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10 Nov 2010 : Column GC29



10 Nov 2010 : Column GC29

Grand Committee

Wednesday, 10 November 2010.

3.45 pm

Superannuation Bill

Main Bill page
Copy of the Bill
Explanatory Notes
Amendments

Committee

The Deputy Chairman of Committees (Baroness Gould of Potternewton): I have to make this announcement even though I cannot possibly imagine that there will be a Division, but as I am told that I have to make it I will make it. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Clause 1 : Consents required for civil service compensation scheme modifications

Amendment 1

Moved by Lord McKenzie of Luton

1: Clause 1, page 1, line 1, at end insert-

"( ) Section 1 of the Superannuation Act 1972 is amended as follows.

( ) In subsection (3), after "consult" insert ", with a view to reaching agreement,"

( ) In subsection (3A), after "consult" insert ", with a view to reaching agreement,"."

Lord McKenzie of Luton: My Lords, this is a straightforward amendment that I have some hope that the Government will feel able to accept. Its subject was specifically raised with us, and I think that it has been discussed with the Government by trade unions.

As was stressed by the Government in the other place, before a superannuation scheme can be introduced there is a requirement that the relevant Minister consult persons appearing to represent those who are likely to be affected by the scheme. That requirement is contained in Section 1(3)-and, in relation to employees of the Scottish Parliamentary Corporate Body, Section 1(3A)-of the 1972 Act. The amendment is designed to clarify the purpose of such consultation-namely, that the consultation should be with a view to reaching agreement with those affected. In that regard it does no more than import into Section 1 of the 1972 Act the same requirement that the Government seek, through Amendment 2, to import into their proposed new clause on consultation.

We will come to a more substantive debate around this issue shortly in the context of the proposal to fetter the existing requirement for agreement in circumstances where compensation schemes are to be changed in an adverse way. We are clearly of the view, which the Government have also expressed, that the introduction and amendment of superannuation arrangements are best achieved and most sustainable in circumstances where they have been accomplished by a proper process of collective bargaining and one which leads to agreement.



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Emphasising that consultation should lead to agreement should not therefore be contentious, and I hope will command full support. However, at the start of our Committee, I ask the Minister to take the opportunity to give us the government view, in so far as he is able, on the extent to which agreement has been reached on changes to the Civil Service Compensation Scheme, what if any residual discussions are proceeding and how he sees such matters heading to a conclusion. I am particularly interested in what he sees as the immediate steps which will follow from this Bill becoming law. Obviously I would not want him to stray into matters which could be prejudicial to an outcome agreed by all-I am sure that he would not-but in the mean time I beg to move.

Baroness Turner of Camden: My Lords, I had not seen this amendment when I drafted my own amendments to the Bill. Of course I prefer it to the current wording because it at least provides that there has to be an agreement before the Superannuation Act 1972 is amended. However, as will be seen from my amendments, I approached the matter from a different angle. I was aware that the unions that have been mainly involved had not been in favour of Clause 1 at all; they said that it was introduced by the Minister on Report in the Commons to amend the requirement of the 1972 Act that any changes be agreed with the unions. Without that requirement, the Government could simply impose redundancy terms on civil servants under Clause 1 without any collective bargaining agreement at all. That seemed wrong, and I approached the Bill from the standpoint that what has to be done is not necessarily to maintain in full the Superannuation Act 1972 and its terms but to ensure that whatever happens does so only after full consultation and agreement-in other words, after the appropriate collective bargaining has taken place.

It is clear that a number of civil servants covered by the legislation and the previous agreement are very concerned about their future. Like many of us, I have received a number of letters from individual civil servants who believe that they are facing widespread redundancy in a situation where they believed that they had at least stable, if not always well paid, employment. They are concerned that, in the places where they operate, they will not find it easy to find alternative employment. That is not surprising because, some considerable time ago, the Government of the day decided to locate their offices in various parts of the country away from the south-east-notably in Newcastle. With redundancy now facing many people, those civil servants are concerned that they are in an area where no alternative employment is readily available. For that reason, they have become very worried about what will now happen in the event of redundancy.

For those reasons, I am not at all happy about Clause 1 and have indicated my intention to oppose the Question that Clause 1 should stand part of the Bill. I will then proceed with my other amendments, the idea of which is to ensure that there is proper consultation and negotiation with the appropriate unions before any action can be taken that changes the terms and conditions on which civil servants were employed.



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Lord Wallace of Saltaire: My Lords, perhaps I should start by responding to the request of the noble Lord, Lord McKenzie, to update the Committee as far as possible on where we are in consultation with the unions. As Members may know, the Government have been engaged in active consultation with the unions in parallel with the progress of the Bill, following the clear signal given on Second Reading and in Committee in the other place that there was consensus on all sides in that House that the negotiations should proceed as rapidly as possible.

As noble Lords opposite are aware, the Council of Civil Service Unions was asked to advise the Government whether the Government's proposals might form the basis of a wider agreement that the individual unions could then recommend to their respective members. In the event, the CCSU did not accept the proposals, but five of the unions-Prospect, the FDA, the POA, the GMB and Unite-then approached the Government directly and asked to continue discussions on the terms. There followed an intensive period of meetings between the five unions and officials that, on 5 October, resulted in an agreement being reached between the parties on terms that might form the basis of a new compensation scheme.

Later on 5 October, the GMB, Unite, the POA, Prospect and the FDA wrote to confirm that the terms accurately recorded an agreement that all five unions were able to recommend positively to their executives as being the best that might be achieved in negotiation. Soon after 5 October, agreement was reached between the Government and the trade union negotiating teams. The POA executive committee then voted to distance itself from the agreement and to request further discussion. The sixth union-the PCS-withdrew from the talks at the point that the five other unions agreed to negotiate separately.

The Government remain committed to trying to reach an agreement with the CCSU. The Minister for the Cabinet Office has since made a number of personal approaches, orally and in writing, to the PCS general secretary and the Prison Officers' Association in which he has invited the CCSU to put forward alternative proposals for a reformed Civil Service Compensation Scheme and has sought to engage with them further. I understand that a letter was received from the Council of Civil Service Unions this morning, but we have not yet had a chance to consider that further.

It may be helpful to remind the Committee that the main outcome that the Government seek to achieve through the Bill is to enable necessary reform of the Civil Service Compensation Scheme in a way that is both economically and fiscally acceptable and fair to the civil servants affected.

The key elements of the new scheme that we propose to introduce include, first, a standard tariff whereby each year of service provides one month's salary in the event of redundancy. The tariff will be capped at 12 months for compulsory redundancy and 21 months for voluntary redundancy. Secondly, all civil servants who are made redundant, voluntarily or compulsorily, will be entitled to a three-month notice period. Thirdly, there will be significant protection for lower-paid civil servants. This is one of the most important aspects of

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the scheme that the Government have agreed with the majority of the unions. Any civil servant earning less than £23,000 a year who is made redundant will be deemed to earn that amount when their redundancy payment is calculated. Payments to the higher paid will be limited so that staff earning more than six times the private sector median average earnings-currently just under £150,000 a year-would have their salary capped at that figure for the purpose of calculating their redundancy payment. When staff have, in addition, reached minimum pension age, they may be able to opt for early payment of pension when they leave, in return for surrendering the appropriate amount of any redundancy payment.

We believe that this proposed new scheme meets our goals and those of the majority of union representatives. It is affordable and sustainable, it caps the amount that can be paid out and it reforms the accrual rate, but it is also fair and provides protection for both the lower paid and those closest to retirement. This new offer is a good one and we seriously hope that it will still be possible to secure the agreement of all the Civil Service unions.

The Government have reservations about the amendment because it takes us very wide of the compensation scheme. The purpose of the Bill is very much to deal with the reform of the compensation scheme. Section 1 of the 1972 Act deals with a much broader set of issues. Noble Lords opposite may have been seeking simplicity in applying their amendment to all schemes made under Section 1 of the 1972 Act, but it goes some way beyond the matters principally addressed by the Bill. It asks us to consider its application to a variety of schemes under the Act, of which some are required ultimately to reach agreement with consultees and some are not. That makes the amendment's fit with the range of Section 1 schemes rather less elegant than it might be. Our strong sense, therefore, is that we should resist this amendment. We recognise, however, that the approach of the 1972 Act and the Government to relations with the unions-like that of our predecessors in government-has been and remains to reach agreement by consensus wherever possible and as fully as possible. I therefore invite the noble Lord to withdraw his amendment.

Lord McKenzie of Luton: I thank the Minister for that full explanation and update as to where matters rest. Around that, I ask him specifically what he sees the steps over the next few weeks as being. I understood from our earlier debate that it was planned that, the day after the Act comes into force, an order will be laid that repeals Section 2. The day after that, the scheme will be laid, maybe in the other order. Can the Minister confirm that? In a sense, it gives some framework to the discussions that we will have about Clause 2 and the caps, which are a particular bone of contention.

More generally, my noble friend Lady Turner makes some very telling points about the concerns that people have and how the changes to the compensation scheme may impact on them. The amendment that I have pursued is to Section 1 of the 1972 Act, not the Bill that is under consideration. We will debate that in a moment. Specifically on the amendment, I am sorry that the Minister does not feel able to accept it. All it

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does is to qualify the obligation to consult in a way that the Government's own amendment does. I am not sure whether his principal argument was that the scope of the Bill precludes its acceptance or that under the 1972 Act some arrangements need agreement and some do not. Even if they do not, presumably the consultation is to some effect, which ought to be to reach agreement, whatever the substantive matter under consideration.

Obviously, given where we are, this is not a matter that I would press today but could the Minister confirm whether it is the scope of the Bill or other matters as well that are precluding acceptance of this amendment? I would certainly appreciate it if he was able to update us on the precise steps envisaged between about now, when the Bill becomes an Act, and what flows from that in terms of orders, particularly on the demise of the caps.

4 pm

Lord Wallace of Saltaire: I thank the noble Lord for that helpful intervention. There were two questions there. First, our resistance to this is partly on the basis that this is a much more narrowly focused Bill. Secondly, the 1972 Act is fairly complex and deals with a large range of different activities. Although there is of course a general acceptance of consultation, the exact element of commitment to agreement and consultation under different clauses is fairly complex. If we were to go into a wholesale revision of the 1972 Act, we would be doing a very different exercise now.

On where we are with the Bill and what is intended, as I am sure noble Lords are aware, this Bill is a fallback position which is felt to be necessary because these negotiations have been under way for two years and have become subject to litigation. The Government are anxious, as were our predecessor Government, that attempts to introduce a satisfactory new compensation scheme should not be delayed further by continuing litigation, some of which-as noble Lords will know-could last for a very long time.

The hope and intention is that once Royal Assent to the Bill takes place, the cap will be in force and, if everything is then accepted by those involved, the sunset clause will come into operation on day two and the new scheme will be laid on day three. We would then go through to the new scheme coming into operation so that compensation could be provided on the agreed new basis. That is the hope and intention and, as those who were Ministers in the previous Government will recognise, it is the essence of what we are attempting to do to avoid further delay.

Lord McKenzie of Luton: Could we just be clear on that point? If the Act receives Royal Assent and comes into force, I think that the Minister said that would bring the sunset clause into play. I thought the proposition was that if you had the new scheme introduced by order, you would then have to do something with the caps-otherwise, there is what I hope is a clear inconsistency between what the caps and the scheme provide-and that the proposal was to repeal Section 2. Is that not the case? It is quite important that we have clarity because we have tabled amendments about doing away with Clause 2. That might be the safest

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route in any event but I assume that, once an order is laid and a new scheme is in place, the caps would have to be removed on a permanent or, at least, a temporary basis.

Lord Wallace of Saltaire: The caps, as the noble Lord will be aware, are there in case litigation were to prevent the new scheme going into operation, so that there would be an alternative. However, the caps can be repealed by negative order and the intention is that that order would be placed the day after Royal Assent, if all else is in play.

Baroness Noakes: Can my noble friend explain what kind of litigation might be anticipated and therefore the need for Clause 2? Clause 1 is self-contained and does away with the need for agreement in relation to a scheme, and Clause 2 has these caps, which are inconvenient because they will get in the way if they are not what we want to bring into effect. The Minister just explained that we might need these caps if there is litigation. What sort of litigation could follow once this Bill has been enacted, doing away with the need for consent?

Lord Wallace of Saltaire: Neither the previous Government nor this Government expected the challenge to the agreement presented by the PCS on the previous occasion. The outside possibility with which we are concerned is a successful challenge that might ask for judicial review under the Human Rights Act and might under certain circumstances go as far as the ECHR. That process could last for some considerable time.

Baroness Noakes: If it is the case that we are providing some kind of insurance policy against litigation that might take us all the way to the European Court of Human Rights-I think that is unlikely, but let us assume that that is going to happen-why are the Government providing caps that are so out of line with anything that they think they are going to agree? It is perfectly plain that Clause 2 is something to wave at the unions to say, "If you don't agree, this is what we will do to you". It is not a reasonable fallback position if Clause 1 is litigated. I am still very confused about the structure of the Bill, as I explained to the Minister at Second Reading.

Lord McKenzie of Luton: The noble Baroness has raised a very pertinent point but, in terms of the litigation-whatever the outside risk of it might be-that could come from challenge under the human rights legislation, what leads the Government to assume that that might be successful in relation to a scheme that would not be equally successful in relation to the legislation around the caps? You would expect them both to be subject to the same sort of challenge.

Lord Wallace of Saltaire: The caps as they stand can be increased but not decreased under Clause 2. This is a fallback Bill that we hope it will not prove necessary to implement but, in that unlikely event, the caps can be increased under Clause 2 in the interim if by any chance there were to be a challenge or a judicial review which delayed the implementation of the scheme that had been agreed.



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Lord McKenzie of Luton: We will reflect on this discussion before Report. In our subsequent amendments, we will want to unpick this issue around the risks and quite how the structure of the Bill should continue as currently proposed. We have scope to do that. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Debate on whether Clause 1 should stand part of the Bill.

Baroness Turner of Camden: I gave notice of my intention to oppose the question that Clause 1 stand part of the Bill because of the information that I received from one of the major unions that opposes the continuance of Clause 1 in the Bill. However, I do not want to press the issue at this stage because I listened with interest to what the Minister said and I learnt that the Government still regard negotiation and agreement as a result of negotiation as something desirable. I shall study carefully what he said.

At the same time, I am nevertheless not at all happy about Clause 1, as it sets the scene for a worsening of the terms and conditions under which these people are employed. For me, it is not acceptable that things are to be imposed on people who are currently, according to letters that I have received, very concerned about their future. I am sure that they will continue to be concerned about their future until there has been some movement in regard to negotiation and possible agreement between the parties about their future. I still feel like that about Clause 1, and I may return to the matter on Report if the information that I receive from the unions and from their members suggests that what the Government have said this afternoon still leaves people feeling very worried about their future. However, I shall not press the matter at the moment.

Clause 1 agreed.

Amendment 2

Moved by Lord Wallace of Saltaire

2: After Clause 1, insert the following new Clause-

"Consultation in relation to civil service compensation scheme modifications

(1) Section 2 of the Superannuation Act 1972 is amended as follows.

(2) After subsection (11) insert-

"(11A) Subsection (11B) below applies if a scheme made under the said section 1 makes any provision which would have the effect of reducing the amount of a compensation benefit.

(11B) Before the scheme comes into operation, the Minister must have laid before Parliament a report providing such information as the Minister considers appropriate about-

(a) the consultation that took place for the purposes of section 1(3) of this Act, so far as relating to the provision,

(b) the steps taken in connection with that consultation with a view to reaching agreement in relation to the provision with the persons consulted, and

(c) whether such agreement has been reached."

(3) The amendment made by this section applies in relation to reductions to which effect is given by a scheme made under section 1 of the 1972 Act after the coming into force of this section."



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Lord Wallace of Saltaire: I shall speak also to government Amendments 7, 9 and 16. All these amendments are intended as a reassurance that the coalition Government will consult the Civil Service trade unions fully if any future proposals to change the Civil Service Compensation Scheme would have the effect of reducing benefits for civil servants.

Amendment 2 responds to the commitment that my right honourable friend the Minister for the Cabinet Office, Francis Maude, made on Report and at Third Reading of the Bill in another place. When my right honourable friend gave the commitment to add an amendment to the Bill in your Lordships' House, he did so to put beyond doubt the need for meaningful consultation with the unions. He also agreed to show the amendments to the unions and to the opposition Front Bench. That has now been done and officials sent the text of the amendments to the Council of Civil Service Unions.

Amendment 2, the lead amendment in this group, will insert a new clause after Clause 1. As I made clear at Second Reading on 26 October, the Superannuation Act 1972 already requires consultation. However, the new clause will make a further amendment to Section 2 of that Act by requiring that a report of the consultation be laid before Parliament. Proposed new subsection 11A will mean that a report is required only where there is a change to the compensation scheme that would result in reduced benefits. Proposed new subsection 11B requires the report to include details of the consultation that took place, the steps taken with a view to reaching agreement with the unions or other persons consulted and whether agreement has been reached.

I repeat that the coalition Government's view is that they should consult the Civil Service trade unions and, just as the previous Administration tried to do, seek to reach agreement with them all on changes to the Civil Service Compensation Scheme. However, that may not be possible in all cases, in which case the report will explain why. Perhaps I may add for the noble Baroness, Lady Turner, that my understanding of the difference between the scheme that the PCS wishes to promote and the scheme that the Government have agreed with the other unions is that the government scheme is much more advantageous to the lower paid than that which the PCS proposes. It seems to us that we should stand firm in these difficult circumstances for the lower paid, who, as the noble Baroness will know, are a substantial proportion of those who are likely to be affected.

Noble Lords will note that the report will have to include the steps taken,

precisely the same wording that the noble Lord, Lord McKenzie, so elegantly proposed in his much wider amendment that we discussed earlier. I very much hope that the spirit and the letter of the new clause will meet with the approval of your Lordships.

The effect of government Amendments 7 and 9 is that the consultation provisions would come into force two months after Royal Assent has been granted to the Bill. This is the standard interval before commencement of new legislation. However, because of the need for certainty, the other provisions in the

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Bill will come into force immediately on Royal Assent. As a consequence, the requirement to publish and lay before Parliament a report of the consultation would apply to future changes to the Civil Service Compensation Scheme and not to those changes currently being developed for implementation once this Bill is enacted. To introduce a requirement for a report on the current consultation would be unnecessary and nugatory. No one could claim that there has not been long and extensive consultation on the proposed changes or that Parliament is not well aware of the proposals. Equally, it would be wrong to risk a further delay while a report is prepared and laid before Parliament, before the currently proposed new scheme could be introduced.

Government Amendment 16 simply amends the Long Title of the Bill so that it will now cover the new clause that makes wider amendments to the Superannuation Act 1972.

4.15 pm

I hope that your Lordships recognise that, with these amendments, the coalition Government are seeking to provide the additional reassurance sought by the opposition Front Bench in the other place. I therefore hope that the concessions that we are making will meet with your Lordships' approval. I beg to move.

Amendment 3 (to Amendment 2)

Moved by Lord McKenzie of Luton

3: After Clause 1, line 9, after "report" insert "for Parliament's approval"

Lord McKenzie of Luton: I will speak to Amendments 3 and 4, and comment on government Amendments 2, 7, 9 and 16. I thank the Minister for moving Amendment 2 which, as he has explained, seeks to fulfil the commitment made in another place to strengthen the consultation provisions. As he will have gathered from our amendments, we do not think that government Amendment 2 goes quite far enough and hope that he will able to support the thrust of our amendments.

We believe in strong, proactive, responsible trade unions. A successful process of collective bargaining is to be valued and should be at the heart of how changes to arrangements such as the CSCS are given effect. As we discussed earlier, we share common cause in wanting the changes to be agreed by all. Amendment 2, in conjunction with Amendment 9, appears to set down a process for the future, as the noble Lord explained, because the new clause will not come into effect until two months after the entry into force of the Bill. That begs the question how we view the process in relation to the current changes to the scheme.

Leaving that aside for the moment, we consider that, although welcome, the proposed consultation requirements do not go far enough. In particular, we consider that there should be a role for Parliament in satisfying itself that due process has been undertaken. At this stage, we are not seeking to be unduly prescriptive of that approval process, so our amendment is a probing amendment. Having very much nailed our colours to the mast of collective bargaining, we do not see this as a way of second-guessing or overriding an agreement that has been reached.



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If we are to move away from adverse changes to compensation arrangements requiring agreement, then, especially when agreement is not forthcoming, I suggest that the appropriate Minister should be held to account. It is also reasonable that the information contained in the report to Parliament is not necessarily determined just by what that Minister considers appropriate, but by what is relevant.

The passage of the Bill has been an opportunity for the Minister to update Parliament from time to time, and I am grateful that he was able to do that again at the start of our proceedings. However, such a requirement is not captured comprehensively in the form envisaged by government Amendment 2-whether or not strengthened by our amendment-so why defer the introduction of this reporting requirement until after the introduction of the currently planned changes to the scheme? Is there really any reason why a report, as envisaged by government Amendment 2, could not be laid before Parliament immediately on the coming into force of the Bill, as the noble Lord has said?

We recognise that there have been genuine and detailed negotiations. To simply collect that process and report it as the noble Lord's amendment requires does not seem unduly burdensome. Presumably, were there to be any delay to the order of the laying of the scheme that drifted beyond two months, that would have to happen in any event because this amendment's effect would be in place.

If he is keen on our amendment about a government process or approval by Parliament, the noble Lord may say that that process could delay the implementation of the scheme. Simply in terms of the Government's own amendment, however, why is it impossible to have the same process for the scheme which now looks as if it will make progress as for that which the Minister envisages for the future?

Baroness Turner of Camden: I support both opposition amendments. When I first read the text of government amendment 2, I thought that I really could not accept an amendment that states,

I do not think that that is satisfactory wording to have in an arrangement by which a Minister is bound to report to Parliament. It should not be up to him to decide what information is appropriate to report to Parliament. I do not think that that is acceptable. Therefore, I support these two amendments, which are reasonable in relation to the text of the government amendment. However, as I said earlier, I have some doubts about the Government's attitude on these matters anyway.

Baroness Noakes: My Lords, perhaps the noble Lord, Lord McKenzie, could give a precedent for a consultation report being required to be both laid before Parliament and approved by Parliament. It seems to me that this is a novel procedure that the noble Lord is suggesting. I am not sure that he has made a case for a novel procedure in this Bill.

Lord McKenzie of Luton: My Lords, that is an interesting question. I am not sure that I could quote a precedent, but the fact that it may be novel does not

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mean that it is not a good idea. Are we not dealing here with something that is quite a significant step? To date, there has been the requirement for agreement. We know why agreement could not be reached when we tried it and why, although it has not run its course yet, it is proving to be challenging as well.

We are moving from a position where there had to be agreement from everyone to one where there need be no agreement. That is in the context of a compensation scheme that will impact the lives of tens of thousands of people in a very big way. Therefore, it is not unreasonable that a process should be undertaken whereby Parliament has the chance to ask whether these have been genuine negotiations. I should make it clear that I do not in any way challenge what has happened today as not being a genuine attempt to reach agreement-I am certain that it has.

A big step is being taken here in asking others, in particular the trade unions, to give up that right for agreement, so requiring that there be a process of Parliament to say that the requirements of consultation and engagement have been met should be something that they would wish to look at. I stress that I am not saying that Parliament should have the opportunity to unpick an agreement and to substitute its own view on what the agreement should be, as that should come from the negotiation. That is the basis on which I moved Amendment 3.

Lord Newby: Following up on that point, if it is the noble Lord's intention that Parliament should not unpick an agreement reached by the Government and the unions, what would be the consequence of Parliament not approving a deal that had been struck as a result of collective negotiation? Giving Parliament a veto over the negotiations seems slightly odd. I thought that noble Lords opposite were trying to get a system going again under which there was free collective bargaining, in which Parliament will not be involved, and that the Government and the unions would just negotiate a deal.

Lord McKenzie of Luton: The noble Lord raises a good point. The problem with drafting one's amendments and writing one's speaking notes later is that one realises that one might have covered matters in a fuller way. However, if, for example, in a particular case Parliament was clear on the basis of the report that there had not been a proper, full and sensible negotiation, one could envisage that the adverse changes to the compensation scheme-we are talking about adverse changes-would not be supported and that there had to be another process to address that. I accept that the amendment as drafted does not flesh out that detail, but we will reflect on that before Report stage.

Baroness Noakes: My Lords, the noble Lord, Lord McKenzie, rests his argument on this being a very big change that requires Parliament to be involved. We have to be clear that, in the private sector, the practice is not for redundancy schemes to be agreed. If it was the practice in the past, it is not now. In the private sector, the practice is clearly that redundancy terms are not hard-wired into employment contracts-that was the evidence given to the other place in the Public

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Bill Committee-and, in my experience, even those organisations that had collective agreements around redundancy have moved away from that relatively straightforwardly. This is not a big deal; it is just modernisation of the terms and conditions that operate in the Civil Service.

Lord McKenzie of Luton: My Lords, I did not base my argument on the fact that there was comparability with the private sector. We know the history of the scheme-the Minister helpfully recapped on it on Second Reading-and that the prospect of compensation arrangements was an integral part of the terms and conditions, historically. It might be challenged as not necessarily the case now, but what people accepted in terms of salary, pension rights and compensation opportunities was seen as a package that was seen as collectively valuable. I suggest that it is a big step, for the people affected, to move away from that. It is right to do it-we have made that clear and support the Government in seeking to do it-but we think that there ought to be protections around it so that Parliament has a role and an opportunity to take a view on whether the process that should be undertaken, in a sense, to justify giving up unanimity is robust.

Lord Wallace of Saltaire: My Lords, at this stage I should declare an interest, in that I have a family member who is about to go on six months' maternity leave and is not at all sure that her Civil Service job will be there when she comes back. The Civil Service has changed a lot over the past 20 years-civil servants indeed have to apply for their next positions-so life is not as it was when the 1972 Act was founded. I reassure the Opposition that the Government's intention throughout is to be as transparent as possible about the proposed scheme and the consultation with the unions. If it helps the Opposition, I am willing to give a clear commitment that the coalition Government will table a Written Ministerial Statement at the point at which the scheme is agreed, to make sure that both Houses are fully informed of what has been agreed.

In answer to what the noble Baroness, Lady Noakes, said about this being an unprecedented development, I say that I am not aware of any precedent in which proposals of this sort have to be submitted for the approval of both Houses. I do not think that the previous Government would have wanted to accept that, and I am not sure that this Government wish to do so. Therefore, Amendment 3 is one that the Government are not in any sense minded to accept. However, I am prepared to look again at the wording of the proposed new clause to which Amendment 4 addresses itself to see whether there is any way in which we can meet the noble Lord's concern over the inclusion of the wording,

On that basis, I hope that he will be willing to withdraw Amendment 3 for the time being.

Lord McKenzie of Luton: My Lords, I am grateful to the noble Lord for the assurance about a Statement being made to both Houses, and that he will look again in relation to the wording on the information that needs to be provided. We will reflect on the debate

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that we have had about Parliament's approval, but I beg leave to withdraw Amendment 3. In doing so, I say that although Amendment 2 is not as we would most like it, it is a step in the right direction so we feel able to support it today.

Amendment 3 (to Amendment 2) withdrawn.

Amendment 4 (to Amendment 2) not moved.

Amendment 2 agreed.

Clause 2 : Limits on value of benefits provided under civil service compensation scheme

Amendment 5

Moved by Baroness Turner of Camden

5: Clause 2, page 2, line 23, leave out "the following limitations" and insert "modifications proposed following consultation with, and the agreement of, the relevant trade unions"

4.30 pm

Baroness Turner of Camden: My Lords, I rise to move Amendment 5 and also to speak to Amendment 6. The amendments are all part of my position that I outlined when I said that I want to ensure that proper negotiations and agreement take place before any change is made to the redundancy and superannuation terms that we are discussing.

As I indicated before, there is a great deal of concern among the individual civil servants who have written to me, because they expect that, whether they like it or not, a number of them will face compulsory redundancy in a very short space of time. We know that the proposed new offer, which is now incorporated in the Bill in Clause 2(2), is not acceptable to the union or to the numerous individuals who have written in. The union points to:

"The absence of any form of underpin to allow people to earn more than 21 months, or transitional provisions or reserved rights to protect accrued rights".

The union is very keen to ensure that accrued rights are protected and it points out that there is no attempt to do that in any provision in the Bill.

For that reason, it seems sensible to write into the Bill the requirement that any modifications-the union does not say that there should be no modifications, and it is willing to discuss alterations to the existing terms-should be introduced only,

Reference has been made to comparisons with the private sector. When I was a union official, I had the job of negotiating for members in the private sector as well, so I think that it depends on what part of the private sector you look at. Some people in the private sector are reasonably well paid and have agreements that cover redundancy-it is not unknown for that to happen, particularly where there is an element of organisation among the employees.

In any event, the Bill deals with public sector employees, who have in many instances for years believed that they would have stable employment. In many instances,

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those people are not terribly well paid and might be less well paid than people in the private sector with similar qualifications or similar work, but they have nevertheless been prepared to work for the public sector for a number of years-some of those who have written to me have worked in the public sector for more than 30 years. Therefore, they feel that they are entitled to the conditions that were negotiated on their behalf, which they always thought that they could always look forward to in the unlikely event that they were made redundant.

It has to be understood that many of the people affected never previously contemplated the idea of redundancy or unemployment, because they believed that their employment was relatively stable. However, that has not turned out to be the case. Many of them realise that they now face closure of some offices, which means compulsory redundancy whether they like it or not. Therefore, we need to ensure that reasonable terms are maintained.

We will probably be told that the terms that were originally negotiated were far too generous and that the taxpayer should not be expected to have to shoulder such a burden. As a taxpayer myself, I have to say that a taxpayer is also an employer of the people who work for us in the public sector. As an employer, I want to ensure that the people who work for us are reasonably well paid and that the agreements negotiated on their behalf are kept as much as they possibly can be. For those reasons, I beg to move.

Lord McKenzie of Luton: My noble friend has, as ever, made a passionate and powerful case for ensuring that people are treated fairly, particularly in relation to compensation when she brought up pension rights. The amendments are an alternative means of achieving something that we have further amendments for later on. They are essentially seeking to get rid of the caps. We obviously support that.

In a sense, this approach is predicated on Clause 1 not standing part of the Bill, which it did. It is now more difficult for these to fit together, but the concept of getting rid of the caps is something that I thoroughly support.

The amendment raises the difficult issue of the extent to which there must be agreement. Again, we are at one in recognising that there must be a proper process. There must be a consultation and every effort made to end up with a negotiated settlement. My right honourable friend in the other place, Tessa Jowell, made clear that we accept that there would be circumstances in which changes would have to be made that did not rely upon agreement. We do not do so lightly, and nor, I am sure, does the Minister. To that extent, we may differ a little on my noble friend's amendment, but we have some other amendments constructed to achieve, in large measure, the same thing: to get rid of those caps and the right to revive them at the earliest opportunity.

Baroness Noakes: The noble Baroness, Lady Turner of Camden, has said twice this afternoon that the civil servants who are potentially affected by the Bill are often not very well paid. This may have been the case

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in the past, but all recent studies show that on pay levels up to £40,000 or £50,000-that is, "well paid"-public sector employees are better paid than their equivalents in the private sector. What may have happened in the past, and may have been part of this notional package whereby people say, "I accept low pay and get a better pension and redundancy", has, over the years, been completely eroded. The terms and conditions are collectively out of balance with private sector comparators. In particular, pay levels at the lower levels are high.

Lord Wallace of Saltaire: There are, however, a substantial number of low-paid civil servants. I am rather surprised at the number of them earning less than £21,000, most of them working outside London. One of the Inland Revenue computer centres is half a mile from Saltaire, and I am well familiar with average rates of pay in the northern part of Bradford. The reason why the scheme is set to be biased in favour of those earning less than £23,000 is that there are a very large number of them. There are a small number of extremely well paid civil servants; the changes in the compensation scheme are also to limit the payouts to which they might be entitled.

The amendments of the noble Baroness, Lady Turner, seem designed to remove the substance of the Bill. To rehearse briefly, the intention behind the Bill is to bring to a close two years of negotiation by successive Governments with the trade unions, to change a compensation scheme designed nearly 40 years ago, which does not fit current conditions or circumstances.

Amendment 5 would, in practice, go further than the requirement in Section 2(3) of the Superannuation Act 1972, which, as I have explained, we have already needed to amend. First, under Section 1(3) of the 1972 Act, it is for the Minister to judge who should be consulted-

or with those persons themselves. However, rather than requiring the agreement of those who have been consulted on this basis, Amendment 5 would prescribe that consultation must take place with "the relevant trade unions" and, indeed, that these unions must agree.

We have already explained the efforts that successive Administrations of all parties have made, and which some of the trade unions have made, to reach such agreement. We are setting out in primary legislation and have reiterated in both Houses our commitment to meaningful consultation but, as I have described, our intention in adding Clause 1 was to remove any union veto on changes to the Civil Service Compensation Scheme. I cannot imagine that any of your Lordships will be surprised to learn that, after more than two years of consultation, the Government's view on this is resistant to change.

The second respect in which the noble Baroness's Amendment 5 would go further than the approach set out in the 1972 Act is that it would apply to any changes proposed to the Civil Service Compensation Scheme, not just to those changes that would have the effect of reducing benefits. This would create a new bureaucratic process, in which any change to the

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compensation scheme including, to pick a trivial example, a minor amendment to its title would require consultation and agreement from all the Civil Service unions. Amendment 6, which is grouped with this, seeks to remove from the Bill the main provisions covering the potential caps on the value of benefits provided under the compensation scheme. This guts the Bill.

The Government are determined that there is a fallback position that can be used and that, bearing in mind the lessons of the previous Administration's scheme, we are not left unable to progress due to some sort of unforeseen legal challenge to the details of the new scheme. We are therefore providing in Clause 2 to have in reserve the possibility of applying caps on the maximum value of redundancy payments under the Civil Service Compensation Scheme: a maximum of 12 months' pay for compulsory departures and 15 months' pay for voluntary departures. Putting these limits in primary legislation leads to greater legal certainty and democratic accountability and, as I have already remarked, the Government can, by negative order, raise the level of the caps, but cannot lower them. I hope that provides reassurance to the noble Baroness and that on that basis she will be willing to withdraw the amendment.

Baroness Turner of Camden: I thank all noble Lords who have spoken in this debate, which has been very interesting. I still have concerns about the Bill and about provisions within it. However, I will study very carefully what the Minister said and the assurances that he has given this afternoon to see what should be done before Report. I do not think that it is useful in present circumstances to have comparisons between the private sector and public sector. A government report has recently been issued that appears to indicate that if you take the total rewards of employment in both sectors, the private sector still exceeds in total the public sector. If you take all the rewards, not just money, but also what is available in superannuation and so on, the private sector is still rather better than the public sector, but that is another issue. In the mean time, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6 not moved.

Debate on whether Clause 2 should stand part of the Bill.

Lord McKenzie of Luton: Notwithstanding what the Minister has just said, I do not think that Clause 2 should stand part of the Bill, and think that the arbitrary caps it includes should go from the legislation. It follows that consequential amendments should be made to Clause 3 as excluding Clause 2 would make the sunset and sunrise provisions obsolete.

We heard earlier from the Minister that the Government have reached agreement with five of the trade unions and are still talking to the PCS. This is to be welcomed. It is the right way to bring about changes to the CSCS which we are all agreed are necessary. Although we recognise the remaining difficulties, it is still to be hoped that agreement can be reached with all the trade unions. As the Minister will by now be

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aware, the introduction of the caps in the first place has been hugely controversial. He and his right honourable friend in another place are on record as saying that they are a blunt instrument and not intended to be the last word. The Minister was clear at Second Reading that the Government's intention is to reform the CSCS by negotiated agreement, rather than rely on the caps. We have heard today that work is now under way as a consequence of the negotiations to bring forward a new scheme as soon as the Bill becomes law. This, in any event, will require the repeal of Clause 2, as we heard earlier.

4.45 pm

There is no doubt that the inclusion of the caps has created a climate of distrust from the start of the current negotiations. Worse, it has caused genuine distress among members of the Civil Service. I am sure that the Minister will, like us, have received numerous letters from individuals expressing their fear that jobs are to go and the compensation package that they have relied on will be, in some instances, 60 per cent less than anticipated. This is in circumstances where the prospect of getting early alternative employment in the private sector is, at best, bleak. These fears are compounded by concerns that the service is holding back on proceeding with redundancies so that reduced compensation terms will apply, notwithstanding announcements already made about the demise of parts of the service. An example of this would be the already announced abolition of the RDAs, to be effective next April, although it may rather have come unstuck today due to judicial review. Could the Minister specifically address this point and explain what the policy is where announcements have been made which clearly signal the demise of certain activities at a specified time in the future?

Whatever our misgivings about the monetary and fiscal framework adopted by the Government, we cannot in the Bill prevent the loss of 500,000 public sector jobs and as many consequential jobs in the private sector. One thing we can do is lift the threat that any compensation payable will be based on the punitive caps. It is clear that when the Bill becomes law the Government will, after due process, be able to secure a scheme that they consider appropriate, even if there is not agreement with all the trade unions. It is clear that the Government do not see the caps as providing a proper basis for a fair scheme. It is clear that the existence of the caps has soured the negotiating environment. In the terms of the noble Baroness, Lady Noakes, the provisions amount to negotiating by statute, pointing a gun at the head of the trade unions-a gun that the Government seem intent on keeping focused on those trade unions.

Why? It has been explained that this is a fallback arrangement, should there be a legal challenge to the new scheme introduced, which the courts-on an interim or other basis-might then set aside. If the caps were not in place or capable of being revived, it is suggested that the status quo would operate. The proposition is that, if there were to be a successful legal challenge, it could affect the new scheme but not the operation of the caps-a point we touched on earlier. Perhaps the Minister could expand on the circumstances in which he thinks there would be a legal challenge that has an

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impact on the scheme-particularly if it is to do with impairment of possessions and human rights legislation-but which the caps simply escape. I am not sure that that has been fully explained.

We have had the opportunity to peruse the correspondence between the Government and the JCHR and understand that the latter is due to issue a report shortly-before Report stage, we hope. We look forward to receiving that report. However, the Government have taken a clear line that the Bill does not interfere with possessions for the purposes of the Human Rights Act and that, if it did, such interference would be justified on public policy grounds. In these circumstances, why do they need a reserve power, particularly since the outcome it would produce is worse than the scheme that has been the subject of the challenge? If at some stage the Government are found to have erred, either in process or in law, they should address the consequences of that failure.

If there were an absolute assurance that the caps were to disappear the day after the Bill becomes law, never to be revived, deleting this clause may be somewhat academic. However, this is not the proposition before us. Keeping them lurking in the background as a continuing threat to the workforce, acting as a possible deterrent to those who believe they have a case in law to pursue, is surely not the way that a fair Government should proceed. I beg to move.

Lord Wallace of Saltaire: My Lords, I feel I should not reiterate the arguments that I have made already about the necessity of Clause 2. My feeling about this is that after two years of negotiations, any Government would have introduced such a proposal. Therefore, I do not want to push this in any partisan way. I am sorry that the noble Lord, Lord McKenzie, thinks that this has soured the negotiating environment. That is not my impression of the quality of the negotiations between the majority of the unions and the Government on this. We have made real progress and both the unions and the Government have been negotiating with clear commitment to reach a consensual agreement in the circumstances in which we find ourselves.

As I described at Second Reading in your Lordships' House, the caps in this legislation serve several purposes. First, they set out a basis for discussion of reform of the compensation scheme with civil servants and with the trade unions representing them, comparable to best practice in the private sector. Secondly, they provide an interim solution if agreement cannot be reached. Thirdly, they provide a fallback if, following discussions and what we believe to be the conclusion of a new workable compensation scheme with terms improved beyond the caps, we find that we cannot implement it.

If we do not have this clause, we shall be in a state of legal uncertainty in which it is possible there might be a judicial challenge. Primary legislation provides much greater legal certainty, which may be important in the event of protracted litigation, where the case might be referred from one court to another. Therefore, I invite the noble Lord to withdraw his opposition.

Baroness Noakes: The Minister said that he did not want to rehearse the arguments he put up before, but I would invite him to rehearse them because that is

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where the crucial issue lies. The Minister gave three reasons for having Clause 2. One is as a basis for discussion, which is no basis on which to put anything in legislation. A second is as an interim solution if there is no agreement. As I understand it, once we have Clause 1, there is no necessity for agreement, so there is no necessity for an interim solution. The third item is a fallback, if for some reason the Government were not able to implement an agreement under Clause 1. So we come back to the crucial issue of whether Clause 1 is legally robust. If it is not, on what basis is it not legally robust, or potentially not legally robust? If that is the case, what are the differences between a potential lack of robustness in Clause 1 and a potential lack of robustness in Clause 2, if that is what one has to fall back on?

I do not agree with the noble Lord, Lord McKenzie of Luton, that these are punitive caps as I think they are relatively generous compared with what the private sector offers. The Government are indeed prepared to go further and offer a more generous scheme. I have no problem with the quantum but I seek to challenge why we have this clause. If it is just for a basis for discussion, it is no basis on which to legislate. We have to tease out why Clause 1 might be challenged and why Clause 2 would not be challengeable.

Lord Wallace of Saltaire: My Lords, logic might suggest that all we need in this Bill is Clause 1. I understand that point, but since the High Court judgment in May, it has become apparent that when the terms of the compensation scheme were subject to legal doubt, the purpose of restructuring within government might be stalled altogether, with consequential financial implications and uncertainty and consequent distress for staff. Having Clause 2 in reserve ensures that, if a scheme is subject to prolonged litigation, there is a provision which produces certainty and can be brought into force to prevent the process of government restructuring being put into limbo. Therefore, this is a reserve power which the Government are asking for which we hope will not be necessary. I stress again that it is a fallback in the event of refusal to agree followed by judicial challenge. The question then arises as to what the default position should be if a scheme is stalled by prolonged litigation. It is right that Parliament should decide in an Act of Parliament what the default position should be, hence Clause 2. I repeat: putting these limits into primary legislation leads to greater legal certainty and thus democratic accountability.

Lord McKenzie of Luton: My Lords, I will obviously not pursue the proposition that Clause 2 do not stand part of the Bill but, like the noble Baroness, Lady Noakes, I am struggling to understand fully the Government's position on this, particularly in relation to the fallback. Can the Minister be a bit more specific on the fear that the introduction of the scheme, by way of order in a parliamentary process, is somehow less secure than caps being included in primary legislation as a fallback, particularly when those caps are, pretty much across the range, substantially more adverse than the scheme which is going to be introduced?



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It seems to me that Governments, as they legislate, could argue right across the piece that there is always the prospect of a challenge. Somebody might take a different view-the courts might take a different view to the Government-and there are consequences of that. If there are, the Government have to face those consequences. I suggest that to try and build in, or hardwire, if I may use the expression, a sort of fallback position in all sorts of circumstances, particularly these, does not seem appropriate. It is something which concerns us greatly and to which we shall certainly return on Report. It is not only our view. The Delegated Powers Committee made a further point about reviving these provisions but, if we adopted this across all government legislation, legislation would be littered with provisions so that if there were a successful challenge here, there or anywhere else, there would be something in your back pocket as a fallback. That does not seem a very sensible basis on which the Government should legislate.

While I hear what the noble Lord said, I am not convinced by the proposition that he has made, certainly on the issues around the basis for discussion and interim solution. In a sense, that is now past and we have something which is, if not fully agreed, on the point of being implemented. Yet, as the noble Baroness said, Clause 1 has moved us on from it anyway, so I remain unconvinced. The issue of having a measure like this in the background, which of itself must be a deterrent for somebody who believes that they have a case in law to pursue, whether they are right or wrong, is that it must make it less likely that they would seek, in their terms, to get justice. That is a regrettable step as well.

Lord Wallace of Saltaire: Since the High Court judgment-since, indeed, one of the unions decided to take what had until then been negotiations to judicial review-we find ourselves in a situation where it is possible that judicial review may be used as a means of delaying the introduction of the scheme. If that litigation were to take a sufficiently long time, the current default would be the previously existing scheme. Now, the previous Government negotiated for some 18 months to change that scheme, rightly insisting-and having the agreement of the unions-that the previous scheme was no longer viable or affordable. We wish to make it absolutely certain that, in the event of continuing litigation, the default to any failure to introduce the new scheme would be enshrined in primary legislation, which is therefore much less open to judicial challenge. That is the justification for Clause 2.

5 pm

Lord McKenzie of Luton: We are in danger of getting a bit repetitive. Could the Minister say a little more about why the primary route is more secure? Fundamentally, if the Government's judgment is that there are risks around a legal challenge that could delay the implementation of the scheme, I would have thought that the Government should be concerned about that and should seek to address it-not by having this fallback position, which they have accepted all along they do not want to deploy, but by looking at the arrangements that they will implement to ensure that those are less likely to suffer the legal challenge

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that the Government clearly fear on this. It seems to me to be the wrong approach. If we think that people's rights are being impaired and are not secure in our judgment about this, I would have thought that the thing to do is to change arrangements until we are secure. I know there is never certainty in everything in life, but that seems to be the right route for the Government, rather than to have this back-pocket fallback that, at their own admission, the Government see as a blunt instrument that they never intend to deploy.

Lord Wallace of Saltaire: I used to teach international politics, not law, and this is the point where I should appropriately offer to write to the noble Lord, and place a copy in the House of Lords Library, about the statutory basis of the scheme as it applies to the cap and to make sure that there are some informal conversations between now and Report to tease out the details of this difference.

Lord McKenzie of Luton: I am most grateful to the Minister.

Clause 2 agreed.

Clause 3 : Final Provisions

Amendment 7

Moved by Lord Wallace of Saltaire

7: Clause 3, page 4, line 9, at beginning insert "Subject to subsection (2A),"

Amendment 7 agreed.

Amendment 8

Moved by Lord Rosser

8: Clause 3, page 4, line 9, leave out "the day it is passed" and insert "a day fixed by the Secretary of State by order, provided that no such order may be made until the Minister has tabled a statement outlining the Government's commitments to re-skilling and redeployment options for civil servants."

Lord Rosser: I hope noble Lords will agree to me moving this amendment as it is not tabled in my name. My noble friend Lord Brett is speaking in the Chamber, and it was not possible to add my name to the amendment yesterday.

This amendment raises the issue of the Government's level of commitment to reskilling and redeployment options for civil servants. During the Committee stage in the other place, oral evidence was taken from the director of the Civil Service workforce in the Cabinet Office. I would like to ask the Minister a bit later about the role of this director, the section or department for which that director is responsible and the extent to which that section or department has been or will be affected by the reduction in posts in the Civil Service.

Evidence was taken in Committee in the other place on how reductions in posts had been dealt with up to now. The representative of the First Division Association said that the workforce had been reduced by more than 80,000, with 20,000 jobs relocated out of London in the past five years, and that this had been

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done without having to resort to more than about 80 compulsory, as opposed to voluntary, redundancies. He described it as "a wonderful success story". The director of the Civil Service workforce confirmed that the vast majority of civil servants whose roles had been lost due to reorganisation in the pipeline were nonetheless "gainfully employed" elsewhere in the Civil Service.

In 2008, a protocol was agreed between the Cabinet Office and Civil Service unions for handling surplus staff situations and, most importantly, avoiding compulsory redundancies. It looks as though this protocol has been pretty effective. The question is whether it will continue to be so if we are about to be faced with a much larger and much faster reduction in the workforce than has taken place before. One assumes that while some will be not unhappy to take voluntary redundancy, others will take it because they can see compulsory redundancy just around the corner, and the terms for leaving under voluntary redundancy are more favourable than those for leaving under compulsory redundancy. In all but name, it would be compulsory voluntary redundancy.

However, for many people whose jobs are going to be eliminated, redundancy is not an option they wish to contemplate. For example, they may have a commitment to public service, or their financial and family commitments may mean that a regular income at current levels is crucial, or they may suspect that the prospects of finding suitable alternative employment elsewhere are slim in the current climate. It would be helpful for the Minister to say what the Government intend to do to redeploy and, where necessary, retrain those staff who do not wish to take voluntary redundancy. I understand that if a negotiated agreement is reached, the Government, as part of that agreement, will reaffirm the principles of the relevant protocols, including the protocol for handling surplus staff, and consider how they can be further enhanced to avoid compulsory redundancies.

Just how determined are the Government to avoid compulsory redundancy? The agreed 2008 protocols state that they,

I assume that this Government accept that agreement.

Can the Minister therefore explain what using "best endeavours" to avoid recourse to compulsory redundancies for those who want to continue their Civil Service careers means in a situation where job losses are taking place on a much larger scale than previously? What is the maximum number of compulsory redundancies that the Government would regard as acceptable, and within the terms and the spirit of the agreed protocols, bearing in mind the figure for compulsory redundancies given in Committee in the other place?

How long will be allowed for finding an alternative job in the Civil Service for someone displaced, and any necessary retraining given, before the Government decide that redundancy will occur despite the wish of the individual to continue their Civil Service career?

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How much time and money are the Government prepared to invest in retraining and redeploying individuals whose current job is eliminated and who wish to continue their Civil Service careers?

The 2008 protocols make reference to the role of the Cabinet Office, for which 11 key functions are listed in respect of the protocol for handling surplus staff situations. The first is to establish and maintain commitment to the corporate protocols and ensure that good practice is shared. Another is to work with departments and regional co-ordinators to ensure that all HR contacts have access to information on departmental surpluses and vacancies, nationally and within a regional context. Yet another is to develop appropriate policies that will help in avoiding compulsory redundancies. It is obvious from just those three out of a total of 11 key functions of the Cabinet Office that its role is both crucial and extensive right across government in ensuring that the protocol for handling surplus staff situations is applied in a co-ordinated manner, consistently, thoroughly and fairly and as part of the culture of the organisation.

I referred earlier to the director of the Civil Service workforce in the Cabinet Office who had given oral evidence on the Bill in the other place. Is this the director who is responsible for the Cabinet Office role in relation to the 2008 protocols, including the protocol for handling surplus staff? If not, which director is? Can the Minister indicate how many staff there are in the Cabinet Office engaged in carrying out that office's responsibilities in relation to the 2008 protocols, including the protocol for handling surplus staff, and whether that number of staff is to be reduced as part of the job cuts in the Civil Service, or increased? If so, increased to what number? The workload will surely increase as a result of the job cuts elsewhere in the Civil Service. Could the Minister provide an estimate of the extent to which the Government consider that the workload in the Cabinet Office section dealing with the implementation of the 2008 protocols will increase as a result of the imminent significant job cuts?

Will the Minister give an assurance that the Cabinet Office will have the necessary staff to carry out its laid-down role in full in respect of the 2008 protocols, including the protocol for handling surplus staff? Will the Minister also give an assurance that the HR functions in the different departments will also be properly staffed to carry out the 21 responsibilities listed in the protocol under the heading, "Role of Departments with surplus people", bearing in mind that the workload in this area will presumably increase as a result of the job cuts? How many staff do the Government estimate that there will be seeking redeployment and retraining? In particular, how many is that expected to be in the current financial year and the next two financial years, compared with the two previous financial years?

I hope that the Minister will be able to respond to the specific questions I have raised. I hope that the answers that the Minister gives will provide the reassurance being sought that the Government are committed to redeployment and retraining for civil servants, by showing that the necessary human and financial resources will be provided to ensure that the words of the protocol about providing a corporate approach across the Civil

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Service and relevant NDPBs to ensure that best endeavours are used to avoid recourse to compulsory redundancies for those who want to continue their Civil Service careers will be honoured in full by the Government. I beg to move.

Baroness Turner of Camden: I support the amendment, which is admirable in every respect. At times of economic recession, the last thing one wants to do is to add to the numbers of unemployed. The unemployed not only pay no taxes, they draw benefits from the state. Therefore, unemployment is also more and more costly at a time of economic recession; it has to be avoided above all things. Anyone who has done, as I have, a great deal of negotiation on behalf of employees knows that when you are faced with a possible redundancy, the first thing you try to do is to negotiate an agreement with the employer. It is designed to ensure that the people do not become redundant and unemployed, but that they have the opportunity to retrain, are reskilled and are able to remain part of the productive workforce. That is what the amendment is all about. It is entirely admirable and I hope very much that we have a satisfactory response from the Minister.

Lord Maclennan of Rogart: My Lords, this is clearly a justified probing amendment, but would not suitable to be in the Act. In any event, it will be overtaken by events rather soon, but I would wish to hear from the Minister as much as he is able to say. If it is necessary to postpone a full answer today because these issues have not been fully resolved, I hope that before the next stage of the Bill the Government will be in a position to give indication about redeployment and reskilling.

Lord Wallace of Saltaire: My Lords, I recognise the concerns which lie behind the amendment. Again, we have inherited from the previous Government the published protocol, to which reference has already been made, and the determination, where possible, to build a leaner and more efficient Civil Service. In the nature of the case, many of the civil servants about whom we are talking are outside London, so there will have to be a variety of different schemes aimed at local circumstances. There will have to be a certain amount of outsourcing. The Cabinet Office is responsible for the protocols and the staff working on the protocols remain hard at work late in the evening. I am assured by those behind me that the director in question is responsible for pay and pension policy, employment policy, trades union issues at a national level and, until last month, diversity and well-being issues.

5.15 pm

Discussions are actively under way. It is certainly intended that there will be additional outsourcing to assist in relocation and retraining. Noble Lords will be aware that, as under the previous Government, wherever possible we avoid compulsory redundancies by providing, where we can, relocation and retraining. I am able to reassure the Committee that the revised protocol allows for more than three months to find new roles.

I hope the noble Lord will understand if, on some of the many very detailed questions which he has asked me, I write to him with the answers. I remind

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him that the recently published Cabinet Office Business Plan states that the Cabinet Office is committed to publishing a plan to help former civil servants find work with proposals to support them to move into the private sector and into self-employment, including options on franchises. We have already discussed the published protocol which was agreed with the Council of Civil Service Unions to deal with surplus staff, with which, no doubt, the noble Lord is very familiar. Secondment to the private sector has been discussed and may take place were possible.

Again, we shall have to take into account the differences in people in Newcastle compared with people in Bradford and people in Cardiff. I stress that this is not simply a London issue. Many of the people who are likely to be affected by these measures are scattered around the country. I reiterate that we are committed to publishing plans to help former civil servants to find work with proposals to support them either to transfer to other posts within the Civil Service or to move into the private sector or into self-employment. We are conscious that there is a myriad different individual circumstances. The provision of new skills and opportunities is a very important part of this process. Having made that commitment, and a further commitment to write to the noble Lord with answers to his many specific questions, I hope noble Lords will feel reassured that we are very committed to finding alternatives wherever we can. On that basis, I call on the noble Lord to withdraw his amendment.

Lord McKenzie of Luton: Could the noble Lord cover-or write to me on-the issue of timing? The issue was raised because I referred earlier to people knowing that the RDAs will go. With that knowledge, at what point do the processes start and at what point do either the current arrangements for compensation apply or new arrangements apply in the future? Does he feel comfortable about there being a level playing field in the way in which these are dealt with across the service?

Lord Wallace of Saltaire: My Lords, I am sure that the noble Lord is aware that, although the RDAs will disappear, some of their task will be undertaken by the new LEPs and some of those involved will, naturally, be strong candidates to find posts in those new sectors. This is not completely a zero-sum affair. I am very conscious that in Yorkshire, we have one of the more effective RDAs. We are now in the process of agreeing local economic partnerships and I have no doubt that many of the staff in the Yorkshire RDA will work for the Yorkshire-based LEPs.

Lord Rosser: I thank the Minister for his response. Of course, I shall await the replies which he has undertaken to send me in response to what I accept were a large number of questions. Obviously, I intend to withdraw the amendment, but perhaps I could make a general point. As I am sure the Minister appreciates, one of the things which prompted the question is that, unless I have misunderstood the situation, the potential number of staff who will be interested in redeployment and retraining is presumably likely to be somewhat larger than in previous years;

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hence my asking for information about the numbers this year, in the next two years and the previous two years to try to gauge to what extent there is an increase.

It is a case, as I am sure the Minister is aware, of making sure that the number of staff who are involved in assisting with the practices and procedures that are in operation now will also be sufficient to cope with what is likely to be a significant increase in the number of people seeking retraining and redeployment. It is from that angle in particular that I ask these questions. Has sufficient thought been given to the increase in workload that is likely to come from people seeking other employment opportunities? Will the system be geared up to cope with that fully? I realise that that will no doubt emerge from the answers to my questions that the Minister will send me. I beg leave to withdraw my amendment.

Amendment 8 withdrawn.

Amendment 9

Moved by Lord Wallace of Saltaire

9: Clause 3, page 4, line 9, at end insert-

"(2A) Section (Consultation in relation to civil service compensation scheme modifications) comes into force at the end of the period of 2 months beginning with that day."

Amendment 9 agreed.

Amendment 10 not moved.

Amendment 11

Moved by Lord McKenzie of Luton

11: Clause 3, page 4, line 15, leave out paragraphs (b) and (c)

Lord McKenzie of Luton: I shall speak to Amendment 11 only briefly since it generally goes over ground that we have covered quite extensively so far. It deals with the deletion of the provisions that enable the caps to be extended or revived after they have lapsed. I refer to the Delegated Powers and Regulatory Reform Committee report, which describes Clause 3(4)(c) as,

It goes on:

"This provision enables clause 2 to be revived at any time after its expiry or repeal, by order subject to affirmative procedure in the Commons. Paragraph 12 of the memorandum explains that the power is needed 'if for some reason CSCS amendments cannot be implemented as anticipated'".

It reaches this conclusion:

"The Committee considers that no convincing justification has been made for the unusual power in clause 3(4)(c)".

Clause 3(4)(c) gives the power to revive the provisions. Can the Minister adduce greater justification than has been provided so far to the Delegated Powers and Regulatory Reform Committee?

The Delegated Powers and Regulatory Reform Committee's report also raises the question of to which House the proposed orders are to be made. It focuses on the fact that they will generally, under the Bill, be made to the House of Commons, rather than

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to your Lordships' House as well. There were, I know, issues around whether it is a money Bill and whether these are financial provisions, but the report draws parallels with previous legislation that has come before your Lordships' House. Perhaps in responding the Minister could cover that point as well.

My noble friend has not moved her amendment, the thrust of which I support. It seeks to achieve what we seek to achieve by removing the right to revive or extend the sunset clause by a different route. These amendments are all part of a package through which we object to the caps. We certainly object to their continuance and the opportunities for them to be revived after they have otherwise been repealed or lapsed.

The Deputy Chairman of Committees (Lord Colwyn): If this amendment is agreed I would be unable to call Amendments 12 to 14 because of pre-emption.

Lord Wallace of Saltaire: Before I reply to this, perhaps I may say a little about changing patterns of employment which affect redundancy and people moving from one job to another. I think there are some generational issues here. My father spent 40 years in the same job, apart from Army service, from the age of 15 until he was 60. The old pattern of employment in which you left school and expected to be in the same career until you retired is one that those of us of a certain age still cling to, but our children by and large do not expect to do so. The levels of turnover in the younger levels of the Civil Service are higher than in the older levels of the Civil Service, so there are certain generational issues here. Our younger generation is more attuned to the idea that you do not have a single career pattern or job pattern for life, and they are prepared to move. That is certainly the Government's hope.

In discussing Amendment 11, it is almost unavoidable that I trespass on the amendments that will follow because the noble Lord, Lord McKenzie, has already mentioned the Delegated Powers Committee's report. We have welcomed it and recognise that the sunset and sunrise clauses are open to question. We hope that the three-year time limit that the two government amendments in the next group will introduce will go a long way towards meeting the points raised by the committee about the power to revive Clause 2 by order. It seems to us that that is a reasonable response to the Delegated Powers Committee's report.

As with much of the Bill, this is a question of how we ensure that we come to a satisfactory and stable settlement on the new compensation scheme by agreement as far as possible with the unions, but avoiding litigation that would challenge the new scheme. It is our hope and intention that Clause 3 would not have to be used for a further revival of the Bill at any point, but it is there to ensure that we have the necessary guarantees. I have already explained to noble Lords opposite what our hope and intention is when this Bill receives Royal Assent, so we hope that much of the Bill will thus be superseded. I hope that when we move on to the next group of amendments the noble Lord will recognise that the Government have moved some way towards

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recognising the concerns which the Delegated Powers Committee expressed and which this amendment seeks to address.

Lord McKenzie of Luton: My Lords, there are some further comments, and perhaps we can pick them up in relation to the next group that we are about to debate. I accept that the Government have moved some way but, I suggest, not very far. We can come on to that. I beg leave to withdraw the amendment.

Amendment 11 withdrawn.

Amendment 12

Moved by Lord Wallace of Saltaire

12: Clause 3, page 4, line 17, leave out "an" and insert "the most recent"

Lord Wallace of Saltaire: For the convenience of the Committee we will discuss together Amendments 12, 13, 14 and 15 which respond to the concerns expressed at Second Reading about what some noble Lords called the zombie clause. The Government also intend these amendments to respond to the comments about the unusual use of a sunrise provision in Clause 3(4)(c) that were made in the third report of the Delegated Powers and Regulatory Reform Committee, which was published on 28 October.

We are very grateful to the committee for its report, and we hope that these amendments respond to its criticisms. The committee rightly commented that "these arrangements are complex", but went on to say that these two delegated powers,

However, the committee was not so persuaded by the need for the power in Clause 3(4)(c) to revive the caps. Its particular objection was to,

These amendments aim to respond to that point, and I hope in speaking to them also to simplify, or at least clarify, some of the complexity in Clause 3. The Government accept that there should not be an unlimited power to revive Clause 2, which might be used many years in the future in circumstances that we could not predict today. On reflection, we accept that that is going too far, and I am therefore grateful to the Delegated Powers Committee for drawing it to the attention of the House. Accordingly, the Government have tabled these amendments which will provide a very similar set of limits on the Clause 3(4)(c) sunrise power as already apply to Clause 2.

5.30 pm

The effect of Amendment 14 is to provide for Clause 3(4)(c) itself to expire three years after Royal Assent-in effect, I am told, a "sunset" of the "sunrise" provision; I hope that the noble Lord likes that. The sunset of this power to revive Clause 2 would mean that it would be there, as the Government intend, as a fallback to revive the caps in Clause 2, just in case they were needed because of future problems in implementing the new Civil Service Compensation Scheme. The

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introduction of this three-year time-limit should provide the needed reassurance that this power to revive Clause 2 would not be available indefinitely to future Governments of whatever complexion.

In the usual course of events, we would thus expect the power to expire during the life of this Parliament. However, again, we have provided in this amendment for a possible extension, by up to six months at a time, of the sunrise power. So, if this provision was exercised, the potential to revive the caps could last for, say, three years and six months rather than just three years, provided that such an order was made during the three-year period. What is specifically not being sought is for the sunrise clause itself to be capable of revival after it has expired.

Members of the Committee may say that we are seeking powers in primary legislation that we hope never to use. That is of course absolutely right: we do not want to use these powers. We want agreement on a new reformed compensation scheme that can be implemented once this Bill has received Royal Assent, and which will mean that we never need to use the caps in Clause 2.

However, the coalition Government are determined to ensure that there is certainty that a new and affordable scheme can be put in place. I very much hope that that is the view shared by all Members of the Committee. If all else fails, the Government are determined that there is a fallback position that can be used and that we are not left, as was the previous Government's scheme, stymied because of some sort of unforeseen legal challenge to the details of the new scheme.

Once the Bill is passed, it will clearly be the will of Parliament that a new affordable compensation scheme is implemented. I accept that the provisions in Clause 3 to revive the caps in Clause 2 are complicated and unusual. We very much hope they need never be used. However, they are essential if we are to be 100 per cent certain that there will be a new, affordable scheme which we still hope may be acceptable to all the Civil Service unions. The changes in this group of government amendments will ensure that these unusual powers are not unlimited, and I very much hope that these changes will meet the concerns that have been expressed.

Amendment 12 is a minor drafting amendment. Amendments 13 and 15 are consequential upon Amendment 14. I beg to move.

Lord McKenzie of Luton: The Minister will understand that, as we do not like the caps and do not want them to continue in any form, we cannot support-although will not oppose today-this set of amendments. The Minister says that the amendments put a time-limit on the provisions but, as I read Amendment 14, it states:

"An order under subsection (4)(c) may not be made after the end of the period of 3 years beginning with the day on which this Act is passed ('the relevant period' ... But the Minister may by order extend (on one or more occasions) the relevant period".

Am I right that the import of that is: as long as it is done before the end of the three-year period, you can keep it going for another six months, then another six after that, then another six after that and another six after that? What on earth is the difference from the current position? Okay, you have to get your decisions in order so that you do not miss the deadlines but, if I

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may say so, that does not seem much of an advance on where we are at the moment. I would be very surprised if the Delegated Powers Committee was comfortable with that. What is the magic about three years, in any event, even if it was just three years and six months, which is not what the Bill provides? Is it not the case that if there is to be a legal challenge to the arrangements which are introduced, that is likely to happen quite quickly? It is unlikely that somebody would accept the scheme if they are unhappy with it, and wait X number of years before pursuing that, so why three years? What is the magic of that?

I do not think that the Minister has yet dealt with the issue about the recipients of the relevant orders and of that going only to the House of Commons, which is what the amendment preserves. It does not challenge that at all. I would accept that we have some advance here on where we are but, frankly, it is not much of one. The fact that we will not oppose it today does not mean that we will not wish to raise and challenge it on Report.

Another thing it does not do is to address the issue of being able to extend the sunset clause. That is in subsection (4)(b) of the provisions, while this is particularly addressed at subsection (4)(c), the sunrise provisions. I am not sure that it sets the sun on the sunrise provisions, because if I read it correctly-the Minister will no doubt sort me out if I am incorrect-there is the opportunity to keep this going in perpetuity, which simply cannot be right.

Baroness Drake: If I might concur with my noble friend Lord McKenzie, given a sunrise provision with a life of three years and a reading of the amendment which seems to suggest that there can be unlimited occasions on which it can be extended, that does not seem much of a concession-if I may presume, having not been in Grand Committee before. Even listening to the Minister's argument that there is a need for a fallback position, surely that is still taking the need for it to an extreme extent, because if there were to be a human rights challenge from one or more of the unions I am sure that it would manifest itself very quickly. I cannot see them waiting indefinitely or until thousands of people are made redundant before they would make such a challenge.

I remain extremely concerned that this seems a very open-ended provision, even allowing for the argument put about the need for the Government to have a fallback position in the event of a legal challenge. If I were a trade union negotiator, I would feel very anxious about the integrity of the negotiating process on an ongoing basis if there were such an unlimited sunrise provision.

Lord Wallace of Saltaire: My Lords, there were two questions which I will take. One was the question that was rightly raised-I thank the noble Lord for reminding me-of scrutiny only by the other place. The second is on the justification for three years, which might be extended.

On the first, noble Lords will recall that there was some debate in the other place on whether this should be considered a money Bill, because it involves public

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expenditure. The justification for scrutiny only by the other House is that changes made by order under the Bill could have a direct impact on public expenditure, for example by changing the level of the caps as provided for under Clause 2 or by reviving the powers to impose caps under Clause 2 using the powers in Clause 3(4). These seem to the Government to attract Commons financial privilege. It is therefore entirely defensible for the Bill to have been drafted to allow scrutiny of these delegated powers in that House and not this one.

On the three-year time limit, it is not simply a question of when a judicial or a legal challenge might be mounted; it is a question of how long it might take for a process of appeal-for a legal challenge-to be worked through. I am sure that noble Lords who have been involved in trade union negotiations will recall how lengthy litigation can be as one moves from lower courts to higher courts and, when human rights considerations are at stake, even occasionally appealing to the European Court of Human Rights. The only reason why the three years is there-and why there is a permissible clause for extension by order each time, which has to be laid before the House for six months at a time-is for the extreme case that such successive appeals might be taken in an extended judicial process to try to prevent a compensation scheme being implemented.

I am willing to take this back to see whether it is possible to squeeze the three-year extension any further, but we are playing, as we can, with making the workable scheme possible. On that basis, I hope that the noble Lord may be willing to accept the government amendments as they stand.

Lord McKenzie of Luton: My Lords, I am grateful to the Minister for expanding on some of those points. Certainly, we do not propose today to oppose the amendments, but, as I said earlier, we will want to revisit them on Report. I am grateful for his offer to look at whether he could squeeze the number of opportunities in which the period could be extended.

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In doing so, in a sense, the Minister has accepted that, as drafted, you could have a succession of six months extensions which would go way beyond three years and six months. It could go on for a very long time.

There is no qualification here or criteria attached to when that extension might be sought. Despite the fact that it may be an order that has to go to Parliament, there are no criteria under which Parliament is able to judge whether that is a fair outcome or not. On the grounds that it is potentially more than three years, I am grateful for the Minister's offer on that. It seems to be three years regardless of the circumstances. There needs to be no trigger which causes that extension to take place, which seems to be unfortunate as well.

I would stress that all of this is second order for us because we do not want it there anyway and we will continue to do what we can to get it removed. I hope, in that context, that the Minister will do what he can to see whether it can be further constrained. It does not seem to have moved that far from the starting position in the Bill.

Amendment 12 agreed.

Amendments 13 to 15 agreed.

Clause 3, as amended, agreed.

In the Title

Amendment 16

Moved by Lord Wallace of Saltaire

16: In the Title, line 5, leave out from "provision" to end of line 7 and insert "about the procedure for modifying such a scheme"

Amendment 16 agreed.

Title, as amended, agreed.

Bill reported with amendments.

Committee adjourned at 5.45 pm.


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