Written Ministerial Statement: Reform of the Civil Service compensation scheme

6 July 2010

Written Ministerial statement from Minister of the Cabinet Office Francis Maude published on 6 July 2010.

The Government intends to limit the amount of benefit payable to Civil Servants under certain schemes made under the Superannuation Act 1972.  In the light of the extremely difficult fiscal circumstances facing the national economy, the Government has no option but to take steps to ensure that any scheme for civil servants is affordable in the economic climate.

Earlier this year, the previous government introduced a revised Civil Service Compensation Scheme that introduced a two year cap on the payment of compensation for loss of office, or redundancy. The terms of this scheme were agreed with the FDA, Prospect, the GMB, Unite and the Prison Officers’ Association.  One union, however, the PCS, did not agree, sought judicial review in the High Court, and won.  The revised scheme was accordingly quashed.  The previous scheme is therefore once again in force.  This scheme is prohibitively expensive - in some cases worth up to six and two thirds years of salary.  We believe swift action to curb its excesses is essential.  We take this step without relish. It has been made necessary by the unilateral action taken by PCS, acting on its own, to contest the previous government’s scheme.

I will therefore bring legislation to the House as soon as Parliamentary time allows in a Bill to limit the costs of future compensation payments for both compulsory and voluntary civil service exits. Specifically, the Bill will propose that all departures on compulsory terms from the Civil Service will be capped at a maximum of twelve months salary and departures under any other voluntary arrangements will be capped at fifteen months salary.

I am at the same time writing to the Council of Civil Service Unions, inviting them to begin immediate discussions to negotiate a sustainable and practical long term successor scheme.

My letter will make clear that the government wishes, in discussion with the trade unions, a fair and practical settlement.  Such a settlement will need to be fair, and in particular to provide a higher level of protection for lower paid workers.  I have also indicated to the Trade Union side that I would be content (in the interests of reaching a settlement) for a discussion to take place on the most suitable terms for voluntary departures.

Having acted swiftly to limit the costs of future compensation payments I hope that the government’s invitation to the Council of Civil Service Unions will be received in the spirit it is offered and that they will engage speedily and constructively with a view to reaching an agreed, fair and sustainable long term Civil Service Compensation Scheme.  I believe that with goodwill and determination a new scheme could be in place by the time the Bill made necessary by the PCS’ action reaches the statute book.

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