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Simon Hughes (Bermondsey and Old Southwark) (LD):
The Secretary of State's statement and answers show our solidarity with Pakistan and practical aid. Is he willing to add to what he has said by continuing to press both European and Commonwealth colleagues to increase their contributions, by exploring expressly with
the IMF a two-year moratorium on the repayment of debt, and by seeing whether the good experience on Haiti, where a trust fund was established, might be repeated, to give reassurance internationally as well as nationally that money will continue to be spent well and in a way that is acceptable to the whole community?
Mr Mitchell: On the hon. Gentleman's third point about a trust fund, that is a mechanism for which there might clearly be a significant role, but we must allow the pledging conference and the other discussions that are going on in the donor community to develop to see precisely what role it might play. He is right, in particular, to identify the Commonwealth. A number of fellow Commonwealth members came quite rapidly to the support of Pakistan, but it is important that all European countries and donor nations that have the significant ability to help do so at this time.
Fiona Mactaggart (Slough) (Lab): Does the Secretary of State agree with me that the generosity that our constituents have shown puts to shame the laziness and inadequate support of other countries? In Slough over the past couple of weekends, I have been involved in bucket collections that have raised more than £3,000 in a small town. Will he ensure that as well as a short-term urgent response to the health crisis, he makes a more strategic long-term investment in improving Pakistan's health infrastructure, which is grossly inadequate? That is illustrated, more than anything else in my view, by the fact that the maternal mortality rate is much worse in Pakistan than in many much poorer countries.
Mr Mitchell: The hon. Lady is absolutely right to draw attention to the maternal mortality figures in Pakistan. That is one of the reasons why, at the G8 summit earlier this year, the Prime Minister focused on millennium development goal 5 and maternal mortality-a strong priority for the United Kingdom. I hope that this is something that we will be able to take forward at the forthcoming MDG summit. On her other points, I pay tribute to the work that she is doing to support fundraising efforts in her constituency. I know that Members on both sides of the house are doing that, and we need to continue to do it.
Andrew Stephenson (Pendle) (Con): I welcome the statement from my right hon. Friend. In my constituency, there has been huge support for the victims of the floods, and I pay tribute to the work of the Secretary of State and his Department. However, I have attended a number of fundraisers for the flood appeal where many people have expressed concerns about the effectiveness of the Pakistani authorities. I know that he has already provided the House with reassurances that the aid to deal with the immediate crisis is being delivered through non-governmental organisations, but what reassurances can he give us that similar scrutiny will be given to long-term infrastructure and reconstruction projects?
Mr Mitchell: My hon. Friend is right to talk about bearing down on corruption and ensuring that for every pound of hard-earned taxpayers' money, as well as of hard-pressed donor money that is spent, we get 100p of value. That is a preoccupation in all the work we do in my Department, and it will continue to be so throughout all the phases of recovery that we have discussed today.
Hugh Bayley (York Central) (Lab): I welcome the Secretary of State's response. News reports from Pakistan in recent weeks seem to indicate a high level of support from the Pakistani people for the actions of the military, but a much lower level of support for the actions of the civilian Government. I do not want to be alarmist about the future of civilian rule in Pakistan, but will the Secretary of State give me an assurance that his Department will continue to make improvements in governance a very high priority indeed, and will make bolstering civilian government in Pakistan an important part of our aid programme over years to come?
Dr William McCrea (South Antrim) (DUP): The people throughout the United Kingdom have raised an amazing £47 million, in addition to the money coming from Government. Can the Secretary of State assure me that there is proper co-ordination of where all that money is being directed, to ensure that those who need it most will be able to get that aid?
Mr Mitchell: I believe I can give the hon. Gentleman the assurance that he rightly seeks. All of the taxpayers' money is allocated through my officials in Islamabad, after careful discussion of what results will be delivered by the spending of that British taxpayers' money. Sometimes it takes a little longer to allocate the funds precisely, but we do so with the confidence that it will have the effect that those who have provided the money would rightly insist on seeing.
Mark Durkan (Foyle) (SDLP): If the international community's initial response was so woefully inadequate, can the Secretary of State tell us that he is now confident that it will be better geared in response to the secondary humanitarian public health crisis that he anticipates; and will others be there for the long-term reconstruction needs, in the way that he has underlined in the commitments that he has given today?
Mr Mitchell: The answer to the hon. Gentleman can only be that time will tell, but I am confident that we are all focused on trying to ensure that is indeed the case, and that focus will continue throughout not only the emergency phase but the subsequent two phases, which I have described.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Members across the House have rightly spoken of the work being done by people in their communities. I mention the work being done by the small non-governmental organisation, Edinburgh Direct Aid, which is headquartered in my constituency; it does various work in the areas concerned and is working on this issue as well.
On the question of a long-term response, the rather general information that the Secretary of State is able to give about the EU response-this is no criticism of him-makes me worried that the EU response is not building up as quickly as it should. When does he expect next to meet some of his EU colleagues to try to get not just a short-term response, but a longer-term response of the type that my hon. Friend the Member for Foyle (Mark Durkan) just mentioned?
Mr Mitchell: The hon. Gentleman is right to point to the inadequacy of the response from members of the European Union in the early days of the crisis. I think there was a significant improvement in the second week. I had a discussion this morning with the Foreign Secretary, who will attend a significant EU meeting within the next two weeks, where he will make precisely the points that inform the hon. Gentleman's question.
Mr Denis MacShane (Rotherham) (Lab): As in the past, the Department for International Development and its leadership have risen to the challenge of the crisis and have done our country proud, but I wonder whether the Secretary of State would consider involving more directly the Pakistani diaspora community leadership in our country, perhaps by organising a common trip to Pakistan of himself, the shadow DFID Secretary and the Chairman of the International Development Committee, to show how our Parliament, our Government and our community are now working with British citizens to help solve some of the terrible problems that their linked communities face in Pakistan.
Mr Mitchell: I thank the right hon. Gentleman for his generous remarks about my officials, which I will pass on to them, and to others in Whitehall. He is right to stress the importance of the very inclusive approach that we are taking in working with the diaspora communities and with all people who want to assist in tackling this dreadful crisis. The spirit of what he said is embodied in the decision by the Government of Pakistan to take up a proposal from the Opposition to set up a high-level committee to co-ordinate the Government response to the crisis, so I hope he feels that notice is being taken of the importance of everyone putting aside any differences and concentrating on helping in a disaster, which even today is still leaving millions of people without any form of support.
Jim Shannon (Strangford) (DUP): I thank the Secretary of State for his very positive response. In my church on Sunday, as in many churches in my constituency and further afield-in fact, right across the United Kingdom-there was a collection for the people of Pakistan. It is therefore disturbing to be made aware that there is discrimination in some cases-more localised than systematic, I have to say-against people in the Christian community, who say that they are not receiving the relief aid that they should. In his statement, the right hon. Gentleman said that "every penny spent achieves a meaningful output that alleviates the suffering" of all the victims. Will he assure us today that the people in the Christian community in Pakistan, who have been discriminated against through no fault of their own and who are equally subject to the effects of the floods, will be looked after, and will receive the relief that we in the United Kingdom wish them to have?
Mr Mitchell: I have not heard the details of what the hon. Gentleman has said, but in view of his concerns, I will certainly look in detail at what he said, and I shall write to him to advise him of what I discover.
Point of Order
4.51 pm
Dr Julian Lewis (New Forest East) (Con): On a point of order, Mr Speaker. You will recall granting an urgent question before the recess to, I think, the hon. Member for Islington South and Finsbury (Emily Thornberry) about the death of Ian Tomlinson, a bystander at the G20 riots who was struck by a policeman. The evidence of the pathologist concerned, Dr Patel, was irreconcilably different from that of other experts, and that was cited as the reason for no action being taken. Given that he was last week struck off the register by the General Medical Council, can you tell the House whether you have received any indication from a Law Officer or a Justice Minister that a further statement will be made about the terrible circumstances of the case, which has caused concern throughout the country and on both sides of the House?
Mr Speaker: I am grateful to the hon. Gentleman. The short answer is that I have received no such request at all. However, the great likelihood is that Ministers, including Law Officers, will have heard his point of order.
Freedom of Information (Amendment)
Motion for leave to bring in a Bill (Standing Order No. 23 )
4.52 pm
Tom Brake (Carshalton and Wallington) (LD): I beg to move,
That leave be given to bring in a Bill to amend the Freedom of Information Act 2000 to remove provisions permitting Ministers to overrule decisions of the Information Commissioner and Information Tribunal; to limit the time allowed for public authorities to respond to requests involving consideration of the public interest; to amend the definition of public authorities; and for connected purposes.
The day when Members of this House backed the Freedom of Information (Amendment) Bill put forward by the right hon. David Maclean, the then Member for Penrith and The Border, will rightly go down in history as one of the most embarrassing days of the previous Parliament. The arguments deployed in favour of that Bill were spurious and specious and collapsed after the most cursory scrutiny. In an article in The Daily Telegraph headlined "House of Knaves", the Bill was described as "an abysmal decision", with MPs
"Acting in a way uncomfortably reminiscent of Communist officials in East Germany".
A Daily Mail headline at the time was no more flattering. It said "MPs' freedom of information cover-up is a dark day for democracy". The Sun was characteristically blunt, saying "MPs back 'squalid' secrecy bill". Members of this House-not only those who were whipped into voting for the Bill, but those who failed to anticipate the skulduggery and subterfuge that the Front-Bench teams were willing to contrive, and who were therefore attending to important constituency business on that Friday-have had ample opportunity to consider the damage caused by that capricious and self-serving vote.
It is timely to revisit the issue in the week in which our former Prime Minister, Tony Blair, chose to denounce the Freedom of Information Act as a "blunder". I would be more inclined to agree with his assertion in 1996 that
"information is power, and any government's attitude about sharing information with the people actually says a great deal about how it views power itself and how it views the relationship between itself and the people who elected it."
It was with that view in mind that I sought to introduce the Freedom of Information (Amendment) (No. 2) Bill in 2007, so that I might demonstrate to our constituents that Members were committed not only to protecting FOI legislation but to reinforcing it. In the spirit of the coalition's pledge both to extend the scope of the Freedom of Information Act and to provide greater transparency, I have introduced today's Freedom of Information (Amendment) Bill, which will strengthen FOI powers in four key areas. I make no apologies for the sense of déjà vu that some Members may have. The Bill is, broadly speaking, identical to my 2007 Bill, because the weaknesses of the FOI Act remain, with one exception, as academies will now be covered by the Act.
The four key areas that I seek to address are the removal of the ministerial veto; an extension of the time limit within which proceedings can be brought for the offence of deliberately altering a record to prevent the disclosure of information; a limit on the time allowed
for public authorities to respond to requests involving consideration of the public interest; and an extension of the range of bodies covered by FOI legislation.
In 2007, I noted that the ministerial veto had never been exercised. Furthermore, I entertained the idea that Members might consider that that was a reason for maintaining it, because Ministers had shown considerable self-restraint in not exercising it.
That argument is now sadly redundant. In the intervening period, the ministerial veto has been used twice by the right hon. Member for Blackburn (Mr Straw), in his then role as Justice Secretary, in the first instance, to block the release of minutes of Cabinet meetings in the run-up to the Iraq war, because releasing the papers would do "serious damage" to Cabinet government and outweigh public interest needs. In the second instance, it was used to block the disclosure of minutes of the Cabinet Sub-Committee on Devolution to Scotland, Wales and the Regions from 1998.
The exercise of the ministerial veto introduces a veil of secrecy and affords an opportunity for arguments in favour of the public interest to be dismissed out of hand. Furthermore, its deployment sets a dangerous precedent and paints a worrying picture of a disdainful relationship between Government and the electorate.
Similarly, it may appear that there is no need to extend the period during which proceedings can be brought for the offence of deliberately altering a record to prevent disclosure of information under section 77 of the FOI Act-that is a new proposal. There do not appear to have been any prosecutions for the offence.
In the wake, however, of the climatic research unit e-mail controversy-or "Climategate", as it is known to the tabloid media-the Information Commissioner's Office found evidence that the CRU tried to avoid disclosure by deleting information. In a letter from the ICO to the CRU, the deputy commissioner confirmed the fact that
"elements of a section 77 offence may have been found here, but cannot be acted on because of the elapsed time",
and said that that was "a very serious matter."
In its subsequent report, the Select Committee on Science and Technology recommended that the six-month time limit between offence and prosecution for breaches of section 77 of the Freedom of Information Act be reviewed. The amendment proposed by my Bill would allow a prosecution to be brought within six months of sufficient evidence of the offence coming to the prosecutor's knowledge, rather than within six months of the offence being committed. However, a prosecution could not be brought more than three years after an offence had been committed.
I would now like to move on to the subject of time limits within which public authorities must respond to public interest FOI requests. In 2009, 1,551 requests to central Government Departments and other monitored bodies were subject to an extension beyond the 20-working-days period, so that the issue of whether information should be disclosed on public interest grounds could be considered. That is allowed, as public authorities can use whatever additional time is "reasonable in the circumstances" to consider the Act's public interest test. Figures from a Ministry of Justice publication, "Freedom of Information Act 2000: 2009 Annual Statistics on implementation in central government" show that of those extensions, in 155 cases, the extension was between
21 and 30 days; in 129 cases, it was between 31 and 40 days; and in 276 cases, it was over 40 days, but how far over is not known. If the Bill is introduced, all those requests, totalling more than 500, would receive a response in fewer than 40 days. Departments such as the Home Office, which set a record in 2007-I do not know whether that is still the case-of 18 months for tardiness in answering an FOI request would no longer be able to use delaying tactics to postpone the release of embarrassing information.
Finally, the Bill proposes an extension to the definition of public authorities to include publicly owned companies, publicly funded "not for dividend" companies, and private contractors delivering high-value public sector contracts. At present, a company that is wholly owned by a public authority is subject to the FOI Act in its own right under section 6(1) of the Act. However, where a company is jointly owned by two or more public authorities, it is not subject to the Act. Equally, where a public authority owns 99% of the shares and someone else owns only 1%, the company is not covered. The proposed amendment would bring within the scope of the Act any company where at least 51% of the shares were owned by one or more public authorities. Not-for-dividend companies such as Network Rail, which are not covered by FOI although the Government are the sole shareholder, would have their secrets revealed if the Bill were to become law.
The argument about private contractors doing public work for public authorities is less clear. The Secretary of State has the power to designate private contractors under the Act, but has never done so. The Bill would include only a very small number of very large private contractors working for a public authority-organisations such as Capita or Serco, for instance-which had contracts of a value exceeding £1 million and covering a period of more than 12 months. Clearly, such organisations are in effect quasi-public authorities delivering public services and they must not be allowed to avoid the scrutiny provided by FOI legislation. They must be covered by FOI rules too.
I have set out today in this Bill four simple measures that demonstrate the Government's commitment to extending FOI and demonstrate that the decision taken three years ago to support the FOI (Amendment) Bill was an aberration. This Bill will strengthen FOI legislation, not emasculate it. I urge Members to support the Bill.
5.1 pm
Mr Denis MacShane (Rotherham) (Lab): I congratulate the hon. Member for Carshalton and Wallington (Tom Brake) on a vigorous speech. I found little in it with which I would disagree, but I think his Bill should be taken much further forward. My only slight worry was the way in which he so enthusiastically prayed in aid at the beginning of his speech quotes from The Sun and the Daily Mail. I gently say to him, even if he is now sitting on the Government Benches, that if he lies down with those papers, he may end up getting very flea-bitten indeed.
However, the hon. Gentleman is right to bring to the House concerns about the Freedom of Information Act, and he is right to quote the former Prime Minister, Tony Blair. I have his book, which says:
"Freedom of Information. Three harmless words. I look at those words as I write them, and feel like shaking my head till it drops off my shoulders. You idiot. You naïve, foolish, irresponsible nincompoop"-
and that is only on freedom of information. I find it rather touching and a healthy thing that we have a former Prime Minister prepared so to describe himself. I have searched in vain in the memoirs of Baroness Thatcher or Sir John Major for any similar recognition that they now have the slightest scintilla of doubt about something that they did.
I suggest gently to the House that the Freedom of Information Act, which became fully operational in 2005-some five years ago-was meant to lead to better government and better journalism. It has been an article of my faith since I first joined the National Union of Journalists about 40 years ago; in the 1970s, it was loony lefties like me who argued for freedom of information. Bit by bit we won the argument. We could not persuade the then Labour Government, we could not persuade the 1979-1997 Government, but we did persuade Tony Blair, and we now have freedom of information on the statute book.
I ask the question again: have we better government as a result? In May, the British people gently suggested that they were not quite so sure that their Government were a paragon of virtue who should be re-elected. If any right hon. or hon. Member in the House is prepared to aver that we now have much better journalism and newspapers as a result of freedom of information, I kindly ask them to put up their hand. Quite.
Freedom of information has coincided-I am not saying that it is cause and effect-with poorer government, and I very much hope that the hon. Gentleman gets his turn with a company car, because then he will find out what I am talking about. In large areas of government, the written discussion and advice that are now on offer to the Ministers who have to make decisions are weaker, because the deciders-the policy makers-are looking over their shoulders and saying, "Will one tiny section of what I am writing appear on the front page of the Daily Mail, The Sun, The Daily Telegraph or any other paper?" As a result, they hedge their bets.
I started to see that happening during my time as a Minister in the Foreign Office, when it was a privilege to receive, frankly, some of the most brutal assessments of what was happening in the world from very, very able foreign service officers. As the dawn of freedom of information approached, however, those assessments became softer and more careful, because, although there are provisions for not revealing policy and the rest of it, they were not sure whether some of what they might write might, in some other context, be made available for the delectation of our journalists.
I do not have a solution to the issue. Freedom of information is still my article of faith, but we may have imported the model in America, where there is a clear separation between the legislature and the Executive and, on the whole, newspapers are more sensitive about facts, to our system, where the Executive and the legislature are fused and a great number of requests-not all, because many diligent journalists use FOI very effectively-are made purely to seek out sensationalist tittle-tattle. I look at the disgraceful story about the Foreign Secretary last week, in which some of those blog rats, those blog boys, used freedom of information only and exclusively to try to peddle innuendo, smear and rumour. I do not know the answer, but I do believe that we need a serious review of the Act. We need to
have a discussion, because the employer of the UK Information Commissioner is, according to Wikipedia, the
"Parliament of the United Kingdom".
But is he in any way accountable to us? Does he make formal reports to us? Is there a Committee to which I might put questions about what he does? The answer is no, and we as a House need to look into that.
I would go further than the hon. Member for Carshalton and Wallington. He is a radical and a liberal, but he is in this wretched coalition, so suddenly we can see his liberalism being slowly vitiated as he becomes more and more conservative. We saw that process yesterday, when there was absolutely no intervention from senior Liberal Democrats on the Andy Coulson affair. It was left to the hon. Member for Torbay (Mr Sanders) to raise the issues.
I would like to see the Freedom of Information Act extended to all those organisations and companies that have any formal status within the public realm. We have referred to the fourth estate, and it is time for freedom of information laws to extend fully to all our media organisations. They have far more power than many public agencies, local councils and the rest, which are covered by FOI legislation. What our media organisations and the oligarchs-often from overseas-who own them decide to do has a huge impact on our public life, and any company that is in receipt of taxpayers' money should also be covered by FOI. [ Interruption. ] I am glad to see the hon. Member for Carshalton and Wallington, from a sedentary position, giving me some gentle support; I hope that we can secure some cross-party agreement on the matter and, perhaps, even consider temporarily re-forming the old alliance.
We also need to look at the UK Information Commissioner. That distinguished gentleman spent the early part of his life serving as a Liberal Democrat councillor, and he has twice stood as a Liberal Democrat candidate for Parliament. I wonder whether the Information Commissioner should be so connected, in such a direct political way, with one of the parties now in government.
We also need to discuss the exact gap between freedom of information and the freedom to have a private life, although I do not want to repeat my remarks about last week's appalling slurs against the Foreign Secretary. We now have the extraordinary example, well known to the House, of our own Independent Parliamentary Standards Authority, which has been leaking details about right hon. and hon. Members to the press. When the sensationalist press have applied to it under freedom of information, the authority has given details of secret notes kept about MPs.
Perhaps Ministers are all good gentlemen who never use swear words, blow their tops or get cross; I certainly know that the Minister for the Cabinet Office, who is sitting opposite me, has never, ever used naval language in his life and is a paragon of niceness to his subordinates when he is feeling upset. Frankly, however, if his subordinates kept secret notes about him that were released every other week under FOI, there would be the most wondrous headlines to amuse us. IPSA did that. It did not stand up for a modicum of privacy and it allowed FOI information to be used against hon. Members.
My hon. Friend the Member for Glasgow South (Mr Harris) has asked IPSA for some information but it has refused to provide it, so he put in a freedom of information request, but IPSA has refused to comply with that. This public body is willing to put FOI information into the public domain to the detriment of right hon. and hon. Members, yet tries to shelter itself from and refuses to co-operate with FOI requests.
Those are some of the paradoxes. We need a debate and a review. The hon. Member for Carshalton and Wallington has done the House a great service. Now let us have a wider debate on the reform of how FOI works.
Question put (Standing Order No. 23) and agreed to.
That Tom Brake, Caroline Lucas, Dr Julian Huppert, Dan Rogerson, Tim Farron, Mike Crockart, Stephen Lloyd, Mr Richard Shepherd and Simon Hughes present the Bill.
Tom Brake accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 12 November and to be printed (Bill 68).
Superannuation Bill
[Relevant document: The oral evidence taken before the Public Administration Select Committee on 27 July (HC 397) on the Civil S ervice compensation scheme.]
Mr Deputy Speaker (Mr Lindsay Hoyle): I have to inform the House that Mr Speaker has selected the reasoned amendment in the name of the right hon. and learned Member for Camberwell and Peckham (Ms Harman).
5.13 pm
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): I beg to move, That the Bill be now read a Second time.
In a statement to the House on 6 July, I made clear the Government's intention to make the civil service compensation scheme affordable and I set out our intention to legislate to underpin the negotiations about achieving that. I start by stating my unqualified support for the British civil service; I firmly believe that our system of a permanent civil service is one of the jewels of our constitution.
The service's values of political impartiality, recruitment and advancement on merit, and the public service ethos are as much to be cherished and nurtured today as they ever were. The service is admired throughout the world for the way in which it serves the elected Government of the day. A steady stream of visitors from other countries send their civil servants to find out how it is done here. It is a pleasure, on returning to government-after an 18-year sabbatical, in my case-to discover that those virtues and values remain intact.
In the latter part of the last Parliament, I was pleased to support the previous Government's actions in introducing, rather belatedly, it has to be said, civil service legislation-only 154 years after it was promised in the Northcote-Trevelyan report, but better late than never. That was an important step in ensuring the continuance of an impartial civil service.
I am also delighted to find that the service continues to attract the best and the brightest, with the civil service fast stream recognised as one of the most prestigious graduate programmes in the country. So the Bill is emphatically not an attack on the civil service: it is a necessary measure to deliver fairness and affordability in the appallingly challenging fiscal circumstances in which the last Government left Britain.
It might be helpful to the House if I set out some of the history and background to how we have got to where we are today. The history of compensation in the civil service is a long one, with the first legislation covering it having been passed more than 150 years ago. The ability of the state to pay compensation to civil servants on the loss of office was created under the Superannuation Act 1859. That Act did not create a right to compensation, but it created a framework under which such payments could be made. The Superannuation Act 1965 consolidated the previous Acts and included provision for the early payment of pensions to those aged 50 or over who were asked to take early retirement in the interests of efficiency. The same Act repeated the provision of an earlier Act that spelled out that civil servants had no legal entitlement or legal right to the benefits referred to in the 1965 Act, which was itself supplemented by an administrative code that set out the
payments that a civil servant could expect, making it crystal clear that there was no entitlement to such benefits.
In the late 1960s and early 1970s, the Fulton committee reviewed the position of civil servants. Alongside that committee, the joint superannuation committee of the national Whitley Council was set up to review the provisions of the 1965 Act. It reported in 1972, noting that improvements were needed to the superannuation scheme
"to restore to the Civil Service the position it had traditionally held as one of the leaders in pension practice."
That view was reflected in the Superannuation Act 1972, which granted civil servants rights to their pensions. In 1987, the compensation scheme was amended to its current form.
The previous Administration concluded that the current scheme was both unsustainable and indefensible. In the summer of 2008, with support from all parts of the House, Ministers embarked on lengthy negotiations to reform the compensation scheme. The right hon. Member for Dulwich and West Norwood (Tessa Jowell) was one of those Ministers. I think it is fair to say that those negotiations were very long drawn out and protracted. I pay tribute to the efforts of successive Ministers in trying to achieve an agreed outcome; they really did go the extra mile to try to achieve consensus. Arguably, they went too far, because the new scheme that was finally agreed in February this year was still out of kilter with most of the rest of the public sector and would have been unrecognisable, frankly, to anyone in the private sector.
The compromises that created what I still regard as a hard-to-defend scheme were made with the expectation that all six civil service trade unions present at the negotiations would agree it. That appeared to have been achieved, but sadly when the agreement was referred back to the leadership of the Public and Commercial Services Union-the biggest and most numerous union, representing very largely lower-paid civil servants-the rug was pulled from under the feet of the lead PCS negotiator and the agreement was rescinded. So after 18 months of tortuous negotiations, with perhaps an excess of flexibility on the part of the then Government, consensual reform of the scheme seemed as far away as ever. Ministers then took the view, correctly, that PCS's last-minute volte-face could not be allowed to stand in the way of much-needed reform. Therefore, with the agreement of five out of the six unions, the right hon. Member for Dulwich and West Norwood laid the necessary order to give effect to the reformed scheme.
I have at all times made clear our view that the February scheme did not go far enough. Had it come into effect, however, when the coalition Government took office in May this year, a pressing case would have been made to let it remain in force. Sadly, that option simply did not exist. PCS unilaterally, and without the support of the other five trade unions, sought and obtained judicial review and obtained an order that quashed the February scheme. The option of allowing the scheme agreed and negotiated by the last Government was removed from the table by PCS's unilateral action.
Steve McCabe (Birmingham, Selly Oak) (Lab):
Whatever the rights and wrongs of seeking judicial review, I am sure the Minister will accept that PCS represents some
of the poorest-paid workers in the civil service. His scheme, rather than being fair, will be a lot less generous to them. Why is he introducing a scheme that gives the poorest-paid junior jobcentre official only as much protection as a head of Department in the civil service, when on 6 July he promised protection for the poorest- paid?
Mr Maude: I will come on to precisely that point, because the hon. Gentleman puts his finger on a real concern that I have. I will deal with it in detail later, if I may, because how to protect effectively the position of the lowest-paid in the civil service is a really important issue that will concern everyone in the House.
It is now more than 20 years since the last serious reform of the compensation scheme and more than two years since the current reform process began, with an unchanged set of arrangements still in place. Frankly, that position cannot be allowed to continue. The current scheme is unaffordable and unsustainable. It allows for payments of up to three times annual salary or, for older workers, enhancements to pension and lump sum payments costing more than five times salary. For some, those enhancements can total as much as six and two thirds times annual salary. That compares with a maximum of 30 weeks' pay under the statutory redundancy scheme, with a weekly cap on the salary allowable of £380, giving a total of about £11,000.
The level of payments under the current scheme would be excessive even if we were not facing such a difficult financial situation. The last Government left the country with, in the immortal words of their last Chief Secretary to the Treasury, "no money left". The Government are having to borrow a pound out of every four just to keep pensions paid and schools and hospitals functioning.
Dr John Pugh (Southport) (LD): The Minister has mentioned that the scheme was last revised in 1972, but did not that revision leave all previously accrued rights in place? Is he not doing something different now?
Mr Maude: The extent to which rights are accrued is an issue to consider. We are talking not strictly about redundancy but about compensation for loss of office under a statutory scheme, and the relevant rights are those in force at the time when redundancy or loss of office happens. If the statutory redundancy scheme changes, the terms that govern the entitlement are those in place at the time when the redundancy happens. I understand my hon. Friend's point, but I do not believe it applies in this case. I shall deal with that matter a little more in due course.
Our view is that to maintain the current scheme would be unfair as between taxpayers and civil servants and as between workers in the civil service and those in the private sector or the wider public sector. It is unfair also to less well-paid civil servants, which is related to exactly the point that the hon. Member for Birmingham, Selly Oak (Steve McCabe) made, with which I shall deal.
The effect of the current scheme is that it is prohibitively expensive to make redundant civil servants who are highly paid and long-serving. The result is therefore
that when money has to be saved by reducing head count, the burden currently falls disproportionately on the lower-paid, more of whom lose their jobs than is necessary or desirable. My view is that lower-paid civil servants suffer disproportionately and are more likely to lose their jobs under the current scheme than would be the case under the arrangements that we are seeking to negotiate. In addition to the very simple cap incorporated in the Bill, we are seeking in parallel to negotiate different arrangements with significantly enhanced protection for lower-paid civil servants.
Steve McCabe: Let me say that I want to assume that the Minister's long-term intentions are exactly as he says, but is it not a fact that under the Bill he will penalise, to an extraordinary degree, the poorest paid people in the civil service? That is the effect of the measure that he is asking us to vote for today.
Mr Maude: No. The effect of the legislation will be identical on all civil servants. Under the Bill, the cap would apply uniformly to civil servants. I shall come in a moment to the negotiations that are going on in parallel, because that will deal exactly with the hon. Gentleman's point.
John Hemming (Birmingham, Yardley) (LD): Obviously we do not want to make civil servants redundant. Does the Bill not make it less likely that lower-paid civil servants will lose their jobs, so in 10 years' time they will still be employed within the civil service?
Mr Maude: My hon. Friend is exactly right and puts his finger on an important point. Because it is so disproportionately expensive under the current scheme to make redundant long-serving and high-paid civil servants, instead of one civil servant who earns 10 times the average-there are some-losing their job, 10 or more lower-paid civil servants might lose their jobs to save the same amount of money. We are seeking to address exactly that issue.
Mr Alan Reid (Argyll and Bute) (LD): I, too, was pleased to hear the Minister say that the Government want a scheme that will be better for the lower-paid, but the Bill does not differentiate the lower and higher paid. Will the Government seek to amend it to allow better compensation for the lower-paid?
Mr Maude: It is not my intention to propose amendments of that nature, because in our view such arrangements are difficult to engineer-this is tricky stuff-and are not amenable to incorporation in primary legislation. Such matters should be negotiated. It is precisely for that reason that we are engaged in a parallel process of negotiation with the Council of Civil Service Unions, which I shall talk a little about in a moment, because we are seeking to achieve two things.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): It is interesting to hear the Minister talking about parallel negotiations with the unions. Will he help me by explaining what negotiations, discussions or consultations there were with any of the civil service trade unions before the publication of the Bill?
Mr Maude: Negotiations were carried out by the previous Government over the 18 months before the order was laid, which, as I understand it, exhaustively explored all the options. I met the Council of Civil Service Unions before the election and immediately after. I have had several meetings with the council-at least two, I think-since, and I am proposing to meet the chairman later this week. There is a continual process of discussion and dialogue, which I regard as very important. I do not want the measure to be unilaterally imposed; I want a genuine consensual arrangement, whereby all six civil service unions agree to a new, sustainable and long-term scheme.
Richard Graham (Gloucester) (Con): As my right hon. Friend knows, I am a former civil servant. I am very conscious of the large numbers of low-paid civil servants in this country. He and other hon. Members will know that on average, the UK civil servant receives no more than £24,000 a year, so there are issues of fairness. I give him my full support in taking forward in his negotiations with the various trade unions every possibility of increasing the statutory minimum available for low-paid civil servants. That will fulfil exactly one of the major tasks for the Bill: greater fairness in the system.
Mr Maude: I can reassure my hon. Friend that that is exactly our aim. It is one of the great myths-I have sometimes heard this expounded even in this august House-that all civil servants are highly paid. That is simply not the case. As he says, the average pay of the civil servant is, I believe, around £23,000, and half of civil servants are paid £21,000 or less. In the pecking order, as it were, of the different sectors, average pay is highest in the wider public sector, private sector pay is next, and civil service pay is the lowest. So my concern for lower-paid civil servants is real and genuine, and it is based on a proper understanding of the concerns that exist.
Mr David Hamilton (Midlothian) (Lab): Is it not the case that many of the low-paid workers have accepted those low wages because of the conditions of employment, which included a pension scheme and superannuation scheme that meant something? To take that away from them takes away the very essence of why they are there.
Mr Maude: I hear what the hon. Gentleman says, and the fact is that in any employment the terms that apply are those that apply when an event happens. People get sick pay when they are sick; they get redundancy pay when they are made redundant. The statutory redundancy scheme, which has the force of law-as indeed this scheme does, as it is a statutory compensation scheme for loss of office-and the compensation to which people are entitled when they lose their office is that which is in force at the time. That is the view that the previous Government took, robustly, having considered-I presume-all the issues as carefully as we have done. So there is a strong view on both sides of the House that this scheme is unsustainable and unaffordable. Even in good circumstances it would be unaffordable, but in today's tragically difficult financial position-with the budget deficit that we inherited so out of control and high-it would be indefensible to allow it to remain unreformed, as a matter of fairness.
Stewart Hosie (Dundee East) (SNP): I was pleased when, a few moments ago, the Minister suggested that he did not want to impose this change unilaterally. Of course, that ties in with Mr Justice Sales's comments that that might not be possible without agreement anyway. How confident is the Minister that agreement will be reached, perhaps before this legislation completes its passage?
Mr Maude: All I can say is that it would be rash to make predictions. I can express the hope and aspiration that agreement will be reached. I stand ready to meet the Council of Civil Service Unions at any time, and my officials are engaged in genuine and sustained negotiations and discussions with the unions, which are continuing on an almost daily basis. I have to say that I was discouraged this morning when Mark Serwotka, the general secretary of PCS-a man for whom I have considerable respect-said, when asked whether he would challenge the result in the courts again, that he would do so. That does not bode well for a consensual outcome, and the fact is that five of the six unions had agreed the previous scheme, but the rug was pulled by one union, to the disbenefit of everyone concerned.
I have made it clear that I do not see this Bill as the last word. It remains our desire to reform the scheme by negotiated agreement, so there have been significant and continuing discussions. There are two key goals in the negotiations. The first is to deliver additional protection for lower-paid civil servants, and that has to be done by negotiation-
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): The Minister has said several times that he aims to protect the lower-paid, but I do not follow his argument. Under the current arrangements, someone who is earning £20,000 a year with 20 years' service in the civil service would receive £60,000 in compensation. Under the February 2010 deal, proposed by the Labour Government, that individual would have received £58,000 in compensation. Under the present proposals, that civil servant would receive £20,000 compensation. Conversely, someone who is higher paid-for example, £40,000 a year-would receive £120,000 compensation under the current arrangements, given that three years is the maximum payment. Under the February 2010 deal, that amount would have been £60,000 because that was the cap, and under the present proposals it would be £40,000. Can the Minister please explain how the lower-paid will be protected?
Mr Deputy Speaker: Order. Before the Minister replies, may I point out that interventions should be short, with quick questions?
Mr Maude: The answer to the hon. Gentleman is, as I have said several times already, that this Bill is not the last word and that the additional protection for lower-paid workers has to be done by agreement. I do not want to be in a position where we design as if in some laboratory a complicated scheme to try to give protection for the lower paid, because the right way to do it is by proper negotiations and discussions with the unions-and that is exactly what is going on at the moment. As I said, that is the principal aim of the-
Mr Maude: I am besieged by suitors, but I will give way to my hon. Friend the Member for Ceredigion (Mr Williams).
Mr Mark Williams (Ceredigion) (LD): I am grateful to the Minister for giving way. I respect the sincerity with which he puts his case, and I also accept that the rightful place for the detailed discussions will be the negotiations with the unions. However, I think what the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) is looking for-and I am, too-is a little more detail on, and justification for, those words that the Minister uttered about protecting lower-paid workers. The anxiety out there is real, and the Minister needs to address that a bit more, if he can.
Mr Maude: I am reluctant to start conducting those negotiations in public. It would be regarded by the unions, which I think are engaged in good faith in these discussions-certainly, all the indications are that they are engaged in good faith in these private discussions in order to achieve an agreed outcome-as bad faith were we to start to explore them here. All I would say at this stage is that we completely and genuinely understand the need for additional protection for lower-paid workers, of whom there are many in the civil service, and we will seek to achieve that.
John Hemming: Does the Minister agree that the difficulty is that the Government need to act and cannot allow one of six trade unions simply to veto all changes, and that if the Government are therefore to put something through, they need negotiating room to offer something better in the negotiations? Obviously, this Bill will not be as good as a final deal that could be agreed with the trade unions.
Mr Maude: That is completely right. My hon. Friend puts his finger precisely on the point. Our view is that one union cannot be allowed to prevent necessary reform of a scheme that is unsustainable and unaffordable-and, of course, that is precisely the view taken by the last Government. The order laid by the right hon. Member for Dulwich and West Norwood, which came into effect, I think, in April this year-before it was rapidly quashed by the judicial review sought by the Public and Commercial Services Union-was made on the basis that one union could not be allowed to hold up the necessary process of reform. However, I stress again that we seek genuinely to negotiate additional protection for the lower paid.
Mr Bernard Jenkin (Harwich and North Essex) (Con): I have been listening to these exchanges closely, but will the Minister tell me whether I have understood him correctly? Is he saying that, whatever special measures may be made for the lower paid, which he is not prepared to discuss now for the reasons he outlined, he has no intention of trying to impose them through legislation, and that they will be negotiated come what may, but that this legislation might become necessary in order to provide the framework for such a settlement? Is that correct?
Mr Maude:
Indeed. I will say more about the relationship between the negotiations and the Bill in a little while. The aim would be to have a whole new negotiated scheme that would make this Bill redundant. Sadly,
however, the experience of the last Government shows that it is impossible to place absolute reliance on the ability to achieve total consensus on that. Proper additional protection for the lower paid is a central part of our aim in the negotiations. I will say briefly as well that the other side of that coin should be a cap on payments for the highest paid. Again, it seems to us that basic fairness requires that.
Our second goal in the negotiations is to negotiate a higher cap for voluntary redundancy schemes. It is the essence of most redundancy schemes that there should be scope for voluntary redundancy terms to be more generous than those for compulsory redundancy. However, I would like to make it clear, if it needs to be made clear, that no one wants redundancies at all, but if they are unavoidable, which sadly I believe they will be-they were under the last Government, and in the current fiscal environment, they are even more likely-it will surely be much better to be able to offer more generous voluntary redundancy terms. That is simply impossible under the current scheme, because of its unaffordably generous terms.
We have made some progress in the talks, but they have not yet delivered an approach that is agreeable to all the unions involved and to the Government. If we can secure agreement with the civil service unions to introduce a comprehensive new scheme, we will implement that package rapidly. Until we reach that point, however, we would be failing in our duty to the tax-paying public-and to lower-paid workers outside the civil service who daily confront much less generous terms-if we were to allow the excesses of the current scheme to continue unchecked.
That is why we have introduced a Bill to limit the size of compensation payments. It has only two clauses, which cap the amounts payable under the current scheme. The first creates caps on the level of payment possible. Staff who depart on voluntary terms will receive payments calculated under the current terms, but limited to a maximum of 15 months' pay. For those leaving on being formally dismissed-effectively, compulsory redundancy-the limit will be 12 months' pay. Where the civil service compensation scheme terms provide for early retirement instead of or in addition to a severance payment, the total value of the package will be subjected to the same cap of 12 or 15 months' pay. In these cases, if the actuarially assessed cost of the total package exceeds the appropriate cap, the Bill provides that those individuals will instead receive 12 months' salary-or 15 months' salary in the case of voluntary departures-and no change to their pension entitlement.
Annette Brooke (Mid Dorset and North Poole) (LD): Could the Minister please explain the rationale for proposing these particular terms, which are so much worse than those that were almost agreed before?
Mr Maude:
My hon. Friend says that those terms were "almost agreed", but that was far from being the case. In fact, one of the trade unions refused to agree to them, sought judicial review and had the agreement quashed. Given that one of the unions had refused to contemplate agreeing to the relatively modest-if we are honest-changes to the current scheme, it would be unrealistic to assume that we could then go back and say, "Oh, PCS, please feel completely differently, and
please execute a rapid volte face from your position of a few months ago." I take the view that the previous Government took, which is that the situation is not sustainable, and that one union cannot be allowed to stand in the way of necessary reform. That is why we have introduced the Bill, and why we are engaged in a concurrent process of negotiation, through which we genuinely want to achieve a long-term, sustainable settlement.
Mark Durkan (Foyle) (SDLP): The Minister has stressed that five unions-not the PCS-had agreed to the arrangements in February. How many of the unions are in agreement with the framework that will be imposed by the Bill?
Mr Maude: Just to be clear, we are seeking to negotiate a new scheme, which would effectively make the terms in the Bill redundant. I make no bones about this: the Bill is a bit of a blunt instrument. It does not seek to create an entire, comprehensive new scheme. It simply imposes a cap on the amounts payable under the current scheme, so that it will be possible for the scheme to operate in a way that is fair to the taxpayer and to workers in other sectors outside the civil service. This is a complex process, and no one should be surprised that there is not instant agreement on a comprehensive new scheme. We are seeking to negotiate all the terms, but particularly those relating to additional protection for lower-paid workers and to a cap on what can be paid to the highest-paid workers.
Lindsay Roy (Glenrothes) (Lab): Can the Minister explain the rationale behind giving preferential treatment to those who seek voluntary redundancy, as opposed to those who are forced to take a compulsory redundancy package?
Mr Maude: Almost by definition, if a compulsory scheme offered less work and better terms, no one would take up voluntary redundancy. Voluntary redundancy is better because it can be negotiated and a scheme can be fashioned to meet the precise circumstances of the employing organisation and the work force. It can be designed to be as sensitive as it can be to the particular needs of the situation. Obviously, if a compulsory scheme were more generous than a voluntary one, no one would ever take voluntary redundancy. It is of the essence of any redundancy scheme that voluntary terms should be capable of being more generous. That is why we framed the provision in this way and why part of what we are seeking to achieve in the negotiated comprehensive new scheme is to enable employers in the civil service to configure voluntary redundancy schemes that are more generous than the compulsory scheme.
Mr McCann: Will the right hon. Gentleman give way?
Mr Maude: I will, but then I will have to make some progress.
Mr McCann: I am grateful. Will the Minister confirm that if the negotiations with the civil service unions fail, he will impose the terms that are part of this Bill?
Mr Maude: If this Bill progresses through the House, achieves Royal Assent and goes on to the statute book, it will come into effect, so the cap will apply as of the day of commencement. As I said, I hope that we achieve something frankly more grown up, more sustainable and more long term by having an agreed long-term comprehensive settlement. If both Houses of Parliament agree that the Bill should be passed, however, it will come into effect.
Mr Nigel Dodds (Belfast North) (DUP): The Minister is generous in giving way. On numerous occasions, he has mentioned the issue of lower-paid civil servants. There is a great deal of anxiety out there about it and many of us have received representations in respect of it. How does he define "lower paid"? What is his definition of a lower-paid civil servant when it comes to these parallel negotiations?
Mr Maude: Well, that is one of the issues that is being negotiated. It can be defined in all sorts of different ways. It can be defined in terms of a proportion of the median salary or it can be defined by an absolute number, which would subsequently need to be updated from time to time. That is precisely one of the issues that is the subject of negotiations, and I hope we can make progress on it.
Mr Maude: I really have to make some progress and draw to a conclusion because Members of all parties wish to participate in the debate.
I emphasise that if the Bill comes into effect, it will affect only those staff issued with a notice of dismissal or in respect of whom a departure date was agreed after the legislation came into effect. Any civil servant already issued with a redundancy notice or who receives one before the Bill passes into law will not be affected by the restrictions it introduces. The first clause provides definitions to clarify who is covered by the compulsory cap and who is covered by the cap on voluntary departures. The second clause provides for the Bill's effects to be time-limited. I stress again that we have no desire to see this legislation continue any longer than is absolutely necessary. The inclusion of a sunset provision prevents the legislation from continuing ever onwards. Instead, if we wish to renew it, the Government will be obliged to return to the House to seek approval by an affirmative resolution.
Alongside the provision for prolonging the effects of clause 1, there is also the option to bring forward the termination date. As I have already said, my intention is absolutely to resolve the issue by discussion and negotiation rather than by legislation, and I look forward to making the order that will repeal section 1 of the Act. It was disappointing, as I said earlier this morning, to hear Mark Serwotka, the general secretary of the PCS, pledge to return to the law courts to try to thwart further reform. That bodes ill for the chances of an agreed settlement, but we will strive-we will genuinely strive-to achieve that agreement. It is essential to deliver additional protection, which, I stress, is especially directed at members of Mr Serwotka's own union. For the sake of his own members, as well as in the national interest and the interest of the taxpayer, I urge him to engage in the negotiations as wholeheartedly as the other five civil service trade unions.
I earnestly hope that a successful negotiation will render the Bill a dead letter before it even hits the statute book. That is my aim, and I will do all that I can to deliver it. In the meantime, however, the Bill is indispensable, and I commend it to the House.
5.50 pm
Tessa Jowell (Dulwich and West Norwood) (Lab): I beg to move an amendment, to leave out from "That" to the end of the Question and add:
"this House, whilst affirming its belief that civil service compensation should be reformed, declines to give a Second Reading to the Superannuation Bill because it provides inadequate protection for some of the lowest paid and longest serving public sector workers; believes that the reform proposals of February 2010 were fair, reasonable and non-age discriminatory, offering protection for the lowest paid workers whilst making substantial savings; and is strongly of the opinion that the publication of such a Bill should have been preceded by a full process of pre-legislative scrutiny of a draft Bill and in full consultation with Civil Service employees."
I hope that the Minister has studied the amendment closely, because Labour Members believe that it holds the answers he seeks.
At the end of the last parliamentary session, the day before the Bill was published, the Minister declared that when it came to reform of civil service compensation, he wanted to negotiate an arrangement that had fairness built into it. Obviously we welcome that ambition, but we argue that as the negotiations have progressed and the detail of the Bill has become clear, he has failed to live up to his commitment.
The Minister says that he wants a fair settlement, but he has proposed reforms that are harsh, and harshest of all for some of the longest-serving, often low-paid, civil servants. The Minister says that he wants a negotiated settlement, but he has thrown out the progress made by the last Government through just such negotiations, and instead seeks to impose a short-term solution which lacks the legitimacy that comes from open and honest dialogue with the trade unions representing the people who will be affected by the reforms.
I welcome the Minister's generous remarks, which were sincerely meant, about our nation's public servants. I join him in recognising the important role that they play in our national life. However, I also argue that they deserve better than the proposals in the Bill. Public servants are too often represented as dead-weight on the taxpayer, as if they were somehow the cause of the deficit.
Mr Maude: No, we entirely blame you.
Tessa Jowell: That is also misguided, and we can have a further debate about it.
In fact, it is public servants who make our borders safe, help unemployed people back to work, run our courts and prisons, collect our taxes, and support our armed forces both at home and abroad, in Iraq and Afghanistan. With professionalism and integrity, they make the process of government work. The representations that I suspect we have all received in our constituency surgeries seek to make that point. It is being made by the people who provide those services, many of whom are members of the PCS but feel that their motives and their importance are being misrepresented.
Mr Maude: Let me make it absolutely clear that we do not blame public servants at all for the disgraceful budget deficit that the coalition Government inherited. Like Tony Blair, we blame the last Prime Minister, who as Chancellor and then as Prime Minister presided over an incontinent approach to the public finances.
Tessa Jowell: And let me make it absolutely clear that the Minister has grossly misrepresented the words of the former Prime Minister. Let me also remind him that the deficit arose because of a global financial crisis, and that it was our Government-led by the last Labour Prime Minister-who steered our economy at that stage, who, indeed, provided leadership for the world, and who drew our economy back from the brink of disaster. Let us have no more trivial point-scoring on that subject. I hope that during this debate we shall be able to move on from some of the crass misrepresentation of our country's public servants and once more recognise the importance of their work, both public and private.
Richard Graham: As the right hon. Lady knows, a number of Members on this side of the House, as former civil servants, have already said how important they believe the civil service to be. The amendment, however, focuses on fairness and affordability. Does the right hon. Lady agree that affordability is critical in the current economic climate, and will she tell the House what approach she intends to take? As for fairness, does she agree that the outline given by my right hon. Friend the Minister of his negotiations with the trade unions represents exactly the sort of fair approach that we should be seeking?
Tessa Jowell: I intend to test the Minister's commitment to fairness-with respect, I think that he asked more questions than he answered-and, if the hon. Member for Gloucester (Richard Graham) will contain his impatience, I shall respond to both his tests in relation to the fairness and the affordability of our alternative.
The Minister has made it clear that the civil service compensation scheme is in need of reform, and we agree. The cost of the scheme needs to be reduced. We fully recognise that, in the present climate, it provides over-generous and disproportionate benefits for some very highly paid people. I believe we are all agreed on the need for reform, which is why in February we set out changes to end what would be regarded by the wider public, and by any measure, as over-generous settlements.
The February 2010 scheme would have saved £500 million over the next three years. That was part of our Government's plan to reduce the deficit. Yes, reform is needed, but it must be the right reform, delivered in the right way. It must be fair and workable, and in particular-here I echo the Minister's words-it must provide protection for the lowest-paid. It must also be underpinned by open and honest dialogue with the civil service unions representing those who are likely to be affected.
Martin Horwood (Cheltenham) (LD): The right hon. Lady keeps presenting the last Government as the Government who pursued a path of negotiation and what she has just described as open dialogue. In February this year, however, she too pursued the route of compulsion. Does she now regret the precedent that that set?
Tessa Jowell: There is all the difference in the world between a settlement that recognises reasonably the proper expectation of the lowest-paid, and the proposals in the Bill. That is the difference that the hon. Gentleman needs to understand.
John Hemming: Will the right hon. Lady give way?
Tessa Jowell: I am going to make a bit of progress.
In the current environment in which many civil servants are understandably concerned about their jobs, it is even more important for any reform package to be achieved in full consultation and, wherever possible, agreement with the work force. As a result of the Equality Act 2010, which formed such an important part of the last Government's legislative programme, the Bill is subject to an equality impact assessment, which I took the time to study.
Against the commitments to full consultation and transparent negotiation, we might look at some of the evidence in the equality impact assessment. It asks:
"Does this policy affect the experiences of staff? How? What are their concerns?"
For staff, the following answer is given:
"Exit terms are set out in Civil Service Compensation Scheme, to be capped at levels set out in the Bill."
That is a perfectly fair statement of fact. The impact assessment then asks whether the policy affects the experiences of staff networks and associations. The answer given is: "As above"-for staff-but also:
"(no consultation due to urgent need for affordable provisions)."
The answer for trade unions is the same:
"As above (but no consultation due to urgent need for affordable provisions)."
When the equality impact assessment looks at the impact on voluntary organisations, the conclusion is that that is "N/A"-not applicable. The impact on race is also deemed not applicable, as are the impacts on faith, disability rights, gender, sexual orientation and age. The impact assessment also asks:
"What were the main findings of the engagement exercise and what weight should they carry?"
That, too, is said to be not applicable.
"Does this policy have the potential to cause unlawful direct or indirect discrimination? Does this policy have the potential to exclude certain groups of people from obtaining services, or limit their participation in any aspect of public life?"
That is not applicable as well.
"How does the policy promote equality of opportunity?"
That is not applicable also. I could go on.
That is not by any stretch of the imagination a proper assessment of the impact of the proposals on the work force, taking account of the obligations that sit on the coalition Government to recognise equality of opportunity.
Mr Jenkin: I am interested in what the right hon. Lady is saying, but I think it is incumbent on her to explain to the House why she thinks the Bill might be discriminatory in some way, rather than just advert to a negative and say that that is not good enough. Does she honestly believe that the measures could be discriminatory in some way? If she could explain that to the House, it would be very helpful.
Tessa Jowell: The hon. Gentleman asks a fair question, but it is his responsibility to test that. However, because compared with the existing situation these proposals in effect levy the greatest penalty on the longest-serving, and almost inevitably the oldest, civil servants, there is at least a prima facie case for considering whether they are age discriminatory. I draw no conclusions, but I say to the House that I consider that the equality impact assessment has not taken full account of the impact of the proposed measures across the work force. The Opposition consider the terms put forward to be both unfair and punitive.
John Hemming: The right hon. Lady often uses the word "unfair". I assume that she employs her own staff in her parliamentary office and that they are subject to the statutory scheme, with a maximum of 30 weeks' pay. How does she argue that that, which was set by Parliament, is fair compared with the scheme the Government proposed in February this year?
Tessa Jowell: For the very simple reason that, in order to meet the terms of the judicial review, the proposals in the Bill are removing entitlements, expectations and accrued rights from staff who have a reasonable expectation of receiving them. That is why they are unfair.
John Hemming: Will the right hon. Lady give way?
Tessa Jowell: No, I am going to make progress because many Members wish to speak in the debate.
We argue that no adequate protection is offered to the lowest-paid, with a junior official in a job centre receiving no more protection than a permanent secretary of a Government Department. In introducing the Bill, the Government have insufficiently consulted their employees. The scant information in the equality statement makes that very clear.
Alison McGovern (Wirral South) (Lab): Does my right hon. Friend agree that the fear, which I have come across in my constituency, about these changes is exacerbated by what seems to be scant consultation? Having more consultation would be helpful in dealing with the worry and fear that I have picked up on in Wirral.
Tessa Jowell: My hon. Friend makes an important point based on extensive discussions in her constituency with civil servants likely to be affected. She is absolutely right in identifying that fear, but that does not mean that change is not necessary, nor that members of the Council of Civil Service Unions are not reasonable people who are prepared to negotiate in the spirit that they recognise is necessary.
Richard Graham: Will the right hon. Lady give way?
Tessa Jowell: No, I am going to make some progress-and I think that the hon. Gentleman has already made an intervention.
The very fact that the Bill is designed to expire within 12 months makes its own case for its unworkability as a long-term solution. Instead the Bill is being deliberately used to force the trade unions into compliance. As such it should be seen as a very unusual use of parliamentary
procedure to ask Parliament to pass legislation that-as the Minister has made clear-it is hoped will not be implemented.
The Deputy Prime Minister has stated-presumably on behalf of the Government-that fairness will be at the heart of everything the Government do. However, as with so much that the coalition does, the terms put forward under the Bill do not meet the first basic test: they are not fair because some of our longest-serving, and often lowest-paid, civil servants receive no protection under the proposals.
Mr David Hamilton: Did the Minister not give it away when he made the point in his opening remarks that it is more expensive to get rid of those at the top of the tree, and therefore there would be an encouragement to get rid of those at the bottom of the tree? Will not low-paid civil servants be really concerned by the attitude now being taken?
Tessa Jowell: I think that those at the higher earnings end and those at the lower earnings end are equally entitled to be apprehensive about the proposals.
Mr Maude: Let me make it absolutely clear that the point I was making is that, under the current scheme, lower-paid people are more likely to lose their jobs because it is so prohibitively expensive to make higher-paid, longer-serving senior officials redundant. As a result, more lower-paid civil servants get made redundant. The reform is therefore necessary for this reason alone: to protect the jobs of lower-paid workers.
Tessa Jowell: Well, let us see how that commitment plays out in practice. I entirely agree with the right hon. Gentleman that the people who work in job centres and at our borders often doing relatively low-paid jobs are the people who make those services happen at all, and I think there would be a marked degree of cross-party agreement about ensuring fairness and protection for such employees. We on the Opposition Benches, however, feel considerable scepticism about whether the proposals will deliver that.
Let me illustrate that and pick up on the point made by my hon. Friend the Member for Midlothian (Mr Hamilton). A member of staff earning less than £20,000 made compulsorily redundant after more than 20 years' service would see their redundancy package more than halved under the provisions of the Bill; and staff covered by the civil service compensation scheme would receive substantially less in redundancy terms than comparable public sector employees, despite being among the lowest-paid public servants. The proposed cap is half that often seen in local government, education and the NHS.
On the question of protection for the lowest-paid, let me repeat the words used by the Minister in the House in July-he was right about this:
"Contrary to general belief, large numbers of civil servants are not very well paid-half of them earn £21,000 a year or less-and we want there to be extra protection for them."-[ Official Report, 14 July 2010; Vol. 513, c. 931-32.]
So say all of us, but the fact is that the Bill gives no confidence to those lower-paid employees.
Matthew Hancock (West Suffolk) (Con): The right hon. Lady made the comparison between civil service and other public sector redundancy packages. Can she also make a comparison between civil service and private sector mandatory redundancy packages?
Tessa Jowell: I am surprised that the hon. Gentleman feels it necessary to ask that question. If employers in the private sector use the basic statutory scheme, it is considerably less generous than even the proposals in the Bill. In a way, that is not the point, because the value that we attach to public servants, to the importance of the jobs that they do and to the commitment to invest in security to prevent turnover and to compensate for what are often lower levels of pay is one of the reasons that such provisions have traditionally tended to be more generous. It is worth reminding the hon. Gentleman-the Minister took us through the history-that the scheme was created by a Conservative Government and amended by a Conservative Government and that attempts at reform were made under a Labour Government. Now, under the coalition Government, we have what amounts to a hollowed out version of the original scheme.
Richard Graham: Will the right hon. Lady give way?
Nick de Bois (Enfield North) (Con): Will the right hon. Lady give way?
Tessa Jowell: No, I am going to make some progress so that Back-Bench Members can get in.
We expect the Government to take seriously the need for proper dialogue and negotiation in circumstances where the individual impact of the changes is so substantial. It is fair to reflect disappointment among the trade unions that the Bill makes no attempt to put in place a long-term solution to the big challenge of the reform of civil service compensation and, as such, no solution is possible given the Government's failure to engage constructively with their employees and their representatives. That is implicit in the Bill's final provisions, which are designed to ensure that it is sunsetted, or expires within 12 months, can be repealed at any time and can only be extended for a further six months through recourse to secondary legislation.
The Bill to which the House is being asked to give a Second Reading tonight does not even represent the Government's settled position. The Minister tells us that his ambition is now a negotiated, sustainable and practical long-term solution, but that ambition merely serves to remind us that the Bill fails to provide such a sustainable solution or one that has been subject to proper dialogue with those affected.
There are questions that the coalition Government and the right hon. Gentleman must answer. The Opposition have made absolutely clear the anticipated level of savings-figures in which there can be confidence-that would have been produced by the February reform package, so I ask the right hon. Gentleman what savings the Government expect to make from the proposals in the Bill. Why do we not have a complete and workable scheme in front of the House as part of the Bill for which a Second Reading is sought? Why are we spending parliamentary time on legislation that simply seeks to provide the right hon. Gentleman with a negotiating tool to use with the civil service unions?
There is, of course, an alternative. It is fair and it is workable. As shown in our reasoned amendment, the February 2010 scheme should form the basis for the reform that we all agree is needed. As the right hon. Gentleman has made clear, it emerged from an eight-month consultation between the Government and civil service staff and would provide a fair resolution to the issue. Now, although five trade unions have agreed and continue to support the proposal, all six have expressed their support for the use of the principles underpinning the scheme as a basis for moving forward. That is an invitation and an offer to the right hon. Gentleman. Such an approach would meet the tests that we have set out for reform and save at least £500 million over the next three years.
Our challenge to the Minister is to put back on the table the February 2010 proposals, which are fair to the lowest-paid, will contribute £500 million to reducing the deficit and will reform the existing scheme. The right hon. Gentleman has already conceded in exchanges with my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) that, had all the unions agreed to this, there would have been-as he put it-a pressing case for acceptance. We therefore ask that he accepts the case now and supports the reasoned amendment. I call on the House to reject the Bill.
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Alun Cairns (Vale of Glamorgan) (Con): Like every Member of this House, I have received significant communications and representations from individuals and from the unions on this matter. Many of us will have significant numbers of public sector employees in our constituencies. I would say that Wales as a whole has a disproportionate dependence on public sector employees-quite obviously, including employees of the civil service-and the Vale of Glamorgan is no different.
It is quite sad for all those individuals and for the House that we are in this position today. The financial state of the nation has led us to this position. The unrealistic position taken by the unions has driven the Minister to introduce such a Bill, sadly without complete settlement with the unions. I was encouraged by some of the statements that he made about the negotiations and I shall come back to them a little later.
It is difficult to believe some of the payments that are made under the current system. In 2007-08, the Department of Health, in 76 individual cases, paid severance compensation of more than £7.8 million-an average of more than £102,000 per employee. I wonder how many of those who were made redundant or who took voluntary redundancy were then re-employed by the Department of Health as consultants, which would obviously have increased the costs to the public purse. In the Department for Environment, Food and Rural Affairs, there are two examples: in one, compensation in excess of £500,000 was paid and, in the other, compensation in excess of £1 million was paid. That position clearly cannot continue and is wholly unreasonable not only to those in the civil service who are paid at lower levels but to the taxpayer who must ultimately foot the bill.
When I discussed those levels of payments with some of the constituents who got in touch with me expressing concern about their own interests, they showed equal disdain towards the levels of compensation that are paid, and they would recognise the absolute need for reform. Such levels of severance paid at the higher level
simply cannot continue. It is a burden on the taxpayer and, as has been highlighted, is prohibitive to the reform of the public sector when the taxpayer really needs every efficiency measure to be driven through. Not only is it prohibitive in terms of the level of payments and the high cost of making many of these individuals redundant, but it is prohibitive and damning for people at the lower levels who will have to be made redundant when those at the higher levels cannot be laid off because it would be unaffordable, even when many of their roles have become redundant as a result of the evolution of the Department or because of new technology. The Bill goes further than the previous proposals, but as the financial situation of the country is much worse than was previously stated, the bill must be affordable, and that imperative has obviously influenced my right hon. Friend the Minister in introducing the Bill in such a form.
I do have concerns about the effect on civil servants at lower levels of the pay bands, and we need to recognise their interests. I was encouraged by my right hon. Friend, who highlighted his concerns and the need for negotiations. I would look to the trade unions, particularly the PCS Union, to see that statement in a positive light and negotiate, in the interests of those at the lower levels, a settlement that is in the interests of the whole of the civil service and, obviously, of the taxpayer.
In research and when chatting to constituents, it was highlighted to me that at the Department for Work and Pensions, someone who is at the maximum of the lowest pay band-band B-earns between £15,000 and £18,000. To put that in perspective, a fraud officer-an individual who we expect and hope would save some money for the taxpayer over the coming years-is a band C. That demonstrates how much responsibility can reside at the lower levels of some civil service pay bands. Currently, if made compulsorily redundant, such an officer would receive three times their salary if they were older than 42 and had more than 20 years' service. Before the court judgment, the intention was to provide such officers with the equivalent of two years' service, and now it is to provide one year's salary in compensation.
I am encouraged by my right hon. Friend's statements to the effect that he is interested in negotiating at this level. I recognise the difficulties in sharing some of those concerns with the House, because it is obviously not the place to negotiate with Ministers, but I ask him, in the summing-up, to go as far as he can in sharing the objectives that he would like to achieve in the interests of people at the lower levels of the salary and responsibility grades.
I would advise the right hon. Member for Dulwich and West Norwood (Tessa Jowell), who was asked a question about the average for private sector redundancy pay, that it is in the region of £9,000, which we should recognise is less than is being offered, and in the affordability debate we need to recognise the generosity of that.
Interestingly, the 2009 civil service statistics show that 36% of civil servants earn less than £20,000 and 58% less than £25,000. Clearly, there is a need for some sort of protection at the lower levels. The Government have taken positive steps-when they formulated their policy on the pay freeze, they protected those at the bottom end of the scale, and I think that principle should carry through to this Bill and to the negotiations that my right hon. Friend is undertaking.
Mark Durkan: The hon. Member will recall that, when the Minister was asked to say at what level he thought people were low paid, he said he could not say. It would not be for him to say-it would be almost impertinent to suggest that outside the negotiations-but the hon. Member has rightly recalled that the coalition Government had no problem deciding that £21,000 was the threshold at which people should be protected from the pay freeze.
Alun Cairns: I have no doubt that that would be part of the negotiations, but I wholly accept the point that my right hon. Friend has made that one does not start negotiations at the point where one expects to finish, bearing in mind the actions that the PCS Union and some of the other unions involved have taken to date. However, the point about the £21,000 threshold that the hon. Gentleman highlighted demonstrates the compassion and support shown by the Government, and I have absolutely no doubt that that compassion and support can and will be shown towards civil servants in the negotiations that are led by my right hon. Friend.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Considering that there are ongoing negotiations, does not the hon. Gentleman agree that the Government are using the Bill effectively as a battering stick to coerce the unions during those negotiations?
Alun Cairns: I am grateful to the hon. Gentleman for the question, but I think the Government have been left in an extremely difficult situation-a sad situation, as I highlighted-from the outset. We have such a large deficit. A decision is needed on this question, particularly given the reforms and cuts that are likely to follow the comprehensive spending review, so I look positively at the action that my right hon. Friend is taking to resolve that position to bring certainty to those people whom I have rightly sought to champion.
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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.
John Hemming: The hon. Gentleman appears to be arguing, relatively coherently, for no change whatever to the terms and conditions of public servants. Is that what he is arguing, or is he arguing that some change is reasonable? If so, what change would be reasonable?
John McDonnell: I recognise that a range of negotiations need to take place. In the last set of negotiations with the previous Government, there were various issues to do with changes tackling age discrimination in particular. My view-we have to come on to the reality of the negotiations that will have to take place-is that we can create a climate of opinion in this House and elsewhere that will enable those negotiations to come to fruition, and that we should protect the lowest paid, in particular, as best we can. That has been the commonly voiced demand in the Chamber today.
John Hemming: Does the hon. Gentleman agree that the best way to protect the low paid is to protect them from redundancy?
John McDonnell: Yes, and that is why I have consistently put forward alternative economic policies and strategies.
Let me press on, if I may. This is a serious debate, and I am trying to get across the feelings expressed to me through the PCS parliamentary group. As I say, I have met PCS members, I have attended meetings of the executive, I have been on picket lines, and I have been at various meetings around the country. There is anger about the proposals in the Bill-I shall come on to that-but also about the way in which the issue has been handled by Ministers.
In interview after interview, and even in the Chamber today, Ministers and Government Members have focused, in their descriptions of the compensation scheme, on payments to the highest-paid civil servants; it has almost been a portrayal of "Yes Minister"-type permanent secretaries, retiring to their Whitehall clubs on large-scale pay-offs. There are some individual examples of that, and they have been quoted today, but PCS is one of the leading unions that has pointed out that issues around high pay within the civil service have undermined the equitable distribution of rewards in the public sector.
Time and again, including today, we have had repeated the example of some civil servants receiving up to six years' wages as a redundancy settlement. Let us get this point on the record as best we can: if I may refer Members to the Library note, of 500,000 civil servants, only 4,400 are in the senior civil service. The maximum compensation for most is capped at three years' pay under the compulsory scheme, and two years' pay under the flexible, voluntary scheme. For a small number of people who joined the service before 1987 with reserved rights regarding severance payments, payments are higher.
Ministers were asked by the Public Accounts Committee and, I believe, in parliamentary questions on the Chamber Floor, for information on the number of individuals currently getting a package worth six years' salary. We were told that the information was unavailable because it could be provided only-there is a sense of irony here-at disproportionate cost. The six-year allegation is consistently used, even today. I would welcome some facts on how many people we are talking about and what the costs are.
Martin Horwood: Perhaps I could be of assistance to the hon. Gentleman. One of my constituents, a civil servant, calculated that to qualify for that six-year maximum, one would have had to have joined the civil service just after one's 17th birthday and have been made redundant just before one's 50th. I suspect that we are talking about a very small number.
John McDonnell: Would it not have been useful, though, if we actually had the number so that we could have a properly informed debate, rather than allegation, counter-allegation and, almost, smear?
Ministers were also asked how much public expenditure the imposed scheme would save-my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) on the Front Bench raised the issue again today-but that information has not been forthcoming. The Secretary of State has said that the amount is impossible to calculate. I have been there; I have advised decision makers-and in the private sector it is exactly the same-and when one is entering a redundancy situation, one does a rough, or even a back-of-an-envelope, calculation of the numbers one is looking to lose, the amounts, the average rates of pay, the distribution of the rates of pay across the service, and therefore roughly what the cost would be. That is not too much to ask before we make a momentous decision on this legislation. In fact, the Public Accounts Committee raised the issue again in July, and the Minister refused to respond.
I deal now with the myth of the highly paid civil service. Some people have already mentioned the subject today, but it is important that we get the point on the record. Even though this has been denied today, it has been part of the Government's strategy to promulgate the myth of a highly paid civil service.
Kwasi Kwarteng (Spelthorne) (Con): I am unclear about the hon. Gentleman's position on the status quo. Does he believe that the system is sustainable at current levels, given the economic climate?
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.
Andrew Bridgen (North West Leicestershire) (Con): Does the hon. Gentleman believe that it is fair or affordable in the current economic situation for anyone to be given six years' pay as redundancy pay?
John McDonnell: Perhaps the hon. Gentleman was not listening. The period of six years has been used time and again to justify the measure. A tiny number of cases are involved, but we would like the exact number. If he can help us to extract that information from his own Ministers, that would be useful.
The vast bulk of civil servants who have been made redundant have been laid off on conditions of no more than three years' pay, and the majority of them on considerably less. Under the terms of this measure, that will be reduced by two thirds. It is not about the tiny minority who receive six years' pay, but about the vast majority who will lose up to two thirds of their payment.
John McDonnell: I will press on, and give way to the hon. Gentleman shortly.
The position now is the worst of all worlds for civil servants, who are facing a double whammy. They enter a service in which they are paid less than the private sector, but at least they receive some benefits as a result of the security of pension and redundancy payments and so on, but their redundancy payments are to be cut while at the same time their pay is frozen or cut.
There is no protection in the Bill for the low-paid-we all agree about that. Members have appealed for details, but the ministerial response is that this is not the place to begin negotiations. The Bill begins negotiations, and it is a negotiating ploy. The Minister could at least set out the parameters or the options available to protect the low-paid. The argument goes that that will be negotiated with the unions in separate negotiations, but do Members of Parliament not have an additional responsibility to represent the interests of their constituents? When hon. Members vote on the Bill, they need security of information to protect their constituents' interests. They need to know in more detail how their low-paid constituents will be protected as a result of the legislation. However no fragment of information has been given, nor have parameters been set by the ministerial words we have heard today.
When we deal with legislation of this sort, we need to consider the impact on people's lives. The worst feature of the Bill is the Government's almost brutal disregard of the human consequences. Tens of thousands of civil servants are likely to lose their job in the coming years. In the economic crisis, even if there is no double-dip recession, and we just rattle along the bottom for the next three years, most of those people will struggle to get back into work at all or find work offering similar
wages. If we look at previous recessions, particularly for older workers, we can see that some of them never work again. We must recognise the devastating impact that that will have on individuals and families.
Most people in this country lack savings. Various reports by citizens advice bureaux show that even people in work lack savings beyond a month's salary or wages. Most people have enough for only two months' mortgage payments, so are close to default. Reducing redundancy payments in this way undermines people's ability to survive the devastating impact of losing their job. It also undermines their ability to get back into work in many instances, because it is a costly exercise to travel around the country looking for work. The measure will introduce poverty and stress, and put pressure on people who have lost their job. The irony is that whatever savings are found will be significantly reduced by the benefits that we pay out. Many of the people we employ to administer unemployment benefits will receive those benefits themselves as a result of cuts in public expenditure.
Many of the PCS members I meet are desperate as a result of the anxieties engendered by the Bill, and they are becoming angry. When people perceive that an injustice has been done to them, they react. Boiling point has been reached as a result of the autocratic methods used by the Government to impose their way. They have introduced legislation before serious negotiations have taken place. It is like putting a cosh on the table before beginning a dialogue. The use of the money Bill device to prevent full parliamentary scrutiny is despicable. I have looked at "Erskine May", and I urge other Members to do so. I cannot see how this can be defined as a money Bill. I hope the Speaker will rule against it after Third Reading. If it is passed as a money Bill, it will be implemented within a limited time scale, with no potential for amendment in the other Chamber.
The introduction of a sunset clause sends out a message that if the economic situation worsens, the Government will come back for more, and there will be further cuts in the scheme after that year. The Bill immediately soured the industrial relations climate under the new Government, and that does not apply just to the civil service. Across the public sector teachers, local government workers, health workers and those working in the emergency services are all on better terms than the terms introduced by the scheme in the Bill, so they see the legislation as the starting gun for an attack on their conditions and their redundancy payments.
Some have put a more sinister construction on the Government's intentions. It is clear that the Government's strategy is that the economic recession will be solved on the basis of cuts in the jobs, services, wages and conditions of employment of working people. For those of us who have been around a while, it smacks of the same old policies of the 1980s. In that period a Conservative Government decided that the unions had to be broken if the Government were to be able to force through harsher cuts. They took on the miners' union, for which I worked at the time. It was an attempt to break a union as an example to others. The present Government appear to have identified the group of public sector unions as the modern day target. I am sure we will soon be hearing statements about enemies within and so on.
If that is the Government's strategy, they are sorely mistaken. My sense is that the public servants who will be affected by such legislation will not take it lying
down. Members have been lobbied already. They are aware of the growing anger, and there will be resistance. That will have public support, particularly as our communities begin to experience the impact of the cuts to their services and increasingly appreciate the scale of the damage that will be incurred by our society.
I appeal to the Government to pull back from this mistaken approach of imposition, which will lead to confrontation. I urge them to get back to the negotiating table and to agree a serious and sensible way forward. They should take the cosh of this legislative proposal off the table to allow proper negotiations. Ministers could sensibly withdraw the Bill tonight. Failing that, I urge Members to reject it because there is nothing in the Bill or in the words uttered by Ministers today that gives us the guarantee of the protection of our constituents that we require. The Bill will damage the civil service that we have all commended in today's debate as an exemplar to the world.
I warn the Government that issues such as those raised by the Bill, which appear minor at first glance, become the combustible material that eventually brings down a Government. I urge Members to reject the Bill tonight.
Mr Deputy Speaker (Mr Nigel Evans): Order. A considerable number of Members are trying to catch my eye, as the House can see. If speeches go much beyond eight minutes, we will not get everybody in, so I ask Members to focus and show discipline in order to help other Members to be able to deliver their speeches also.
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Dr John Pugh (Southport) (LD): I shall be fairly brief, as I have only one fundamental concern. Despite the persuasive skills of the Minister, I sensed in what he said the iron fist within the velvet glove.
I have concerns about the scheme which focus on the fundamental issue of a unilateral alteration of contract and how that stands in this place. I accept that the scheme as it stands is, as many hon. Members have said, generous. It is certainly superior to any available to other public sector workers, such as teachers, NHS staff or local government workers. It is expensive and everybody accepts that it needs an overhaul. I am aware that successive Governments, worried about affordability, have sought agreement on changes and got very close to agreement, which must give some hope for the future.
What I have difficulty with-it is a genuine difficulty, and perhaps the Minister can help me-is a unilateral variation of contract in any context, and not because it is ruled out, as it was in the courts, by the Superannuation Act 1972, which Parliament is, of course, free to amend, and which we are in the process of amending here. Let me briefly explain why. The scheme as I see it is referenced in civil service contracts of employment. Those contracts are freely entered into by the state and by the employees who work for the state. The scheme therefore features, though not in specific detail, as a term and condition of that contract.
When an employment contract is ignored or discarded by any other employer, there is normally a redress in law. Some unscrupulous employers view that as an
occupational hazard, preferring to pay people off with meagre compensation than to honour contracts. That is a calculation, but it is not something that a Government should engage in. Such people belong to what I would call the brutalist school of management, and working for such people is a unhappy experience. The hon. Member for Hayes and Harlington (John McDonnell) mentioned how things could go in the civil service.
The state should, in theory, be a model employer, and legislates in this place on employment law for other employers. What we have here, apparently, is the courts telling the civil service that they cannot vary a contract unilaterally as a result of action by the previous Government, and this Government legislating to ensure that they can. However it is dressed up, that represents the naked-albeit legal-use of power to alter a contract unilaterally. Such managerial brutalism, as I call it, is likely to have long-term detrimental consequences, in terms of morale and the willingness of employees to engage satisfactorily in their employment.
Leaving aside the fact that this sets a poor example, there is a danger that it may also be poor politics. Good politics is based on ethics, and who wants to defend breaking contracts at one's convenience? To be sure, keeping to them in this case costs money-Members have spoken about affordability-and more money than people ever thought it would. We do not argue in this place that because private finance initiative contracts cost much more than imagined, we should pass legislation to drop some of their clauses, but that strikes me as an exact parallel of what the Bill appears to do.
Keeping contracts is fundamental to any scheme of law. Even when football teams that are saddled with managers who drag them down into lower divisions finally come to sack them, they honour contracts that they have made with them, sometimes at huge cost: they keep the terms and conditions of their contract. We do not hire people to work on our premises or our houses and, when our bank balance declines and our fortunes get worse, insist on paying them less than agreed, unless we have some sort of justification. Only in the direst national emergency can a democratic Government sacrifice the principle of honouring contracts, and they should do so only when there is no alternative course of action.
I genuinely appreciate the Government's dilemma. I wish to see the scheme reformed to become more affordable, at less public cost. We must all accept that since 1972 the scheme has grown and grown, and there might be a difference between reneging on the scheme and varying some detail of it, but that is a legal question above my pay grade. I do not seek to answer whether that difference exists, or to create difficulties for anyone. I simply want to know whether the Bill before us is in effect a unilateral variation-a rewrite of a contract. If it is, how in this case can we provide a wholly rational and ethical defence for it?
6.59 pm
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab):
May I declare an interest? In the Chamber tonight, I am representing thousands of civil servants who live and work in my constituency, home to Her Majesty's Revenue and Customs, the Department for International Development and the Department for
Work and Pensions. Many other constituents work in the Scottish Court Service, the Scottish Prison Service, the Forestry Commission and many other Departments, agencies and non-departmental public bodies throughout Scotland.
I have another interest to declare: I was a civil servant between 1982 and 1992; I became a full-time official with the Civil and Public Services Association, a predecessor of the Public and Commercial Services Union; and then I became a senior full-time official for the PCS. I know all the protagonists in this debate very well indeed, including the aforementioned Mr Serwotka.
The motto of the new coalition Government is, "We are all in this together," and I should like to put that to the test by asking them to put their motto into actions rather than words, because, despite what was said amid the heady atmosphere of the Queen's Speech debate, every Member recognises that we have to tackle the fiscal deficit. The difference-well, there may be more than one-between Opposition and Government Members is how we do so. The Opposition believe that there are other options, that the Government are going far too far, far too quickly and that the damage that occurs will create more problems for the economy.
The proposal before us is the first real acid test of the Government's plans for deficit reduction, because we all know that the whole economy of the United Kingdom benefited from the economic bail-out. The private sector, the public sector and what people call the third sector all benefited, and in order to reduce the deficit every part of the economy must contribute. I shall argue strongly that that contribution must be proportionate and depend on how much people can afford. For example, the bankers, who perpetrated the biggest crime against our country's economy, must pay the most in order to rebalance our books.
We know from the Budget that people will be asked to pay a 20% VAT rate, and that there will be what Opposition Members regard as a puny levy on the banks. We must also consider the proposal before us, and taking matters in the round I have reached the judgment that we are not all in this together, because we are asking those who can least afford it, those who are vulnerable and public sector workers to pay the largest price. That is the collective impact of the proposal. Despite what the Minister said, that is the message that the Government are sending out. I appreciate his point about the negotiations, but, having taken part in many negotiations over the years, I now recognise when I had the upper hand and when the employer did, so I recognise that in the current negotiations the employer-the Government-has very much the upper hand.
Ministers still have an opportunity to reach a common-sense resolution for the civil service compensation scheme, however. A lot of inaccurate information has been put out in the press, and there is a great deal of confusion about the difference between severance and early retirement. For example, on the BBC's "Today" programme, I heard that some civil servants would receive six and two-thirds years' payments after they had been made redundant. That clearly confused severance with retirement, because severance is simply based on length of service and salary, and the maximum payout under the current CSCS scheme is three years. In respect of retirement, the terms are for the over-50s, involving an enhancement, through added years, to their pensions.
The Labour Government's comprehensive proposal to the civil service unions would have saved between £500 million and £650 million-not inconsiderable amounts of money, I hope Government Members will agree-and protected all the different bases in respect of early severance and early retirement.
Harriett Baldwin (West Worcestershire) (Con): I want to clarify the hon. Gentleman's point about severance, because the Library research paper states that early severance can cost "6 years' pay" under the 1987 terms. Is that the case?
Mr McCann: The hon. Lady is absolutely correct, but earlier contributors made it clear that that refers to a very tiny proportion of the civil service staff; the vast majority are under the terms that I have given the House- [ Interruption. ] The hon. Member for West Suffolk (Matthew Hancock) shakes his head, but it is absolutely true that the vast majority will receive severance terms based on a maximum three years' payout. [ Interruption. ] His colleagues nod in agreement, so he seems to be in the minority.
Matthew Hancock: The surprise that I express is due to the argument that, because not many people will receive enormous payouts, there is somehow not a problem. I also want to add a couple of facts to the debate. In the past three years at the Department of Health, the average payout has been more than £100,000 each year. The argument that large payouts amount to a couple of small examples contravenes the facts.
Mr McCann: I thank the hon. Gentleman very much for that intervention, but he is simply wrong. A minute number of individuals will attract substantial payments; the vast majority will receive a maximum three years' payment under severance terms and, for early retirement, up to six and two thirds added years. The Minister nodded when I mentioned that the maximum is a six and two-thirds years' enhancement.
The most important thing about the February 2010 proposals that the previous Labour Government put forward was that they would have protected the lowest-paid civil servants. The cap was two years' salary, with a maximum payout of £60,000, but given that the average salary of a civil servant is £20,000-that figure has been bandied about a lot in the debate-Labour's proposals would have protected those individuals. Under the Bill, they face a two-thirds cut, which is unreasonable and, with the greatest respect to Government Members, demonstrates that we are not all in this together. The Bill anticipates that, as a result of the comprehensive spending review, many thousands of civil servants will be made redundant in the months to come, and it effectively says, "While we give you the pain of making you redundant, we'll also hammer you financially as you walk out the door." That is unacceptable.
Richard Graham: Does the hon. Gentleman agree that his comments are focused on the Bill, rather than on the parallel aim of the negotiations with the trade unions? The fundamental aim of those talks, which is to increase the minimum statutory amount for the less well paid civil servants, is critical and fair. Does he support it?
Mr McCann:
I understand the hon. Gentleman's point, but may I make this point in return? If the February deal was unacceptable to one trade union in the negotiations, it strikes me as logical that that deal
would have to be significantly improved in order to make it acceptable to the PCS. I do not get from the Minister any impression that there will be any significant move to improve that deal financially, which leads me to conclude that those negotiations might not be as fruitful as Government Members hope.
Richard Graham: Does the hon. Gentleman support the concept of making the proposal to the trade unions more attractive to the lower paid, even if it is less attractive to the better paid?
Mr McCann: One of my final points is that the February deal should be put back on the table. That is the simple fact of the matter. That deal represents the best opportunity to reach an agreement, as the shadow Minister, my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell), said.
The Minister said that the Government have proposed a 15-month deal for those who volunteer for redundancy, and from a negotiating point of view I can understand why that might seem attractive, but it will not be attractive to the many low-paid civil servants who work in my constituency. They will see it as a pearl-handed revolver to the temple, implying that they can take 12 months' pay if redundancy is compulsory, but 15 months' pay if they go quietly. That is not fair to civil servants.
I gave an example when I intervened on the Minister. Let us take a 42-year-old civil servant with 20 years' service-I have chosen that age because it is, almost, close to mine. Under the current, pre-February deal, which is in place because, owing to legal action, the legislation has not changed, that individual would receive £60,000. Under the February proposals that the Labour Government put forward, that individual would have received £58,000. Under this Bill, they would receive £20,000 in compulsory terms or £25,000 if they went voluntarily.
Dr Thérèse Coffey (Suffolk Coastal) (Con): I respect the hon. Gentleman's argument, but on a point of clarity, I should say that he talked about a 42-year-old who had worked for 28 years. That suggests that he or she would have started work at 14. I would have a bit more understanding if the hon. Gentleman used a more realistic example.
Mr McCann: The hon. Lady should forgive my accent; she probably did not catch it, but I said 20 years' service. That should clear it up. My example was a 42-year-old civil servant who had worked for 20 years. Is that okay?
Mr McCann: The numbers are okay. Forgive me; I was not trying to suggest that we introduced new legislation in Scotland under which people started work earlier. My point is that the lowest-paid are still paying the biggest price. That is unfair, and I hope that Government Members will take that on board.
A number of people have said in this debate that the private sector does not get the same treatment. I was a full-time negotiator for the Public and Commercial Services Union and its predecessors for many years, and let me tell the House what happened in the public sector. When times were good and we went into negotiations asking, Oliver-style, for more, we got the answer back that we had to set an example. We could not share in the
country's wealth because of that. When times were bad, the argument from the opposite side of the table changed-it became, "We can't afford it." That is why the civil service has been a battleground for a number of years.
Sadly, I am old enough to remember the 1980-81 pay disputes. In the late 1980s, Margaret Thatcher, the then Prime Minister, put new arrangements in place. Those were ripped up in September 1992 when we had to pull out of the disastrous exchange rate mechanism. In 1993, the Conservative Government imposed a 1.5% pay limit on the whole public sector to take account of their economic problems. I mention all that to demonstrate the link between Conservative Governments and cuts to the civil service and the fact that the civil service is always the easy scapegoat.
There is always a dilemma between the public and private sectors. We were trying to emulate in some way the private sector's efficiency-there is an eternal debate about how we can make the public sector more efficient. The conundrum is this: the private sector can make a profit, but the public sector is about service and delivery. The public sector must always be efficient, but low salaries are the price that public servants are prepared to pay in return for better terms and conditions of service. That is the simple fact of the matter.
Nick de Bois: My hon. Friend the Member for West Suffolk (Matthew Hancock) highlighted the fact that there is little difference between weekly salaries in the private and public sectors. How does the hon. Gentleman equate that with his argument that a differential has been growing?
Mr McCann: The simple fact of the matter is that I can pluck any statistic out of the air that will disprove that. When I was a negotiator, I used the retail prices index, RPIX, the consumer prices index-whichever best backed up my claims on behalf of my members. That is the simple fact of the matter. I respect the fact that the figures come from the Library; I do not doubt them at all, but I could quote other figures that would support my argument, and mine are more accurate.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): My understanding is that the Government's figure was from 2009, with no other years being considered. I am sure that my hon. Friend will agree that 2009 was in the midst of the deepest recession since the 1930s. At that stage, the private sector had taken the real hit, which perhaps explains what a statistician would describe as an "outlier figure". Most statisticians and statistics would suggest that there is a pay premium in the private sector; that has been established over 30 or 40 years. To cite figures from only 2009 is a little naughty.
Mr McCann: I shall defer to my hon. Friend's greater knowledge of these matters and get back to the point that I was trying to make.
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