My Lords, the amendments in this group are pretty crucial. In part, they take forward what we said in the first group about exit payments and helping the good management of the service at local and national levels. There are clear examples of where existing rights and agreements should not be undermined, such as payments in lieu of notice where they are part of a contractual entitlement of employment, which, as has been said, is often a useful tool for employers in managing exits.
In the Civil Service the proposed cap cuts across the negotiating of an agreement. The then Minister for the Cabinet Office, now the noble Lord, Lord Maude of Horsham, described the agreement reached in 2010 as one that would be lasting. He said that it would provide,
“a fair balance between the interests of taxpayers and the interests of civil servants and protect those approaching retirement and the lowest paid”.—[Official Report, Commons, 14/12/10; col. 849.]
This Bill should not undermine that agreement, whatever one thinks about the desirability of the principle of the cap itself. Nor, as we have heard, should the cap hamper the reorganisation and modernisation of public services, as suggested earlier by the noble Lord, Lord Stoneham, and as wanted and supported by other parts of the Government. As my noble friend has said, the Local Government Association is particularly worried that the cap would threaten its future staff restructuring because it is such a rigid cap and because of its particular impact on long-serving employees who may be exactly the ones whose tasks or skills are now less in demand. It would also exclude some staff from early retirement who might otherwise have been part of a headcount reduction exercise, with strategic restructuring now hampered as councils are perhaps forced to keep on their highest-paid staff instead of allowing them to retire and bringing in lower-cost replacements.
The cap, of course, once it is in, will also act as a disincentive to those considering voluntary redundancy. That is likely to mean there will end up being more compulsory redundancies as well as difficulties in modernising the service. This matter is of particular importance to local government, which is partly why we have tabled Amendment 54H to include in the Bill rather than in secondary legislation the ability to make exemptions where the full council of the local authority decides to grant a waiver of the cap. The Government have now published their draft statutory instrument allowing for a waiver where the full council so agrees. However, as my noble friend Lady Donaghy said, this ability could be swept away if it is only in secondary legislation, with local government having no guarantees in this regard. That makes future planning very difficult. We therefore hope that Amendment 54H will be
considered a better way forward as the principle has already been signed up to by the Government, but the amendment would give everyone confidence in it.
The amendments containing specific figures that we have now brought into this group seek to push the Government to define the words that we all keep using—that is, what is meant by “the best paid”? Is it people on a salary of £30,000, £35,000 or £40,000 a year? It is important to be clear about that. It is hard to imagine the Government not accepting that anyone earning below the national average wage should be excluded from this provision. Therefore, we hope that Amendment 54BA will be accepted.
We also think it important to exclude from the provision people with long service. That is important not just for their sake, and what they have earnt during their career working for all of us, but because of the advantages that this offers to management. After all, those people have earnt those benefits. We do not consider that the Conservative manifesto wanted to catch people who have given long service to this country. Those are the people we would like to see excluded from this provision. I imagine that the Minister concurs with that objective and hope that she can find a way to accept that amendment.