Superannuation act

Status of the bill: Enacted

Main purpose of the bill:

"To make provision for and in connection with limiting the value of the benefits which may be provided under so much of any scheme under section 1 of the Superannuation Act 1972 as provides by virtue of section 2(2) of that Act for benefits to be provided by way of compensation to or in respect of persons who suffer loss of office or employment."

Main points of the bill:

*Limits the amount of compensation payable under the Civil Service Compensation Scheme (CSCS) in the case of compulsory severance to a maximum of 12 months' pensionable earnings.

*Limits the amount of compensation payable under the CSCS in the case of voluntary severance to a maximum of 15 months' pensionable earnings.

Provides for clause 1 (which imposes the limits) to expire after 12 months, unless repealed earlier by order-making powers, or extended or revived using order-making powers.

*Controversy

The previous Labour government initially put forward proposals in July 2009 to reform the CSCS. These were rejected by the six Civil Service unions, and so in February 2010 a revised scheme was proposed which was supported by five of the unions. The sixth union, the PCS, sought judicial review and succeeded in having the proposed reforms quashed by the High Court. The union claimed the Government had acted unlawfully when it made the cuts to the redundancy terms.

PCS deputy general secretary Hugh Lanning said his union was "somewhat annoyed" by the suggestion that it was "five unions versus one union", insisting they were in agreement on most issues and he explained why his union had taken unilateral action. "We represent nearly 300,000 civil servants, the majority of whom earn less than £22,000 and the sticking point for us in the last negotiations was over the level of protection there was to the lower paid in the Civil Service," he said.

However, the Government remained adamant that the present compensation scheme was "prohibitively expensive" and must be revised. In July it was announced that legislation would be introduced to cap payments. The Cabinet Office stated: "We take this step without relish. It has been made necessary by the unilateral action taken by the PCS, acting on its own, to contest the previous government's scheme."

But PCS general secretary Mark Serwotka rejected the Government's claims. "This bill is deeply unfair and was introduced without any consultation or negotiation. It is being rushed through simply to make it easier and cheaper for the government to make tens of thousands of its own workforce redundant," he said. "We believe the bill should be abandoned and proper negotiations opened to allow us to reach a fair settlement that protects existing members' rights, as upheld by the High Court."

A further concern shared by all the Civil Service unions was that the Government intended to ask the Speaker to certify the Superannuation Bill as a Money Bill once it had completed its passage through the Commons. This would limit the time for consideration in the House of Lords and allow the bill to receive Royal Assent at an early date.

The unions stated that the use of a Money Bill to impose changes to employment conditions was "both inappropriate and an abuse of parliamentary procedure." Paul Noon, general secretary of the Prospect union, said: "It looks to us like it is legislate first and negotiate afterwards and effectively by trying to introduce a compulsory cap in that way it puts a gun to our heads."

A reasoned amendment introduced by the Opposition which sought to prevent the bill receiving a second reading was defeated by 329 votes to 240 votes. The bill subsequently passed through its second reading by 326 votes to 244 votes.

Cabinet Office minister Nick Hurd insisted that the Government still intended to negotiate an agreement. "This bill is not the endgame," he said. "It is an interim measure which we hope to repeal as soon as possible."

Progress of the bill:

The Superannuation Bill was presented to Parliament on the 15th July, 2010

Commons:
First Reading: 15.07.10 Second Reading: 07.09.10 Committee Stage: 14.09.10 16.09.10 Report Stage: 13.10.10 Third Reading: 13.10.10

Lords:
First Reading: 14.10.10 Second Reading: 26.10.10 Committee Stage: 10.11.10 Report Stage: 01.12.10 Third Reading: 07.12.10
Ping Pong: 14.12.10 Royal Assent: 16.12.10