Superannuation Bill

Debate between Lord McKenzie of Luton and Baroness Noakes

Wednesday 10th November 2010 Grand Committee

[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.

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[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,

“such information as the Minister considers appropriate”.

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 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 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 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.

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[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 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.