Superannuation Bill

Michael Connarty Excerpts

Tuesday 7th September 2010 Commons Chamber

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I am grateful for that comment, Mr Deputy Speaker, and I will truncate my remarks as best I can. Perhaps it is just an irony that the PCS is the single union that held up the agreement and a representative of the PCS held up the debate for 21 minutes after being implored to speak for only eight minutes. I reflect on that.

The Public Administration Committee, which I chair, recently took evidence from my right hon. Friend the Minister for the Cabinet Office and the principal civil service unions about the provisions of the Bill and the prospects for a negotiated settlement of the dispute about ongoing compensation for civil servants who are forced to leave their jobs or voluntarily accept redundancy. The hope then was that the parties would reach a negotiated settlement, but regrettably that settlement has not been reached.

It is appropriate at this stage to remind ourselves of why we are having this debate. We are here because there was no agreement. The agreement reached with the five other unions by the previous Government was challenged in the courts, and we finished up with the courts ruling that the compensation payable represents legally enforceable rights. That was never the intention of the original legislation, and that is why we have this Bill. We are not undoing previous legislation; we are undoing the work of the courts on previous legislation. In my view, it is about the culture of judicial review and judicial activism that we now live in. It is unfortunate but it is where we are.

Let us have no illusions about why this is necessary from an economic viewpoint. We are facing the worst public expenditure crisis since the 1930s. It is inconceivable that compensation arrangements that were reached as part of voluntary arrangements between Government Departments and civil servants, and have become legally enforceable by accident, should be respected as though they were contracts entered into and signed in blood. I do not accept what the hon. Member for Southport (Dr Pugh) said about these arrangements. They were intended to be flexible and negotiable, and the Bill is attempting to restore that position, albeit now putting in place a statutory baseline that is harsh—let us have no illusions about that. It is sobering to reflect how harsh these arrangements are in comparison with the existing arrangements.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Will the hon. Gentleman give way?

[Mr Jenkin]

I hesitate to give way because we are very short of time, but I will do so briefly.

[Michael Connarty]

This is obviously a very brief Bill, and the hon. Gentleman will have read it; I have read it also. Could he tell me where it says that this is in any way negotiable and flexible?

[Mr Jenkin]

The hon. Gentleman misunderstood me. The Government have made it clear that they want a negotiated settlement, and that they are not prepared to talk about the terms of that settlement in this debate. Obviously, however, what we enact here provides a legally enforceable baseline that ultimately is not negotiable—the hon. Gentleman is quite right. The point is that the Government have made it absolutely clear that they want a negotiated settlement. With five of the six unions having negotiated in good faith, I hope that the PCS will also do so, whether or not the Bill passes on to the statute book and comes into force.

The need to reform the civil service compensation scheme is well understood. In fact, all the evidence that we received from the trade union representatives conceded that we need to deal with it as a matter of urgency in the current economic climate. This short Bill is simply a reflection of the accumulated mess that successive Governments and successive decisions in the courts have got us into. If there is one thing I regret, it is that there is not more understanding from the official Opposition of the mess that they were in on this same subject and that we cannot present more of a united front, but that is the prerogative of opposition and our democratic process, and I respect that.

I have two particular concerns about the Bill, and I would be grateful if the Minister could address them when he winds up. The first is technical and raises an important issue of principle. Clause 2 provides for early termination or an extension of the 12-month applicability of the legislation. Of course, sunset clauses are not unknown, and in many respects they are welcome provisions because they provide an opportunity to declutter the statute book. However, this Bill is unusual in providing what one might call a “sunrise” clause whereby, if desired, the legislation can be revived by an order under the affirmative resolution procedure in this House. The only similar provision was made in relation to section 13 of the Prevention of Terrorism Act 2005. I worry that the matters in this Bill are hardly in the same category, and that the ability of this House properly to control the law is being excessively compromised for nothing more than the managerial convenience of the Government. Can the Minister explain what the special circumstances are that justify such a provision in this case?

Secondly, I should like to focus on the possibility of a further legal challenge to the provisions of the Bill given the High Court’s decision to quash the earlier agreement. In his judgment, Mr Justice Sales took the view that compensation payments under the scheme should be taken to be accrued rights in the same way as pension entitlements. In his answers to me about the Bill’s compatibility with the European convention on human rights, the Minister for the Cabinet Office was, if I may say so, not entirely persuasive that he had addressed the legal point made by the unions and potentially to be made in a future action. The PCS argues that the Bill is unlawful because it offends against the principles of the ECHR, namely that the legitimate expectations about compensation rates that the current state scheme gives rise to, are legally possessions of which individuals cannot be deprived.

In the explanatory notes, the Government declare the Bill’s compatibility with the Human Rights Act 1998 because payments under the civil service compensation scheme cannot be considered to be a possession. In any case, they say, even if they were to be considered possessions, since the cap on compensation rates does not apply until a redundancy notice is issued or a voluntary departure is agreed—that is, after the Bill has come into force—it does not therefore amount to the deprivation of an existing possession. That is all very elegantly argued, and no doubt the Government have had the benefit of legal advice, but if the Bill is enacted and subsequently challenged in the courts, the consequences could be extremely significant. Even if the challenge were not successful, if it went to the European Court of Human Rights for a determination, the delay and dislocation would be considerable. How sure is the Minister that the rights generated by the legitimate expectation of civil servants about their terms and conditions with regard to redundancy payments will not be regarded as possessions?

I understand that there is case law in the ECHR suggesting that mere claims to possessions are capable of being interpreted as property rights when there is sufficient basis in national law, for example when there is settled case law in the domestic courts confirming that. Precisely that confirmation was provided in the case that was adjudicated in May. Is the Minister confident that, even if the accrued rights are considered possessions, the Government are justified in interfering with those rights in the wider public interest, and therefore lawfully able to do so? In short, is he satisfied that the unions will not have a claim against him for not exercising his discretion in a fair and proper manner in failing to recognise existing entitlements?

That is an important matter, not some arcane point. A legal challenge could run for a very long time in Strasbourg, perhaps for years, and if the Government lost having gone ahead with job reductions on the terms set out in the Bill, it would potentially saddle the public purse with a huge liability at some future date, to say nothing of the subsequent complications in trying to repay individuals long after the event. I point out that Governments of both parties have a long history of wishful thinking when it comes to such cases. I speculate that it appears that the easier course in the short term is often to risk defeat in the courts sometime in the distant future rather than to confront the legal realities and their implications immediately. That is not conducive to better governance and decision making, and if it continues to happen under this new Administration there will perhaps be a case for the Public Administration Committee to launch an inquiry into why the Government’s legal advice has so often proved deficient in such cases. I place the Government on notice about that.

Subject to those qualifications, I support the Bill and will vote for it. What Ministers do will be taken as a reflection of the regard in which the civil service is held, and that will have an effect on the morale of the public service at a time of great uncertainty and change, and therefore on this Government’s relationship with civil servants. Nobody listening to this debate can be under any illusion about the seriousness of the measures that we are discussing and the impact that they will have on people’s lives. I commend many of those who have spoken from both sides of the House for alerting us to those concerns.

--- Later in debate ---

[Cathy Jamieson]

We heard today that the people whom the Public and Commercial Services Union represents—the majority of people who work in the civil service—did not agree that the previous Government’s approach was the right one at that stage. Whether or not the hon. Gentleman agrees with the union, it had the right to go to court and did so, and secured a ruling in its favour. We must recognise and accept that. I was surprised to hear other hon. Members suggest that the ruling by the court was something that we should simply dismiss, and I would hope that that is not in fact what they are saying.

Given the need for brevity, I will focus on one particular point and that is the device that is being used to push this Bill through. I am very concerned that the Bill has been laid as a money Bill. I am a new Member and I stand to be corrected if I am wrong or if I have misunderstood what a money Bill has traditionally been used to do, but my understanding is that the Parliament Act 1911 defines a money Bill and charges the Speaker with certifying whether a Bill is a money Bill. Previously, money Bills have been used to protect revenue and to raise tax, but never before has a money Bill been used in a situation like this. I agree with my hon. Friend the Member for Hayes and Harlington (John McDonnell) who suggested that the use of a money Bill in these circumstances could be seen as an abuse of parliamentary procedure, and certainly many of the people who have spoken to me about this feel that is indeed the case. It is an abuse of that procedure to try to speed a Bill through Parliament without the proper scrutiny and, as the Minister has already accepted, to use a blunt instrument to try to force something on to the negotiating table.

If we look at the detail of the Bill, although it is very short we see that the degree to which it is unworkable in the long term is implicit in its provisions. The sunset clause, which means that the Bill will expire after 12 months, can be repealed at any time and can only be extended for a further period of six months by secondary legislation, and that is a real cause for concern. On the one hand, the Minister said that we have to negotiate but we cannot negotiate in public. However, at the same time, he is very publicly using this blunt instrument to try to force the unions into a particular position without providing any of the detail that Members on both sides of the House have sought today—

[Michael Connarty]

My hon. Friend is, as usual, shy about telling people that she is a former Minister in the Scottish Parliament and probably knows more about this than most Back Benchers. She also points out that the Bill has a sunset clause, but it is more like a sunrise clause. It is a blunt instrument fashioned to be picked up again and again when the Government do not have the capacity to negotiate and to be used to attack people in the public sector whenever they wish to do so. All that will be required is a statutory instrument off the Floor of the House, without anyone seeing what they are up to.

[Cathy Jamieson]

I am grateful for my hon. Friend’s complimentary remarks. In fact, I am a former Justice Minister. Far be it from me as a former Minister to suggest that people should be suspicious about very short pieces of primary legislation that give greater powers to secondary legislation that can then be picked up and laid without proper parliamentary scrutiny. Having had to work on legislation in another Parliament, I recognise that the concerns expressed by hon. Members are well made in this case.

The Bill puts the Speaker in a difficult and unfair position, because he has to decide whether it should be certified as a money Bill when in fact it is about industrial relations and people should be redoubling their efforts to put the previous deal back on the table and to ensure that all the trade unions are involved in the negotiation. Parliamentary procedures should not be abused in this way.

Given that brevity is required, I shall not seek to rehearse points that other hon. Members have made. However, when we are talking about the low-paid and given all the warm words that we heard earlier about the desire to protect the lowest grades in the civil service, I do not think it is good enough that Ministers cannot identify what “low paid” means in those terms and how many people will be affected. It is incumbent on the Minister who winds up the debate to give us more information on that point.

--- Later in debate ---

[Matthew Hancock (West Suffolk) (Con)]

It is a great pleasure to speak in this debate under your speakership, Madam Deputy Speaker. I shall concentrate on the issue of fairness, which has come up again and again today. It is central to the Bill, and an extremely important factor. We are debating a sobering situation, and the Bill is a response in part to the enormous fiscal deficit that we need to tackle. It is clear that the negotiations and the Bill will have an impact on many thousands of civil servants who have worked extremely hard for the good of their country. Like many other Members, I pay tribute to the excellent work of the British civil service, and I echo the view of the Minister that it is the jewel in the crown of our constitution.

That is why it is so important that we consider the consequence for fairness as the negotiations go forward and the Bill goes through. That view has been reflected in speeches from both sides of the House today. I shall address the issue of fairness in three different ways. First, we must consider the fairness of these measures, given what else is going to have to happen if we are to tackle the deficit. Secondly, we must consider fairness across society and the economy. Thirdly, we must take into account fairness within the civil service in terms of working practices, and the consequences of the current system for some of those working practices.

The enormous fiscal deficit has overshadowed many of the debates in the Chamber since the election. We on the Government Benches argue that dealing with the deficit is a fair and progressive thing to do. In the short term, failure to do so would lead to higher mortgage rates and interest rates as well as create the risk of a catastrophic economic failure, which we do not want to do. It would also be unfair to burden our children and grandchildren with levels of debt that we had failed to deal with. It is therefore fair and progressive to deal with the deficit. It is important, when considering all the different aspects of that process, to think about the Bill in that context.

How can it be fair to defend a system, as Labour Members have done, in which payments of more than £500,000 have been made to certain individuals at a time when we are having to take other measures—as Labour Members would have had to do, were they still in office—to deal with the deficit? How can it be fair that the average redundancy package in some Departments has been more than £100,000 for the past three years? In an earlier intervention, I gave the example of the Department of Health, in which the average redundancy package last year was £122,000.

When this country is tackling its deficit, it is difficult to say that it is fair to make such enormous redundancy pay-offs. The argument has been put by Labour Members that there are only a few of them so it does not really matter. However, we as a country are going through a difficult process, and having extremely unfair examples of public spending like that only makes it even more difficult. We cannot argue that simply because there is not an enormous quantity of such payouts, they do not matter. They do matter and reforming the system is crucial, as the Opposition Front Benchers seem to recognise, but Labour Back Benchers too often do not.

[Michael Connarty]

I am amazed that the hon. Gentleman is still quoting the figure of £100,000 when one of his hon. Friends who spoke earlier provided him with the true average of £60,000. He ignores reality again and again. Some people get huge payouts, and some Labour Members have argued against them for the last 10 years but we could not convince our own Government to deal with these people. If the hon. Gentleman’s logic had been applied after the second world war, the huge deficit this country would have had to carry would have meant no rebuilding and our people living in poverty for the next 50 years. The hon. Gentleman may be lucid, but he is certainly wrong.

[Matthew Hancock]

The hon. Gentleman answers his own question when he says that the previous Government did nothing about the problem over the last 10 years. As for this new argument I am hearing expressed by Labour Members, that we had a large deficit in 1945—yes, we did, but we also had large cuts in 1945 and not least to the military because we had just won a war. There are no such easy reductions now because of the mess left by the Labour party—[Interruption.] I will take no lessons from what the hon. Gentleman shouts out from a sedentary position. At one point in the last three years, £8 billion was spent on redundancy payouts. I do not know whether the hon. Gentleman is willing to defend very high payouts, but we seem to be getting a reaction on the Labour side against any change to anything. It is a great pity that Labour Members do not engage in the process of trying to deal with the deficit as we Conservative Members do.