHQ. Of the 5 per cent. of civil service posts that the Minister says will be reserved for UK nationals, how many will be in those particularly sensitive areas?

We support the proposals, but I hope that the Minister can answer those questions. I thank him again for his comprehensive explanation of the complex measure.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I take this opportunity to welcome you to the Chair, Mrs. Dean, and to thank the Minister for his eloquent, detailed presentation of the complicated, long-standing policy background to the order. I shall do my best to ensure that the hon. Member for North-West Norfolk is available to go to his next debate.

I should like to raise a couple of points. In general terms, we welcome the order. As a pro-European party, we feel that it makes sense, as the Minister said, to ensure that the civil service is able to benefit from competition between the best people for a wide range of posts. The Minister spelt out in some detail the posts that remained reserved. I understand that, at the moment, most posts in the civil service fast stream remain reserved. What will be the position if the order is introduced?

Like the hon. Member for North-West Norfolk, I should like to know a bit more about the problems that have led to the promulgation of the order. I understand that some of the impetus comes from Her Majesty’s Revenue and Customs, as recruitment to posts that deal with collection and revenue assessment, whichare currently reserved, has been problematic. What assessment and analysis has been done of the extent to which the order will help to resolve that problem? HMRC is shedding substantial numbers of jobs, so it is reasonable to assume that many posts in revenue and collection assessment that are unfilled or hard to fill could be filled through the redeployment of existing staff, who are in posts that HMRC is abolishing.

Some services will be centralised as a result of the job cuts. I know, for example, that significant job reductions are planned in the highlands and islands, so there will be plenty of well qualified HMRC former staff around there who could fill posts to which the order might apply. In that context, the order should in no way stop the Departments to which it applies from doing all that they can to find the best people in the UK and to offer them jobs. The issue is not about shifting the emphasis away from UK nationals.

The group to which I should like to draw the Committee’s attention is disabled people. There are10 million disabled people in the UK. On average,4.5 per cent. of Departments’ staff are disabled, according to the most recent Government figures. However, in the Departments to which the order might apply most, the Foreign and Commonwealth Office, Her Majesty’s Treasury and the Home Office, the percentage of staff who are disabled is 2.9 per cent.,3.2 per cent. and 2.2 per cent. respectively, so their performance in employing disabled people is already pretty poor.

I should like the Minister’s assurance that opening up some of those posts to nationals from other EU countries will not distract from the important drive—not least through the Disability Discrimination Act 1995 and the new disability equality duty—to offer full employment opportunities in the civil service to those millions of disabled people, many of whom are out of work and want to work. With his social exclusion hat on, the Minister will be concerned about that, so I should be grateful for some assurances on that point. With those few remarks and questions, I look forward to the his response.

John Hemming (Birmingham, Yardley) (LD): I could have dealt with my point in an intervention, but it comes down to the same issue—namely, that since the enlargement of the EU, the expression “You can’t get a plumber” has been heard less frequently. Paragraph 7.1 of the explanatory memorandum to the order says:

That implies that “You can’t get a taxman”, but it would be nice to have some evidence for that.

Mr. McFadden: Given the spirit in which the questions were asked, I will endeavour to concentrate on those alone, rather than going any further.

Let me start at the end and work backwards. I do not believe that there is any contradiction between opening up the civil service to a wider group of talent and managing the efficiency process under way in the civil service. The hon. Member for Inverness, Nairn, Badenoch and Strathspey raised the efficiency savings process and its effect. It is an essential process, but there is no contradiction between that and opening out recruitment to a wider pool of talent. I stress that there is certainly no contradiction between the order and the extensive efforts in the civil service to manage that process well, to do everything that we can to avoidany compulsory redundancies as a result, to have an extensive process of retraining and relocation, depending on the nature of the work, and to help those affected by head count reductions with job searches in other parts of the civil service. We are committed to maintaining that process, which has been largely successful, as evidenced by the fact that althoughthere has been a net head count reduction of some 45,000 in the civil service in recent years, fewer than35 compulsory redundancies have been announced.

The hon. Gentleman also raised the issue of fast stream. The order concerns only the eligibility to apply, and fast-stream posts will be considered against the criteria in the order. The HMRC posts that we have discussed are almost wholly reserved among junior grades. That prevents some talented people from progressing in their careers. For example, if someone enters the HMRC at an administrative level, theymight be prevented from taking a promotion in the Department for which they are otherwise fully qualified, as the more senior post is reserved forUK nationals only. The non-specific nature of the indicative criteria has required a blanket approach to posts in Customs and Excise, with the result that that Department alone is responsible for some 79,000 of the 97,000 posts that are reserved. The issue is therefore about career progression in those Departments, as well as recruitment.

The hon. Member for North-West Norfolk asked how many people from the Irish Republic had been affected by the change in 1996. I do not have the exact figures available, but the Northern Ireland civil service very much supports the order before us today. It believes that it is an inhibition on its capacity to operate at the highest possible level if it has to turn away talent on a reasonably regular basis. The order would enable a more rational approach to be taken. It would, of course, maintain reserved posts for those areas set out and would also maintain the Secretary of State’s capacity to exercise the judgment conferred on him through the order.

The hon. Gentleman also asked how many posts would remain reserved in future. We think that around 5 per cent. will remain reserved, which is some 27,000 posts. That compares with some 97,000 reserved posts at present. Obviously that cannot be an exact figure; it is an estimate.

I hope that that has been of some help to hon. Members who asked questions. The Government believe that the order will allow us to keep the security arrangements that any state would want to keep and to keep reserved those posts that need to be reserved, but also to open up those posts that would benefit from being opened up to a wider pool of talent.

Question put and agreed to.

Resolved,

The Committee rose at three minutes to Five o’clock.