Superannuation Bill

My Lords, perhaps I should start by responding to the request of the noble Lord, Lord McKenzie, to update you 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 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.