Examination of Witnesses (Question Numbers
27-39)
RT HON
FRANCIS MAUDE
MP AND RT
HON OLIVER
LETWIN MP
27 JULY 2010
Q27 Chair: Good morning, Minister and
Secretary of State. We are very grateful to you for giving us
your time this morning. Would you like to introduce yourselves
for the record?
Mr Maude: I am Francis Maude.
I am Minister for the Cabinet Office.
Mr Letwin: I am Oliver Letwin,
Minister for Government Policy.
Q28 Chair: Does it mean you are both
ministers of state?
Mr Maude: We are both of that
rank both attending the Cabinet.
Chair: Thank you. Charlie Elphicke?
Q29 Charlie Elphicke: Ministers,
the letter to the unions says that the payment caps reflect the
current economic circumstances not an institutionalised culture
of hostility towards the Civil Service. By introducing that emergency
legislation first are you not negotiating with a gunboat style
of diplomacy?
Mr Maude: Our view was that had
the scheme that was introduced by the last Government, which was
diluted as the negotiations went on, I understand, in order to
secure the agreement of all of the unions, including PCS, remained
in place then there would have been a very pressing case made
for us to retain that and work with that. As Mr Brennan knows,
there were significant savings which had been, as it were, banked
by the last administration on the basis of that new scheme, but
that option was taken off the table within days of us taking office
and the view the Government took was that it was not responsible
in financial terms to allow the current scheme to remain in place
nor indeed was it defensible in human terms because the truth
is that there are significant numbers of people within the Civil
Service for whom through no fault of their own but simply because
of the way life has moved on there is no job in reality but who
are not made redundant because the terms are prohibitively expensive
at the moment. In human terms it is not a good way to treat people
to keep them in limbo with no actual job, so we took the view
that we needed to proceed and proceed with expedition.
Q30 Charlie Elphicke: What I do not
understand is why you are not prepared to use the February 2010
deal as the basis of negotiation and are giving a worse position
under the emergency legislation?
Mr Maude: The reason for that
is that the scheme (it was not an agreement, it was a scheme imposed
by the last Government with the support of five out of the six
unions) was still massively out of kilter with good practice elsewhere
in the private sector and also out of kilter with much practice
in the public sector. Given that that option had been removed
and that it had been impossible previously to secure agreement
to that, the view we took was that we should try to get a scheme
in place that would be sustainable and affordable for the long
term. It remains my intention to do everything we can to secure
a negotiated settlement. We have said that there is scope and
flexibility both in terms of the headroom for voluntary schemes
of redundancy but also particularly we are concerned with giving
additional protection to lower paid workers. That is quite a complicated
business which is not susceptible to being put into a Bill and
in any event needs to be negotiated. We need to be satisfied that
it really does meet the concerns of fairness and is affordable.
Q31 Charlie Elphicke: And what are
your plans for bonuses for more senior mandarins?
Mr Maude: In the previous year
I think 75 per cent of civil servants got bonuses; last year it
was 65 per cent; this year it will be 50 per cent; and next year
25 per cent. I would not expect it to fall below that. I think
the bonus approach—non-consolidated performance pay as I
believe it is technically known—is a valuable pay tool to
have and I would want it to be retained, but it should not be
routinely going round with the rations.
Q32 Charlie Elphicke: Will you link
the bonuses more to actual productivity, which has been falling
in the public sector? Will you link those bonuses to productivity
so we can see productivity rise?
Mr Maude: Yes. One of the functions
of the enhanced departmental boards that we are starting the process
of establishing will be to set up (and this is in the board protocol
that we have published) a remuneration committee which will be
very much involved in setting the performance terms for those
bonuses.
Q33 Robert Halfon: How will the proportion
of bonuses be divided up between the high paid and the low paid
and will the lower paid benefit from bonuses?
Mr Maude: The bonus scheme is
just a Senior Civil Service scheme. Pay arrangements for the delegated
grades below the Senior Civil Service are obviously a matter for
individual departments and agencies.
Chair: The Chairman is failing in his
duty to keep to the subject of the Superannuation Bill. If we
could stick to that I would be very grateful.
Q34 Robert Halfon: With the Superannuation
Bill in the background are you having positive negotiations with
the unions?
Mr Maude: I am not conducting
them on a day-to-day basis. They are being conducted by officials.
I have met with the Council of Civil Service Unions a number of
times, both before the election, where we had a good and constructive
meeting, pretty soon after the election, and then I guess earlier
this month after we had announced that we were going to legislate.
Q35 Robert Halfon: If there was some
movement would you be more prepared to go back to the February
2010 deal or not?
Mr Maude: I would need huge persuasion
that we should move off the 12-month cap on compulsory redundancy.
It is a pretty universal feature of redundancy schemes that you
should always aim for that. We do not want there to be any compulsory
redundancies at all. I make that absolutely clear at the outset.
It was said that there had only been a handful of compulsory redundancies
recently, and that is true, but there were several thousand redundancies
which were made voluntarily but on compulsory redundancy terms,
so I do not want there to be compulsory redundancies. In a rational
world you would have headroom so that you can devise voluntary
redundancy schemes which are more generous than the compulsory
redundancy terms, but devise them in a way that suits the needs
of the organisation and the group of people to whom they are going
to apply. What I would want to see is us being able to negotiate
a higher cap on voluntary redundancy terms as well as the all
important additional protection for lower paid workers.
Q36 Greg Mulholland: Good morning,
Ministers. Obviously this is about the economic situation the
country is in and the need to make considerable savings. Could
you give us an idea of how much the proposals as they stand will
save? The benchmark we have is that when the former Prime Minister,
Gordon Brown, announced the reforms back in March 2009 he said
that the reforms as proposed then would save £500 million
over three years. Can you give the Committee a sense of how much
you are telling us that this will save as it stands now?
Mr Maude: No, not really; it is
really hard to do that. The assumptions which lay behind that
number were the new terms, which was the February scheme struck
down by the court, which were more generous than we think is defensible
in the current environment, and based on the same sort of number
of redundancies as had been the case in previous years, but we
know that there were significant numbers of redundancies which
were not actually made because the terms were prohibitive. I cannot
possibly know at this stage and departments will be working out
their plans for how they deliver the spending reductions which
are needed to meet our deficit reduction commitments. Just to
say how much you are going to save does not quite work because
the truth is that with a prohibitively expensive redundancy scheme
people do not get made redundant or in many cases the wrong people
get made redundant. You end up protecting more highly paid people
who may have been there for a very long time and the result can
be more people losing their jobs with a very expensive redundancy
scheme. I think a scheme much more realistic and comparable with
the private sector scheme is essential for those Civil Service
leaders charged with running their departments to make good, sustainable
decisions.
Q37 Greg Mulholland: Could I suggest,
Chair, that perhaps we get further clarification on that at a
future date as we get further towards knowing exactly what the
negotiations will lead to and what sort of savings there will
be?
Mr Maude: I should just make the
point, you say this is made necessary by the financial situation
and the budget deficit. That makes it urgent but actually the
scheme is completely indefensible as it stands at the moment and
needed reform in any event.
Q38 Chair: Can I ask about the Bill
and in particular the notes on compatibility with the European
Convention on Human Rights, which is rather a longer paragraph
than we usually have in such notes because in the case it was
clear that the rights accrued through administrative practice
were nevertheless legally enforceable rights. The Bill does not
seek to address that directly. It places a cap on redundancy payments
as an alternative to addressing that directly, but it could be
argued that by limiting the right to compensation expected under
the Civil Service Compensation Scheme you are in fact seeking
to deprive people of their possessions as defined by Article 1
of Protocol 1 of the European Convention on Human Rights. Have
you got a comment on that?
Mr Maude: I am a very long retired
lawyer. It is 25 years since I donned a wig and entered a courtroom
(in that guise anyway) and I am advised that what we are doing
does not in any way breach the European Convention on Human Rights.
Q39 Chair: It is interesting that
your notes on the Bill say: "Second, those limits only apply
where notice of compulsory severance is given, or voluntary severance
agreed, after clause 1 comes into force. So there is no deprivation
of or interference with existing possessions (if any)." It
does suggest there is some doubt as to whether these accrued rights
are in fact possessions or could be, and is it not quite likely,
as we have heard from the union representatives, that they are
going to take this to the High Court once again possibly using
the European Convention as the grounds for an appeal?
Mr Maude: So far as that drafting
and the note is concerned, I suspect that is admirable lawyerly
caution drafted in that way, and I cannot remember the Latin but
the English phrase is "out of an abundance of caution"
very prudently.
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