Enterprise Bill [HL]

Baroness Donaghy Excerpts

Monday 30th November 2015 Lords Chamber

Schedule 4 shows that the pension regulations will have to be amended. This breaches the 25-year guarantee of no more meddling with the public sector pension scheme made by Danny Alexander, then a Minister, on behalf of the Government just four years ago. If the Government want to achieve their objective of stopping six-figure payments to the highest paid, rather than to the longest serving—who will actually be caught—then Amendment 70B, which removes early access to pension from the calculation of the exit payment, is the easiest way to achieve this. It is fair, it would prevent long-serving, lower-earning workers being caught and it would not discriminate against older workers. I beg to move.

[Baroness Donaghy (Lab)]

My Lords, in supporting my noble friend Lady Hayter and speaking to the two amendments in my name, I want to give the Government the opportunity to keep their word and to give peace of mind to thousands of public service workers who will be affected if Clause 26 is enacted. The consultation period for this clause was brief and took place in the height of the summer vacation. The Delegated Powers and Regulatory Reform Committee was extremely critical of all aspects of this clause and the Minister’s assurance that any future changes will be subject to affirmative procedure in no way mitigates the overwhelming centralising powers which the Government are giving themselves.

The first promise was that the exit cap would not apply to the lower paid. As my noble friend Lady Hayter said, the then Treasury Minister, Priti Patel, said in January 2015:

“Crucially”—

I repeat, “crucially”—

“those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants”.

What has happened to this exemption? The purpose of Amendment 70C is to ensure that the figure, and the promise, is contained in the Bill.

The second promise appeared in the Conservative election manifesto, which said:

“We will end taxpayer-funded six-figure payoffs for the best paid public sector workers”.

The key phrase here is “best paid”: not low paid or averagely paid. The fact that this clause proposes to include those on very moderate pay, but with long service, shows that the manifesto statement was misleading. This is why exempting the pension strain payments is so vitally important to these workers, who will not receive a pension lump sum if they are made redundant after long years of service. This is why I support Amendment 70ZG and why I tabled Amendment 70D about long service.

The third promise to public sector workers—made after difficult negotiations on changes to public sector pensions—was that the new pension schemes would be a settled issue for 25 years. There is a statement by the then Cabinet Office Minister, now the noble Lord, Lord Maude of Horsham, to that effect. Suddenly, a few months later, over 100 pension schemes, affecting thousands of workers, will be forced to change their rules. People have made life plans on the basis of agreed entitlements. The anguish and stress on the lower paid caused by this clause could be prevented if the Government honoured their promise.

Finally, it is important that the Government are clear about when this clause might be enacted. The headline news is that the clause is intended to control excessive payments at the top end for the “best paid” public service workers. Not many would take issue with this, but the reality is that long-serving, lower-paid workers would also be affected, despite assurances to the contrary. This is a highly centralist measure giving this Government, and future ones, the right to overturn national agreements and increase uncertainty for public service workers who already face redundancy and reorganisation. It is still not too late for the Government to keep their promises.

[Lord Stoneham of Droxford]

My Lords, I said in Committee that there are a number of aspects the Government should be looking at. One was that they should retain some flexibility for dealing with special cases, particularly where value for money was involved. Given all the reforms in the public sector that will be required in the next few years, to miss out on the opportunity to compensate people who will be involved in those, and hit them with caps when they are seeking to co-operate, is not progress in any respect. We pointed out in Committee, as the noble Baroness, Lady Donaghy, did this evening, that these measures are not just aimed at people in the public sector on high pay. They are aimed at quite low earners who, because of long service, could reach the proposed cap. That is unfair. We have also heard that pension arrangements struck only quite recently are being further undermined by imposing this inflexible cap. For these reasons, we hope the Government will show some flexibility on these amendments, to give them the capacity to respond to the injustice they are creating through a commitment they made at the general election without really realising the unintended consequences.