Public and Commercial Services Union

This briefing was sent to peers ahead of the second reading of the Superannuation Bill on 26 October 2010. Please note that as the situation is fluid aspects of this briefing could be out of date quickly, therefore please check these pages to get the latest update.

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The Public and Commercial Services Union represents over 300,000 members working across government departments, agencies, non-departmental public bodies and staff working on privatised government contracts.

PCS negotiates with the Cabinet Office as part of the Council of Civil Service Unions (CCSU). The CCSU is made up of PCS, FDA, Prospect, Unite, GMB and POA.

Summary

The coalition government laid the Superannuation Bill before Parliament on 15 July which is designed to dramatically cap redundancy payments made to civil servants under the 1972 Superannuation Act as part of the Civil Service Compensation Scheme (CSCS). We oppose the bill because:

• the cap will reduce compulsory redundancy pay entitlement for our members by up to two thirds
• it does not recognise our members accrued rights under the present scheme which have been reaffirmed in a High Court decision this year
• clause 1 of the bill introduced by the Minister during the report stage seeks to amend the requirement in the Superannuation Act 1972 that any changes are agreed with the unions meaning the government can simply impose redundancy terms on civil servants, now and in the future, without collective bargaining or agreement
• in light of the Chancellors spending review this week that could see hundreds of thousands of civil servants made redundant, it is critical that there is an agreement over the procedures and payments for redundancy.
• talks are ongoing with the Minister.

What peers can do

PCS and its members across the country urge peers to:

• participate supportively in debates and the committee stages on the Bill
• make urgent representations to the minister the Rt Hon Francis Maude MP
• table amendments to defend the right of unions to agree a change in their members terms and conditions and also protect civil servants accrued rights that also upholds the High Court judgement

Background

On 31 July 2009 the Cabinet Office first published former proposals for reform of the CSCS, the redundancy payment scheme for the civil service and many non-departmental public bodies and other public organisations.

After publishing their proposal in July 2009 the Cabinet Office consulted on them. 18,000 civil servants responded; the overwhelming majority of whom were opposed to the proposals. For large numbers of the civil service the proposals worsened the redundancy terms to which they were entitled under what is a statutory scheme.

Since the consultation period in 2009, there were further negotiations under the previous government. While we were willing to continue negotiations, the previous government laid an amendment scheme to change the CSCS before Parliament on 5 February 2010. These new arrangements, which were not agreed by PCS because the changes left many of our members considerably worse off, came into effect on 1 April 2010, but have now been largely quashed by the High Court.

High Court rulings on 10 May and 18 June, which followed a judicial review taken by PCS, found that the amendment scheme was unlawful as it imposed changes without agreement, and would remove accrued rights based in the 1972 Superannuation Act and replace them with an inferior set of conditions.

The coalition government laid the Superannuation Bill before Parliament on 15 July 2010 which is designed to dramatically cap redundancy payments made to civil servants under the 1972 Superannuation Act as part of the CSCS.

The cap and its impact on our members

The Bill attempts to place a cap on the level of redundancy payments that civil servants can receive: at 12 months pay for compulsory redundancy and 15 months pay for voluntary redundancy.

For many civil servants this could mean that in the event of compulsory redundancy their compensation would be worth only a third of their current entitlements.

PCS has given written and oral evidence to both the Public Bill committee and the Public Administration select committee to show the drastic effects this would have on ordinary members.

Accrued rights and clause 1 of the bill

We are also opposed to clause 1 of the bill which Francis Maude laid as a new clause on 7 October.

The clause repeals the provision in the 1972 Superannuation Act that requires the government to come to an agreement with the recognised unions, if it is proposed to change the terms of the civil service compensation scheme in such a way to worsen the accrued rights.

Historically, the requirement to reach agreement with the unions was intended to give civil servants redundancy rights comparable to private sector employees – whose rights to redundancy terms are guaranteed through their collective agreements and contracts of employment.

The intention of the clause is to enable the government to change redundancy terms without collective bargaining or agreement with the recognised unions - both now and in the future.

It is also intended that the clause would enable the government to unilaterally change individual rights to redundancy without the employees’ agreement. This means that the redundancy terms of civil servants will be politicised, rather than being part of the normal collective bargaining processes between the civil service unions and the civil service as an employer.

The current context of job cuts and our concerns

It is clear that the government will seek to make hundreds of thousands of civil servants redundant during the next three years. For industrial relations it will also mean that every job cut and office closure will be disputed, rather than part of an overall agreed procedure.

PCS is therefore seeking an agreement which is lawful, fair to all parties, recognises the accrued rights held by many civil service staff and fair to new entrants to the civil service. However, the absence of an agreement will mean that PCS will be left with no alternative but to challenge the legality of any amendment to the CSCS, which is imposed on civil servants by the enactment of the Superannuation Bill.

Our legal advice is that civil servants should continue to be entitled to accrued rights under the CSCS. This means that PCS will take legal action, which may take many months to resolve. If successful the government would be liable to pay redundancy pay to any civil servant made redundant on the basis of existing entitlements. This will mean that the costs to government of any programme of redundancies within the civil service may not be resolved for years.

This is a recipe for chaos for any job cuts programme within the civil service. It will also mean that for hundreds of thousands of loyal and hard working civil servants, at a critical time, there will be even more concern about their future.

For the government there is the potential for a huge outstanding bill for additional redundancy costs, should the PCS legal challenge succeed. The only solution that gives certainty to all parties is a fair and lawful agreement.

Negotiations and the offer

On 24 September the Cabinet Office issued a letter to the CCSU containing what it called a final offer with marginal improvements on the proposed legislation. All the unions that make up the CCSU formally agreed that the offer was not acceptable and informed the Minister of that position in a meeting on 28 September.

At the meeting, the Minister declared he would seek an agreement with the five smaller unions, and break off talks with the CCSU. He also stated that the Treasury had intervened to impose a cost envelope – a total amount of money that would set the parameters of any agreement.

PCS were subsequently excluded from negotiations. The PCS position is very clear: we are always prepared to negotiate to reach agreement, but any agreement should be fair to all parties, recognise the accrued rights held by many civil service staff and be fair to new entrants to the civil service.

PCS has now received a formal offer from the Cabinet Office. Our NEC does not believe the offer to be acceptable, and has called for further negotiations.

The Minister suggested that five unions had concluded negotiations on the new offer and that PCS was alone in not signing up to the package. However, the Prison Officers Association (the second largest civil service union, with 36,000 members) has reacted angrily to the suggestion that they have in any way agreed to the proposals. Their executive has now stated that the offer is not acceptable and has also called for further talks.

Following a meeting between the Minister, PCS and POA, on 11 October, further talks are taking place, although the outcome is as yet unknown.

The offer

The offer contains only marginal improvements on the proposed legislation and drastically cuts members’ existing entitlements. The cap on voluntary severance has been increased to 21 months and there is protection for the lowest paid – those earning 90% of average pay or £23,000 (whichever is greater).

There is no protection, transitional or otherwise for accrued rights. In addition, the proposals go beyond the Superannuation Bill or indeed the 1972 Act in proposing changes to notice periods (from six months down to three months), the protocol and the scope for redeployment across departmental boundaries.

In considering the offer, the test PCS has 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 new offer is worse. The absence of any form of underpin to allow people to earn more than 21 months, or transitional provisions or reserved rights to protect accrued rights, means that the proposals will be detrimental to the majority of our existing members earning more than £20,000 with accrued rights to two years or more service. This will particularly affect a large number of our lower paid grades.

Moreover, the offer seeks to change the period of notice of those in a compulsory redundancy situation from six months to three, and to reduce the timescales for efforts at avoiding redundancy set out in the agreed protocols.

The new offer does incorporate a different way of protecting the lowest paid by providing for a notional salary for those below 90% of the median (as defined) or £23,000 – whichever is the greater. This is an improvement for many of the lowest paid. PCS has welcomed this as part of the package whilst arguing for a higher median figure.

The areas of concern lie particularly in relation to the cap and the protection of accrued rights. The absence of an underpin at previously discussed levels, or any reserved rights or transitional protections, leaves many worse off than their accrued rights. This is significant not only because of the Judicial Review ruling but also in relation to any potential legal case. In reaching agreement we would forgo our right to take legal action.

If you require further information on our concerns please contact Chris Haswell, PCS research office on 020 7801 2725, chrish@pcs.org.uk.