Examination of Witnesses (Question Numbers
27 JULY 2010
Q1 Chair: Gentlemen, welcome. We have
the privilege of welcoming you as our very first witnesses in
this new parliamentary session at this new Committee. Could I
first ask you for the record to say who you are.
Mr Noon: My name
is Paul Noon. I am the General Secretary of Prospect.
Mr Lanning: Hugh Lanning, Deputy
General Secretary of the Public and Commercial Services Union.
Mr Baume: Jonathan Baume, General
Secretary of the FDA.
Q2 Chair: Thank you very much. As
a preliminary can you set out as briefly as you can your position
on the question of compensation payments to civil servants taking
redundancy or early retirement and explain to us why there is
a difference of opinion between you on this?
Mr Noon: Prospect has been involved
in the negotiations along with the other unions for about two
years now. It is not a recent thing; it is some time since the
Government announced that they wanted to review the Civil Service
compensation arrangements. Those discussions have taken place
sometimes at a pretty slow pace but in more recent times we came
to a position at the end of January/beginning of February where
the Council of Civil Service Unions (the six unions involved)
could not agree on a position. Along with four other unions we
concluded an agreement subject to membership endorsement, with
Tessa Jowell in the last administration which brought about changes
to the Civil Service Compensation Scheme. We would have been prepared
to sign up for that but in the meantime the PCS legal action took
place which froze that. Our position now is that we are still
prepared to enter into negotiations. We think that is the way
to resolve the issues and we would want to do that with due expedition.
We do not believe that the Money Bill, the piece of legislation
which I understand is coming forward through the House, is a good
way to do things because it looks to us like it is legislate first
and negotiate afterwards and effectively by trying to introduce
a compulsory cap in that way it puts a gun to our heads. We would
rather negotiate without it but we are certainly prepared to negotiate.
Mr Lanning: Firstly, we have always
taken the view that the stance of the official side and the previous
administration and now of the Government was wrong in trying to
forcibly take away the accrued rights of staff, and we thought
that they were acting unlawfully, and that is what the High Court
found in the judicial review, that they did not have that power
to take away those accrued rights. Also we want to explain the
PCS's position. We represent nearly 300,000 civil servants, the
majority of whom earn less than £22,000 and the sticking
point for us in the last negotiations was over the level of protection
there was to the lower paid in the Civil Service, and although
much publicity goes to the big six figure sums and those sorts
of things, that is not the norm. Our members have on average ten
to 14 years' service and if you are low paid and it is ten to
14 years' service it is low amounts of money you get at the end
of the day. Our particular problem is we represent the main administrative
core of the Civil Service and they are the 100,000 that have gone
and the ones at risk of redundancy. If I am being honest about
it, there was a difference of interest between the different unions
about who they represented and the scale, but the outcome that
all the unions wanted was a negotiated settlement, and that is
still what we want to do, to try and reach an agreement because
we do not think this will be resolved by legislation nor do we
think it will be resolved properly through the courts. The best
way is to come to an agreement.
Mr Baume: I agree with everything
that Paul Noon has said. We did not want to see a particular change.
Who does want to see a change that would lead to worse conditions?
Nonetheless, we were willing to negotiate. It was over a lengthy
period for the best part of two years. We felt that the balance
was right in the agreement reached in February. We had protected
over half the Civil Service and everybody under £20,000 retained
pretty much the terms that they had, with the exception of some
areas that everybody lost around pension enhancement which other
unions had argued in the courts was discriminatory anyway.
Q3 Chair: Most of Mr Lanning's members
Mr Baume: Anyone who earned under
£20,000 retained three years' pay and that is just under
half the Civil Service on the figures we have seen recently. If
you want the significant change, it was the higher earners and,
to be fair, in particular, groups of people in their mid-40s who
felt particularly aggrieved about the way that the balance worked
out. A final comment on all of that was that if there was going
to be change, what we wanted to do was to negotiate a package
that did mean some got less, some retained existing terms and
some actually benefited. There were no terms in place for anyone
over 60 under the old arrangements and there were no redundancy
terms in place beyond statutory for anyone who had joined since
2007 under what is called the Nuvos scheme, the career averaging
arrangements that were brought in as part of the pension changes
in 2007. We felt that although some got less, some got new rights
for the first time, and we had a package overall that was fair
and balanced and, as Paul has said, we still want to try and find
a negotiated settlement through this. We are a union that is committing
to trying to engage and reach negotiated outcomes.
Q4 Chair: Mr Lanning, what proportion
of your members was not protected by that agreement and why did
you feel so strongly about that?
Mr Lanning: On our calculations
about half of our membership was not protected by the agreement.
Why we felt strongly about it was because it was about half of
our membership. That is over 100,000 people that we represented.
I do not like to make digs at other unions because we do share
the majority of the view, but it is the PCS that represents the
overwhelming majority. We do get somewhat annoyed by the idea
that it is five unions versus one union. You have to look at the
scale of representation and the numbers we represent and the people
whom they represent. If you look at the 100,000 who went under
the last administration, as I say, most of them were PCS members
and the ones at risk under the current administration when you
talk about the 25 to 40 per cent are going to be people in the
mainstream lower paid grades. There may be many low paid redundancies
and we want a fair deal for them.
Chair: Thank you and my apologies to
your two absent friends. I am sure you will do a very good job
for them. Nick?
Q5 Nick de Bois: Mr Lanning, do you
think that you might be operating in a bit of a vacuum when it
comes to the not unreasonable perception of many of the public
that those who would have perhaps 25 years' service in the private
sector earning on or around the average salary that you say you
represent would be lucky to walk away with a statutory redundancy
of maybe £6,000 or £7,000? Indeed, someone on just under
£30,000 a year with 25 years' service would get just over
£9,000, and therefore do you not think a period of reflection
is worthwhile and that having scuppered those previous agreements,
which were frankly very generous in the eyes of many people, that
was a big mistake?
Mr Lanning: No, we do not because
it was the administration that was found to have acted unlawfully
and the reason why they did was because they tried to take away
without agreement people's accrued rights, and that is effectively
trying to replicate people's contracts. It is a bit fortunate
that maybe BP have made the point for us today that in the private
sector people would be protected normally by their contracts on
what they are entitled to on redundancy, and that was not available
to people in the Civil Service. The main difference you find is
actually between the low paid and high paid. We are not opposed
to dealing with the exceptions that get quoted in the press, but
we do not think you should penalise the majority in order to deal
with the problems which are the exceptions rather than the generality.
What we are keen to do is a fair deal.
Q6 Chair: So you do not think you
are going to finish up with a worse outcome as a result of winning
the court action?
Mr Lanning: We do not think so
because we think what they are doing is still unlawful. The proposition
of the capping at 12 months and 15 months, according to our legal
advice, falls foul of exactly the same issue, although under a
different law, where the administration is trying to take away
the accrued rights under human rights legislation. Pensions are
regarded as possessions and we think this will be as well. We
do not think it will be a workable scheme. What the administration
and the Cabinet Office need to do is come together and have an
agreement. There is all this focus always on the terms. The best
way to reduce staff is through natural wastage and not through
compulsory redundancy, and we did that for about 100,000 people
and that would be the best way to save money going forward.
Q7 Robert Halfon: With the Bill looming
in the background, do you think that ministers will be prepared
to engage in constructive negotiations?
Mr Lanning: I think what is being
proposed at the moment is an unreal process to say we are proposing
12 months and 15 months and putting a Bill through a speedy processand
we have not heard of a Money Bill being used for these sorts of
purposes in the pastand then expecting there to be free
collective bargaining to come to an agreement with that gun to
our heads. We think it will produce the reverse effect and it
has certainly gone down very badly amongst the ordinary civil
servants out there. We want and have said regularly let us have
proper talks. We recognise the need for change, we recognise that
there are bits that are discriminatory and we recognise the need
to save money, but there also has to be recognition about the
protection of people's accrued rights.
Q8 Robert Halfon: And would you be
prepared to accept the terms of the February 2010 deal and, if
not, why not?
Mr Lanning: We come back to the
fact that there was a lot in that that we did find acceptable
and we thought if we had carried on a bit further we would have
been able to come to an agreement. We did not feel that the cash
protection for the lower paid went far enough but if there was
movement and change around that area that would be a basis for
discussion for us.
Q9 Robert Halfon: The chap who wrote
in The Guardian Daniel Calder, one of your members, said
Mark Serwotka should leave because of the failure to accept the
February 2010 deal. What do you say to that?
Mr Lanning: Go and listen to the
High Court judge. It just seems wrong that the union gets pilloried
for using the due processes of the law. It was not the union that
was found to have acted wrongly. If it had been the other way
round, if the union had been found to have acted unlawfully, I
am sure it would not be everyone saying the administration were
wrong to go off to court. We felt the Cabinet Office in the last
administration was wrong and the reason is this need or wish to
try and forcibly take away people's accrued rights. If that was
not the basis of discussions then I think we would have a much
more productive discussion.
Q10 Michael Dugher: On a broader
point, if I may, what in your view is the extent of engagement
that you have had with the Cabinet Office and particularly new
ministers in terms of these negotiations? Do ministers have an
open-door policy with yourselves? Are conversations real and meaningful
or do you think that you are just brought in occasionally to "be
Mr Noon: I also chair the Council
of Civil Service Unions, although I am not here in that capacity
today, and I would say we have had meetings. We asked for a meeting
with the Minister, Francis Maude, and that was arranged with due
expedition. I would also say I have not personally experienced
anything but courtesy in the discussions, except it would have
been much better, and this is a point that I think all the unions
made with some force, if we had been consulted first and then
if the Minister had come to a decision that he had to legislate
or wanted to do something else, that would have happened. Colleagues
can speak for themselves but certainly there is no complaint from
me about process in the sense of availability of ministers or
Q11 Charlie Elphicke: One thing that
troubles me is you have a lot of hard-working public sector workers
like border guardians and they are facing a big loss and yet we
seem to have a situation where senior mandarins wander off with
large bonuses. Is that justifiable?
Mr Baume: Shall I answer that
Mr Lanning: Go on!
Mr Baume: There is a lot of misunderstanding
about so-called bonuses out there. The Senior Civil Service, which
is governed by the Senior Salaries Review Body, which as MPs you
know very well, has a pay system actually introduced by Michael
Heseltine back in 1996 that has what are called in the press "bonuses"
which are a fixed part of the pay bill and which are non-consolidated
performance pay awards. These are paid to about two-thirds of
senior civil servants of varying sums but the average payment
is about £8,000 a year. The average salary, by the way, for
the Senior Civil Service is around £78,000. That is slightly
more than a basic MP's salary, I realise that, but it is not up
in the stratosphere. These annual payments are built into the
overall pay bill. It is just a fixed pot of money that is allocated
each year. Certainly the FDA has never been particularly keen
on this scheme for all sorts of practical reasons which we have
occasionally talked about before this Committee. We welcomed the
Prime Minister's view earlier in the summer that these should
continue to be paid for this year, but what particularly we do
not want to see is that money stripped out of the pay bill so,
in other words, you just reduce the pay bill at a stroke. I should
add that the Senior Civil Service is now facing a three-year pay
freeze, not a two-year freeze because there is a pay freeze operating
this year. I realise there are a lot of people out in local government,
even at very junior levels, who are in much the same position,
but they are unique in the Civil Service in facing no pay increases
for three years.
Mr Lanning: Could I comment briefly
on the point about pay-outs. If you look at the figures from the
Compensation Scheme and the payments, the thing which we tried
to address in the negotiations is that relatively few numbers
of people on high salaries with large periods of service take
large amounts of money out of the pot, and so we do not think
there is a fair distribution. That was something we were trying
to tackle through the protection last time around and I think
that is something that we would be very keen to do going forward.
The impact of one year is not the same if you are earning £10,000
as opposed to if you are earning £100,000.
Mr Baume: Can I make one caveat
to that. One of the great strengths of the Civil Service is that
everybody from Sir Gus O'Donnnell to an administrative officer
is in the same pension scheme, they are in the same redundancy
scheme and they get exactly the same terms and conditions. The
salaries are different and people will obviously have varying
lengths of service, but I think one of the strengths is it is
exactly the same pensions arrangements and redundancy arrangements.
We were willing in the February agreement to actually load the
benefit towards lower paid staff, but I certainly would not want
to see a situation where we started to put people in senior positions
on different types of arrangements to the generality of the Civil
Service as a whole.
Q12 Charlie Elphicke: If there is
such galit and fraternit in the Civil Service should not senior
civil servants all be in it together with Mr Lanning's members
and take their hit on bonuses as his members are taking a hit
Mr Baume: Actually the Senior
Civil Service is taking a hit two-fold, firstly, because there
is a three-year pay freeze, not a two-year pay freeze operating
and, as I say, these bonuses are part of a pay system that was
designed by the Senior Salaries Review Body (it is not something
we are particularly supportive of) but actually in a way that
is already a form of hit because it is money that does not count
towards pension entitlement or carry forward year by year. It
is not money that somehow appears on top of the pay system. It
is an integral part of how the pay system is structured. As I
say, it is not one that I am particularly keen on but it is one
that has been in place now for about 15 years.
Q13 Kevin Brennan: In considering
the route you took of going to court over this and the implications
of that, did you factor in the possibility of a change of government?
Mr Lanning: Yes, we would have
been silly for it not to be in the minds. There was a general
election looming. It was bound to be a possibility, the last administration
was not that popular, but actually what was driving us was to
try and find a fair solution. That is still the case and we have
to deal with whoever the administration is at the time.
Q14 Kevin Brennan: So you thought
you would get just as good a deal from an incoming Government
as from the previous one? That was your strategic thinking on
Mr Lanning: We did not know what
the in-coming Government would be.
Q15 Kevin Brennan: Well, not a Labour
Government obviously if it was going to change.
Mr Lanning: Let us first be clear,
we are not party politically affiliated.
Q16 Kevin Brennan: I understand that;
that is not the question.
Mr Lanning: And what we felt was
that the deal on the table at that time was not acceptable to
about half of our membership.
Q17 Kevin Brennan: I understand that
but I am just asking did it strategically enter your mind that
an incoming Government that was not a Labour Government might
want to deal on different terms altogether?
Mr Lanning: It did.
Q18 Kevin Brennan: It was not an
Mr Lanning: It was not the overriding
factor. The overriding factor was, I think, to try and achieve
a fair outcome and whether us signing up to a deal at that point
was the right thing for us to do; we felt not.
Q19 Greg Mulholland: Mr Lanning,
do you still think that pursuing the legal route is the best way
to protect your members' interests at this stage rather than sitting
down with the other unions and ministers to see if you can reach
a negotiated settlement?
Mr Lanning: We have never thought
the legal route is the best route. It has only been a last resort
for us to do when we have not been able to reach agreement. We
have said, and still say, we would like to have a proper, open,
without pre-conditions on either side negotiation to try and reach
agreement because they are the things that last. If it is imposed
one way or another, be it by the courts or otherwise, then it
is not going to stick. It will only be a collective agreement
that does stick.