Restriction of Public Sector Exit Payments Regulations 2020

The Secondary Legislation Scrutiny Committee noted these regulations as a statutory instrument of interest. I will address the points raised in its report. First, a number of bodies are exempt from these regulations. These include the armed services, the Security Service, the Secret Intelligence Service and the Government Communications Headquarters. This is appropriate due to their unique career requirements. Often, individuals working in these fields experience lifelong impacts, sometimes at early ages. It is right these individuals should be properly compensated, and their reward packages are typically designed to reflect that.

The regulations also outline which payments are deemed an exit payment for the purpose of the cap. The Government are clear that all payments conditional on an individual’s exit from employment must be in scope of the cap to avoid opportunities for manipulation, with a few exceptions. Payments such as death in service will not be capped and should be paid in full.

The second point raised by the Secondary Legislation Scrutiny Committee is that public sector pension schemes may need amending to account for these regulations. Where required, these changes are the responsibility of the parent department. Some of these amendments are already under way, with the Ministry of Housing, Communities and Local Government publishing its consultation on amendments to the Local Government Pension Scheme on 7 September this year.

Prior to amendments being made where the application of the cap would result in an employer being unable to make a pension strain payment due to pension scheme rules, it may instead pay the pension scheme member an equivalent cash sum. The aggregate of that cash sum and any other exit payments must not exceed the cap.

The Government accept that in some limited circumstances, it will be appropriate for employees to receive an exit payment that exceeds £95,000, including where imposing the cap would cause genuine hardship. To account for these circumstances, a waiver has been designed that ensures flexibility, while maintaining an appropriate level of scrutiny from Ministers.

Today, the Government are taking forward regulations that deliver a long-term manifesto commitment and ensure value for money for the taxpayer. The regulations do this in a proportionate and thorough way, while ensuring the flexibility to protect the most vulnerable. I beg to move.

In addition to there being little communication between government departments, no equality impact assessment has been produced. Why not? Are the Government afraid that, if they produce one, it will be obvious that the bread-and-butter staff of public service are being caught in this trap?

However, I note that the Armed Forces and security services are exempt from this regulation. “Good,” many will say, “our service men and women deserve to be exempt”. But what of the rear admirals, air vice-marshals and lieutenant-generals, in cushy jobs at the Ministry of Defence, earning £120,000 to £150,000? Surely, they should not be exempt. The Government have got this wrong and should realise that and withdraw this SI.

I understand that the Government’s preferred solution is to change the Local Government Pension Scheme to avoid significant pension reductions. However, the MHCLG consultations commence this month but do not close until November. Why do these changes to local government pensions not take place at the same time as the regulations, and why wait until now to begin a consultation?

Loyal long-term local government employees are being poorly treated and taken for granted. This is not the message that the Government should send out just as they tighten the lockdown. What assurances can the Minister provide?

Finally, I understand that the medical professional bodies, such as the GMC, are concerned that they might be included under these regulations. Will the Minister please provide some clarification on that point?

The BMA highlights different issues and I hope the Minister will reclarify its main charge—that the regulations are unlawful because they capture individuals who have claims against their employer which arise during their employment. These might relate to claims for damages for race or sex discrimination, or any form of discrimination under the Equality Act 2010. They point out that this is a significant change from the 2015 statutory wording. My interpretation of Regulation 6(f) is that such payments would come under its terms. Could the Minister clarify what would happen if an employer settled a claim without resorting to a tribunal—that is, where Regulation 6(f) is too narrow in its scope and does not take into account this kind of settlement?

Why are such onerous terms of a requirement to inform placed on the individual by Regulation 9, rather than on the employer, as required by the 2015 Act? Here I have sympathy with the example of junior doctors frequently moving between NHS employers, particularly as the sums concerned are nowhere near the £95,000 cap. I look forward to the Minister’s reply.

The reality is that these regulations will damage the pensions of long-serving key workers earning between £30,000 and £40,000. That, surely, is unacceptable.