Superannuation Bill

My Lords, I thank the noble Lord for the care with which he has approached this entire Bill. It is a complicated Bill and a complicated scheme; all those in the previous Government and in this Government who have been involved in these negotiations will know how complex it is, particularly when issues of judicial challenge come in. I assure your Lordships, once again, that the Government intend to repeal Clause 3 when the new scheme is ready, in order to enable that scheme—as I have explained, we have agreed that it will be more generous than the minimum reasonable levels set out in the caps—to be laid before Parliament and to take effect. It is not our intention to leave the caps in force for any length of time, since we want to make progress in delivering a reformed compensation scheme for the Civil Service. However, if Clause 3 were not yet in force when the new scheme is ready, as we hope will be the case before the end of the year, we would need to do one of two things. We would either proceed with laying the scheme before Parliament, without having available for several weeks the potential fallback of Clause 3, or we would move that a new scheme be put into place at that point. I have listened with interest to the noble Lord’s detailed arguments and I thank him for giving me notice of Amendments 11 and 12 earlier this week. I have some sympathy for the reasons behind Amendment 11, but I shall explain that there are reasons why the Government are unable to accept this particular approach. The noble Lord has made it clear that Amendment 11 is aimed at testing the intention behind the power in Clause 4 to revive the caps in Clause 3 and to ensure that they would be reviewed if there were circumstances in which they had to be revived at a later date. Our view is that there are some significant problems with the drafting of Amendment 11, which we do not think could be resolved. First, the amendment requires the revived caps to be aligned, "““with the current terms of the civil service compensation scheme””." On the face of it, this might mean maintaining compensation payments as closely as possible with the terms of the proposed new Civil Service Compensation Scheme, which it is intended to put in place as soon as possible after the Bill receives Royal Assent. However, if the new scheme were struck down by challenge in the courts, it seems quite possible that it would not be interpreted as ““the current terms””; rather, those terms might need to be interpreted as the terms of the previous, pre-2010, scheme, which would solve nothing, as that is the scheme that both this Government and our predecessor concluded must be reformed. Even if this were not the case, the wording, "““align ... as far as practicable, with the current terms””," is not at all clear and might itself be subject to challenge. It would not be as simple as the Government changing the caps to the numbers of months’ service specified in the scheme—for example, replacing 15 months with 21 months. We have made it clear that such an approach would not work, as staff accrue compensation payments differently under the existing and proposed new schemes and so simply changing the number of months stated in the caps would not keep compensation payments within the same cost envelope. We are simply not confident that the words ““as far as practicable”” would provide sufficient flexibility to set caps that would fully take account of differences in accrual or other issues determining the likely profile of departures. While for these reasons I have considerable difficulties with the drafting of Amendment 11, that is not the end of the matter. The Government have provided in the Bill a power at Clause 3(11) to increase by order the number of months specified in the caps. I emphasise again that this is a power to increase and not a power to decrease the caps. The powers are there for a reason, which is that, just as the noble Lord has indicated, there might well be very good reasons why the caps should be increased should they need to be imposed following a revival of the provisions in Clause 3. If the Government had no intention of ever increasing the caps, they would not have sought this power. I hope that the noble Lord will accept that if, following the expected repeal of the caps in Clause 3, it is necessary at some stage in the future to revive the caps, the coalition Government will undertake to review their level. Should there be a genuine problem that could result in the imposition of the caps leading to a general reduction in the value of compensation benefits payable, we will indeed use the power to increase them. The commitment that I am putting on the record today is this: if we need to use the revival power in Clause 4 to bring back the caps because the new Civil Service Compensation Scheme is set aside, we will, first, undertake to review what the impact of operating the caps would be compared to the new compensation scheme; and, secondly, if there were a significant detriment in practice in operating the caps as they are, we undertake to table an order under Clause 3(11) to increase the caps to such a level that would, as far as is both fair and affordable, reflect what would otherwise apply under the new scheme. I am not sure that I can say any more, as the circumstances that we are talking about might never arise. However, if they do, that is what the Government will do. I very much hope that that provides the reassurance that the noble Lord is looking for to enable him to withdraw Amendment 11. I cannot accept Amendment 12 either, but for rather different reasons. In Grand Committee, I brought forward government amendments to limit the period within which the powers in Clause 3 could be revived to three years. I believe that that is a reasonable timescale. I am afraid that a one-year limit simply will not do, as a legal challenge could quite possibly still be in progress within that time. Such a challenge might not set aside the new scheme—we might not know until after the end of legal proceedings what the position would be—so we would not necessarily need, at the outset, to revert to the existing, unaffordable scheme. Thus, we would need to apply the caps. Indeed, it is even possible that one would not have emerged within such a short a period as 12 months. Of course, I understand that the powers to revive primary legislation by order are unusual and should be used sparingly. That is why we introduced the three-year limit. Also, as we shall be discussing under the next group of amendments, that is why we have accepted the arguments made in Grand Committee that we should not be allowed the power to extend beyond three years by order. I believe that that is a considerable concession. For those reasons, I cannot accept any further reductions to the limits that we have set and, therefore, I ask the noble Lord not to move Amendment 12.