Tuesday, September 22, 2015

Tories refuse to listen on exit payment cap

The Tory Government’s consultation on the proposed cap on public sector exit payments had illustrated the approach to consultation of which trade unionists often complain.

They told us what they were going to do and now they tell us that they are going to do it. This in spite of the overwhelming opposition to their proposals from those consulted, most of whom were employers (many of them Tory controlled).

The proposed “cap” of £95,000 on the total value of “exit payments” for public servants will be marketed as an attack on “fat cats” but, as I have previously pointed out, will impact upon career local government officers a long way from the top of the income pile (primarily because of the inclusion within the cap of the capital cost of paying unreduced pensions when making over 55s redundant).

The cap will now proceed by way of Clause 26 of the Enterprise Bill, currently before the House of Lords, which will give the Government the power to introduce subsequent secondary legislation to implement the cap. This does mean that effective Parliamentary opposition could limit the damage which this cap will otherwise do to employee relations and to the interests of some employees (and trade union members).

As well as pursuing amendments to Clause 26 (for example to try to exclude pension costs from the cap) the Parliamentary Opposition will also need to get into the detail of how the cap will be applied (not least the Government’s proposal that payments made following litigation for breach of contract or unfair dismissal would be excluded).

Two things are certain about this proposal. The first is that the wealthiest will find a way to circumvent the cap (whilst the professionals and middle managers will get hit).

The second is that the public sector exit cap will be used by the Government to achieve its real purpose, which is to engage in the decades long denigration of public service and the public sector. The now faltering neoliberal consensus has, for a generation, lauded the profit-driven private sector as the source of both value and virtue, whilst the public sector is presented as nothing more than an unproductive burden upon “hard working families”.


From a trade union point of view we would sooner have no redundancies and no exit payments at all, but if we are to see redundancies, and therefore redundancy payments then we should oppose an arbitrary cap upon payments in just one sector of the economy.

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