UK Politics

Legislation to cap civil service payouts introduced

The government has introduced legislation aimed at reforming redundancy payments for 500,000 civil servants.

Ministers say they want to cap the value of severance deals to a year of salary for compulsory job losses and to 15 months for voluntary exits.

The current scheme - paying out more than six years' salary in compensation to some - is unsustainable, they argue.

But the PCS union has promised to fight the plans and warned of strike action.

Ministers believe the current civil service redundancy terms are prohibitively expensive and mean to change them.

But under current legislation they need the agreement of all six civil service unions to do so.

The previous government managed to do a deal with five of the unions, but not the largest one, the Public and Commercial Services union, which successfully had the reformed scheme thrown out by the courts.

Union officials say the plans are an attack on the rights of its members, coming at a time when public sector workers are facing a pay freeze and reduced pension entitlements.

'Kick in the teeth'

Francis Maude, the Cabinet Office minister leading the negotiations with unions, said: "Our priority remains trying to achieve a negotiated successor to the existing scheme that is sustainable in the current economic climate and fair for civil servants and taxpayers, while providing protection for the lower paid.

"But the financial situation and the actions of just one union (PCS) to contest previous reforms meant we had to move quickly to limit the cost of payments under the current scheme. We simply couldn't continue with a scheme that saw some longstanding employees leaving with packages worth more than six years' pay.

"The step we have taken today to introduce legislation is just the beginning. Our focus over the coming weeks will be on trying to reach a deal with the unions on a more affordable scheme and I can confirm that discussions are already under way."

On Wednesday, Lib Dem MP John Leech warned the plan to slash redundancy payments for civil servants would be a "kick in the teeth" if it was applied to low-paid workers.

Mr Leech told MPs civil servants at the low end of the pay scale had spent years worrying about their jobs and were now facing uncertainty about their future.

But Labour's Katy Clark said thousands of civil servants faced losing their jobs as a result of coalition policies, and asked: "Will those people in that situation be able to rely on their contractual terms?"

Mr Maude said there was "common ground" that the current scheme was unaffordable, pointing to the "modest" reforms proposed by Labour that were blocked by the PCS.

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