Superannuation Bill

If my hon. Friend will allow me I shall come to that later, because I want to talk in a little more detail about the terms of the scheme that has been brokered by the negotiators for five of the unions. I repeat that we want a long-term negotiated successor scheme. We want a package of reform that provides genuine protection for lower-paid civil servants, that caps the total amount that can be paid out, that provides protection for those closest to retirement and that reforms the accrual rates. It takes time to negotiate such a scheme and it has been a very intensive process. That is why the caps were put in place in the Bill—as a safeguard to ensure that if agreement could not be reached, we could at least limit the payouts in the short term. I have always been hopeful that we could reach agreement with all six unions by the time the Bill reached Report. After the intensive negotiations throughout the summer, we reached an impasse. The same five unions that agreed the February deal with the right hon. Member for Dulwich and West Norwood came together once again and put to me concrete proposals for reform. Sadly, the PCS refused to join them in that approach. That was disappointing, but I made it clear to the PCS that it was welcome back at any stage if it was willing to put forward concrete proposals, and I wrote to Mark Serwotka, the general secretary, to that effect. In the meantime, my officials and I engaged productively with the remaining five unions to attempt to reach agreement. Last week, all five union negotiators, representing Unite, GMB, Prospect, FDA and the Prison Officers Association, agreed terms with us that they were prepared to recommend to their executives. The terms of that agreement represent a reasonable outcome for everyone involved and deliver on our objectives of being fair, affordable and sustainable. It is worth dwelling a little on the terms of the agreement. We reached agreement on a standard tariff in which each year of service would provide one month's salary in the event of redundancy. That compares with one week's salary for every year of service under the statutory redundancy scheme. The tariff would be capped at 12 months for compulsory redundancy and at 21 months for voluntary redundancy. All civil servants being made redundant would be entitled to a three-month notice period. That is in contrast to a cap, in some circumstances, of well over six years' pay—six and two-thirds years—and paying up to three months' pay for every year of service, as is the case currently. It contrasts with the current situation of having a six-month notice period for all compulsory redundancies, but no equivalent notice period for voluntary redundancies. The new scheme will be simpler, fairer and more affordable. We also agreed on significant protection for lower-paid civil servants. Under the terms of the scheme, any civil servant on a full-time equivalent salary of less than £23,000 who was made redundant would be deemed to earn £23,000 when their redundancy payment was calculated. So for someone earning £13,000 in those circumstances, the multiplier by which the number of years would be multiplied to calculate the redundancy payment would be deemed to be £23,000. For the very lowest paid in the civil service, that is significant additional protection and, I have to say, better protection for the lowest paid than the February scheme. I say again that that would be a permanent feature of the scheme, not a transitional feature of it. It would be in place for all time, or for all time until some subsequent Government chose to revisit it. Conversely, staff earning more than six times the private sector median average earnings, which is around £150,000, would have their salary capped at that figure for the purpose of calculating their redundancy payment. That would be an end to the mega-payouts, which have been highlighted in a national newspaper recently and which cause a certain amount of offence to taxpayers. We also agreed on protection for staff who have reached the minimum pension age of 50, allowing them to opt for early retirement when they leave, in return for surrendering the appropriate amount of any redundancy payment. Again I stress to the House that under this proposal that will be a permanent feature of the scheme, whereas in the February scheme, which the right hon. Member for Dulwich and West Norwood attempted to impose, it was framed as a transitional arrangement that would run out over time. I believe that that is a fair deal for civil servants and for taxpayers. Given that we had agreement from five of the six union negotiators on the terms of the new scheme, I therefore proposed an amendment—the new clause that we are now discussing—to allow the Government to impose that scheme, which is a power that the Government thought they had and used when the right hon. Lady was in office, but which was subsequently struck down by the High Court. I want to make it absolutely clear that there will be an obligation for the Government to consult properly before any scheme is imposed. I believe that that obligation already exists in section 1(3) of the Superannuation Act 1972, but lest there be any doubt, I undertake that we will introduce a further amendment in the other place to put the matter beyond doubt. In the intervening period, I shall want to discuss with the right hon. Lady and with the unions how we can frame that measure in a way that gives the necessary comfort that this is a serious process. That commitment is there. There is already in the existing Act an obligation to consult with unions. It is not framed in quite that way, but that is the effect of it. We shall introduce further amendments if they are regarded collectively, by us all, to be necessary to put the matter absolutely beyond doubt. I want now to make it absolutely clear what the new clause does. It does not create any unprecedented power for me that has not been available to my predecessors. It simply recreates precisely the power that the right hon. Lady had when she imposed the February scheme. It does not go one whit beyond that. It is rigorously framed so that it goes no further at all than the power in the original Act, on the basis of which the right hon. Lady—in good faith, and with our full support—acted before the election. Let me say a word about the PCS. I have no wish at all to exclude the PCS from the negotiations. Late last week, the leadership of the PCS came back to me and indicated that they would like to return to the negotiating table. I welcome that and have told them that I am looking forward to seeing their proposals. The other five unions have been making constructive proposals for some little time now, and those suggestions have formed the basis of the proposed new scheme brokered and agreed by the negotiators for those five unions. I have stressed to the PCS that any changes to the proposed scheme cannot exceed the cost envelope of the scheme already agreed, and that any changes must be agreed with the other unions, which have already worked hard to reach this agreement. May I say a word about the Opposition amendments, which have been grouped with the Government new clause and amendment? The Opposition amendments would effectively invalidate the effect of the Bill, as they would remove the caps, which are the essence of the Bill. There is nothing more to say about that. On Second Reading, I set out the reasons for having the Bill at all, and I have reiterated them today. I say again that no one would be more happy than I would if, the day after Royal Assent is given to the Bill, should it get that far, I am able to put those provisions into abeyance; I do not want us to be in a position whereby those caps are what applies in practice. I want there to be a new scheme—ideally agreed by six unions, but if not, agreed by as many as possible, and imposed using the powers that the right hon. Lady herself used, which the Government new clause will put into effect and allow to be used. I earnestly hope that a successfully negotiated new scheme agreed by all six unions will follow from today's debate. I stress that I remain completely committed to achieving that. If we can achieve it, neither the caps in the Bill nor the power contained in the new clause will be needed, but if there were no such agreement, it would be wrong for the PCS to be able to veto any changes to the current scheme, because that scheme has been universally agreed in the House to be unsustainable. This amendment will simply put the current Government in the same position as the previous Government—committed to consultation and to negotiation, but able, in the end, to decide. I commend it to the House.