Superannuation Bill

My Lords, the noble Baroness, Lady Drake, said in her excellent speech that staff in the public sector feel demonised. I have had a number of conversations with senior staff in the NHS and my experience is that they indeed feel demonised. As a former member of the public service and as an active trade unionist as a young man, I find that extremely worrying because I do not believe that it is my noble friend’s intention to demonise the public sector. Certainly, from the Government’s point of view, it would be completely foolhardy to pursue that course given that they are embarking on extraordinarily ambitious changes to the way in which we run virtually everything in this country. Therefore, it is important that civil servants feel that they are respected and taken seriously by Ministers. However, one reason why this view is taken—in my view falsely—is that many people working in the public sector have not the faintest clue of what is happening in the rest of the world. Incidentally, it is true that many people in the private sector do not have the faintest clue of what is happening in the public sector. However, many in the public sector would be surprised to know how out of line their current redundancy terms are with those that obtain in the private sector. The typical provision, at least for compulsory redundancy, is that people receive one week’s payment for each year that they have been employed. Indeed, I am told that this is the standard that DBERR, as it was, recommended to private sector employees. That is very different from what is happening in the public sector. Even for voluntary redundancies, as the noble Baroness, Lady Noakes, pointed out, the most generous terms in the private sector are now no better than those currently on offer from the Government—indeed, those terms are being reduced all the time. In fact, if you are made compulsorily redundant in the private sector, it is virtually impossible to get a year’s pay. You would have had to have started at 16 and still be working at 68 to qualify. The one year that has been proposed in the public sector is a level of compensation unobtainable by anyone in any circumstances in the private sector. Many people in the public sector do not realise how differentials in pay have changed over the past 10 years. A number of noble Lords have mentioned this already, but recent IFS research shows a public sector pay premium of 2 per cent for men and 7 per cent for women, based on hourly rates. That ignores the other benefits that the public sector has in enhanced pensions and redundancy rights. As the noble Baroness, Lady Noakes, said, over the past two to three years, in addition to making a lot of people redundant in many firms, the private sector has been adopting a range of flexible labour practices in order to keep the maximum number of employees in work, including reduced hours, frozen or reduced pay and the abolition of bonuses. That has worked to a considerable extent and unemployment in the private sector has not increased to anything like the extent that was originally envisaged. One of the challenges for those in the public sector, including the unions, is the extent to which they can follow this practice, because surely, more than anything else at this point, they should be seeking to reduce the number of people who are made redundant and who have to leave public service. That should be the logical aim of a public sector or Civil Service leader, because the Government have imposed, in effect, a cash limit in aggregate on public sector pay. The question is what you can get for that and how best you protect people within the sector. In local government, steps that to a certain extent replicate private sector behaviour have been taken by a number of councils. In Salford, for example, staff are being asked to work an extra hour a week for no pay—a pretty common thing in recent times in the private sector. In Stockton, refuse workers have been put on a four-day week. That kind of practice, although not desirable in an ideal world, is what we, and the Civil Service and public sector trade unions, should be looking at, instead of fighting tooth and nail, as is happening in some cases, to preserve overgenerous redundancy terms that, if they were continued in their current form, would mean only that in the medium term more people would be made redundant or the size of the Civil Service would shrink even more. The story so far reads rather like a throwback to the industrial relations that I remember from when I worked in the Civil Service—and indeed went on strike as a civil servant. The Government produced proposals—in this case on redundancy payments—that were still, by private sector standards, extremely generous. The PCS went to court and won. The negotiations dragged on beyond the election, so we now have a situation, not surprisingly, in which a new Government, in worse economic circumstances, find themselves offering less propitious terms than were available earlier in the year. It is a classic case of a union biting off its nose to spite its face. As the noble Lord, Lord Turnbull, said, if the deal offered earlier this year had been in place, it is highly unlikely that the coalition would have sought to overturn it. Now the question is: what alternative do the Government have to the current proposals? A settlement is urgently needed. Without it, more civil servants will undoubtedly lose their jobs. I am a great believer in negotiations and would have hoped that it was possible to get them in this case, but I, too, have read the PCS briefing, which says: "““In considering the offer, the test PCS used has been a practical one—how many of our members, particularly the lower-paid—are protected by the proposals. The last scheme, with an underpin of £60,000 and a cap of two years, was rejected as our estimate was that it only protected 50% of our members””." The implication of that statement is that any scheme that has any detrimental effect on a significant number of PCS members will be rejected by the PCS. However, I am afraid that if it does not have a detrimental effect, there is no point in changing the scheme. The attitude exemplified in that brief means that the Government have no option but to proceed broadly as they are doing. I hope, of course, that the maximum amount of consultation and negotiation will take place; indeed, I think that the Government are committed to that. I also have difficulties with the sunset clause simply because, despite the best efforts of my noble friend Lord Wallace, I cannot understand it. To cover an extraordinary series of circumstances in which zombies might be resurrected seems less than satisfactory. However, that is a second-order point. We are now at a point where we have to get a conclusion to a most unsatisfactory situation. I hope that the Bill, as amended, will allow us to do that.