On keeping one's promises [Matthew's Journal]

You're viewing

emperor's journal
Create a Dreamwidth Account Learn More

Reload page in style: site light

←

→

Why is it OK to consider changing the law to allow the government to renege on promises it made to civil servants, when we're not considering doing similar to allow us to renege on, say, PFI deals?

←

→

There are 40 comments on this entry. (Reply.)

Well, because the government has a contract with the PFI people, but obviously doesn't have contracts with its own employees. Oh, no, wait.

Maybe it's because cancelling PFI deals would result in corrupt rich people who don't pay tax not getting as much money? After all, we're regularly told that it's necessary to give those people as much money as possible, preferably at the expense of much poorer people. Otherwise, they'll leave the country and not pay any tax. Um, or something.

Because if they renege on a commercial contract no one will again bid for government work at a reasonable price (and possible have an effect on the government's credit rating), but they'll still get civil servants even if they treat them badly.

This was the argument for bailing out Railtrack IIRC, though I don't recall what they actually decided to do in the end and how that played out.

[link] [parent] [reply]

They pushed it into administration (by means of not bailing it out), then took it over, and the shareholders lost out. As my father-in-law (a Railtrack shareholder) never tires of complaining.

[link] [parent] [reply]

Lawsuits about this are still ongoing, aren't they?

[link] [parent] [reply]

Perhaps to align the Public Sector legislation with Private Sector legislation? When I was made redundant in 2005 (through the company I worked for going bust) there was quite a low cap on the redundancy payment that I was entitled to; not only was it caped by number of months based on years of employment, but on amount per month and total amount. I only got a few hundred pounds for three years service at a decent wage. Also, I wasn't entiled to any payment in lieu of notice, unless I didn't have any offer of employment during that notice period, even though I would have had if the company had been able to pay the reduncancy. Consequently, I would be significantly unhappy if other people were entitled to significantly more, just because they worked in the Public Sector.

All too often one hears of very generous pay and perks being provided to Civil Servents; far greater than ordinary mortals could expect. How much those are true and how much apocryphal I don't know, but I'm fairly sure that there is some truth in them somewhere.

Working where I do, I know of multiple individuals who get far greater salaries and holiday for very little productive work simply by being in the Public Sector and having been able to gain by playing the various changes to terms and conditions that have happened over the years. If nothing else, I want these people's wages aligned with reality. If that takes a change in the law to allow the government to renege on [unrealistic] promises that have been made in the past then I'll take it.

Private sector legislation is the legal minimum - many companies actually offer a lot more then that.

The phrase "mere mortals" is an odd one to use for civil servents. Pointing that phrase at ceo's and other senior staff in the private (and often public) sector who's bail out terms are eye watering good seems ore reasonable.

And who do you know that's paid vast ammounts for nothing in the public sector? Everything I've seen that compares like with like jobs the public sector is often less then that private in terms of raw cash.

[link] [parent] [reply]

Perhaps to align the Public Sector legislation with Private Sector legislation?

No, the relevant employment law is the same -- in that it does not distinguish between public and private sectors; and the minimum required amounts, periods, etc, are identical everywhere. But at the moment, the Government, as an employer, offers more generous contracts,than much of the private sector. Just as any employer is entitled to chose the T&Cs under which it employs its staff, subject to the restrictions of the employment acts.

The law being referred to is a specific, special purpose, instrument which would allow the Government, as an employer, the freedom to renege on pre-existing employment contracts. A freedom of action that the private sector does not, and cannot, enjoy.

[link] [parent] [reply]

I've not been following closely, but I believe that the reason the government lost previously when they tried to change the terms of civil servants redunancy pay, is because the existing provisions are set out in primary legislation (the Superannuation Act 1972).

I'm not an employment lawyer, but I believe that most employment contracts do provide for the terms of employment to be varied from time to time.

[link] [parent] [reply]

I believe that most employment contracts do provide for the terms of employment to be varied from time to time

Yes, but only following mutual agreement, as with all contracts, and not unilaterally. Of course, the employer has the upper hand, as the oft-implied result of rejection tends to be unemployment (even though it cannot actually be).

[link] [parent] [reply]

Aren't private employers entitled to make people redundant (on the old terms) for not accepting a new contract?

[link] [parent] [reply]

Yes, and no...

[link] [parent] [reply]

Private sector companies in dire financial straits of course have the freedom to resort to insolvency and consequently pay very little at all leaving the taxpayer to pick up the tab, an option the public sector rather lacks...

[link] [parent] [reply]

Very true, but it's something of a nuclear option.

[link] [parent] [reply]

Not at all: been there, didn't get given the t-shirt!

[link] [parent] [reply]

It is, in that it destroys the company. Doesn't mean it doesn't happen. It's happened to me, too.

[link] [parent] [reply]

Also doesn't mean that those taking the decision to resort to insolvency wind up in the same boat as the staff having to fight for the minimum they are legally entitled to. This is probably not how it is supposed to work, of course.

[link] [parent] [reply]

No, at least it wasn't how it worked at the company that I worked for which went bust. There was a holding company and a service company and other companies. Assets got transferred between companies, debts got transferred between companies. One company ended up with almost all the debt, the other companies ended up with most of the assets and that one was wound up. Its directors got shafted by the directors of the holding company who didn't reveal all the facts prior to the events. I can't now remember all the details, but it was quite dodgy.

It sort of has a happy ending as some of the shafted directors managed to shaft the dodgiest of the shafting directors, who ended up with an insolvant company in Jersey which he couldn't actually make insolvant without revealing his dodgy dealings; they managed to get out with their sense of revenge satisfied.

[link] [parent] [reply]

Because PFI companies have scary lawers...... and because the narative is set that civil servents are lazy, gready and incompitant.

Pretty much this, as far as I can see.

[link] [parent] [reply]

Nada on the scary lawyers.

If the Government cancelled a PFI contract most PFI providers would not sue - they cannot afford to as Government contracts would never be won again, and a lot of them have a business serving government.

However they would never do ANY business with government on credit ever again.

The banks who lent to the scheme might sue, but not the PFI companies

[link] [parent] [reply]

At a guess (IANAL), they don't have to change the law in order to vary the terms of employment of civil servants. The employment contract itself will describe how the employment contract can be changed, subject to being able to demonstrate reasonableness in an employment tribunal.

It could be (depending on the contract, which, of course, I've not seen) that the government can vary that deal and the employee's only alternative to accepting the change is redundancy with statutory redundancy pay.

The redundancy arrangements for civil servants are far in excess of statutory redundancy pay, which is one week's salary (capped at £380) for each full year of service (capped at 20 years). That's all I got when I was made redundant in late 2008, so my sympathy with civil servants is limited. (-8

And £380 per week is not much.

I'm get the statutory with 100% enhancement for going voluntarily.

Civil servants might be lucky devils -- but that doesn't make it right to imposes changes retroactively.

[link] [parent] [reply]

It's not retroactive, though: retroactive would be going to people who've already been made redundant and asking for the money back.

[link] [parent] [reply]

I'm not convinced. If one enters into a contract for some work, agreeing to pay a certain amount on completion, and then when the work was substantially done, tried to enforce a change to a lower price, I think we'd all agree that was an attempt to retroactively change the contract.

I'm not sure how changing the rules on redundancy payouts shortly before making lots of people redundant is very different.

(On the other hand, I also have limited sympathy with the idea that capping the payout at a year's salary is a terrible hardship. I'm concerned that there may be other changes other than the headline one which means significantly reduced payments for people who would be getting relatively small ones in any case. Haven't done the research though.)

[link] [parent] [reply]

Nobody's suggesting not paying civil servants for the work they've done, though, only giving them less compensation for not giving them any more work to do.

[link] [parent] [reply]

Okay, fine, a contract which paid on delivery of stages, and had a penalty fee for cancelling part way through. Trying to cancel after the first stage without paying the penalty fee would still be a retroactive change of contract.

[link] [parent] [reply]

OK, an employment contract could be set up that way and/or perceived that way. But that's expecting quite a lot more than the basic you-do-the-work-and-we-pay-you stuff every contract contains.

I've never had an employment contract that gave me those kinds of rights, so I certainly wouldn't take it for granted that civil servants got them.

[link] [parent] [reply]

Because they aren't changing the law. they can't. All benefits accrued will be paid.

What they are changing is how FUTURE payments will be handled, and those have always been subject to change, if anybody had read the small print.

See: http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/06/bbc_removes_gold_plate_from_pe.html

Specifically search for 'when a BBC employee looks at his or pension statement under the new arrangement' and read the following six paragraphs: the same applies to the civil service.

S.

Oh dear, that's what you get for assuming the news cycle hasn't moved on and it's all still about pensions.

Oh well. Still an interesting article by Mr Peston.

S.

[link] [parent] [reply]

I think part of the problem is that terms like "the public sector" and "the Civil Service" are bandied about by The Media and Digby Prat Jones, who lump everyone who works in any kind of public service role in the same boat.

Most "public sector" workers would love to have any kind of salary that the people at the top, who are the ones who get big bucks and massive pensions are on. Teachers, policemen, firemen, job centre workers, etc do not earn anything like the same as equivalent jobs in the private sector. But every day on the radio, we are being told how expensive it is for THE TAXPAYER to pay their pensions. No mention of things like contribution holidays or removal of tax credits on pension schemes or the massive fall in the value of schemes due to the stock market collapsing due to the financial sector screwing us all over.

Yes, the civil service had a better deal on redundancies, which needs looking into. But it was offered to them instead of comparable salaries.

Private companies can decide how much or how little they pay out in redundancy, depending on how desperate they are at the time. It's not uncommon for people to be offered 1 month per year's service, but there's usually a cap of something like 2 years' pay.

Teachers, policemen, firemen, job centre workers, etc do not earn anything like the same as equivalent jobs in the private sector.

And those in the public sector tend to wildly over-estimate the earnings of those in the private!

http://www.touchstoneblog.org.uk/2009/12/more-about-public-versus-private-sector-pay/

http://www.guardian.co.uk/science/2010/jan/09/bad-science-ben-goldacre

[link] [parent] [reply]

Having worked in both areas and knowing how much people in comparative jobs earn, I don't think I'm underinformed. I also deal with a wide variety of employers in my current role and know how much they pay certain workers.

I happened across one of my old payslips last night from when I bought this place in 1999. OK, I was in a completely different job role, but I was earning more than 25% more than I currently earn.

[link] [parent] [reply]

Did you read the links? As the second one, a Ben Goldacre column says: "In reality, this is one of those interesting areas where anybody who makes a firm statement is wrong, because there is not sufficient evidence to make a confident assertion in either direction."

[link] [parent] [reply]

I did. I was just about to reply that apart from saying that it;s hard to say, neither of those articles actually said very much.

[link] [parent] [reply]

I was also going to say that all the stuff about hourly pay and number of hours worked is valid. But in my job I can see direct comparisons between admin assistants with comparable qualifications, payroll assistants in similar sized firms, IT technicians with similar job roles and the differences between what they are paid in the public and private sectors.

Edited Date: 2010-07-07 07:21 pm (UTC)

[link] [parent] [reply]

They're both saying "apples and oranges". Neither sector clearly earns more than the other, across the board. It all depends how, and what, you measure it.

Another anecdote: in the last few years, I've had two jobs, both in the private sector, where the salary, for very similar jobs, differed by 40%. Does that prove anything?

[link] [parent] [reply]

One might also ask why doesn't the government buy lots of things and then not pay for them? Save loads yes?

Or even better, why not simply not pay any more of the government debt back? That would save 60% of GDP + interest!

This is what you are saying on PFI in effect. PFI is a contract to purchase a building, but with performance related pay - i.e. if it is late, over budget, breaks, or is unavailable for any reason - I don't pay, the private sector does.

To deliver this the private sector borrows money and uses it to build the building and pays back the debt over time using the income from the PFI contract.

Just stopping payments would be the equivalent of not paying for goods you buy and not paying back money you borrowed.

The Civil service contracts contain no payment for services previously rendered - they are paid up to date there is no credit. PFI contracts are a credit contract based on services already delivered (the building).

A better analogy would be with accrued pension rights. These have already been given. If they were taken away for no compensation retrospectively this would mean the employee was out of pocket. Conversely if they decided just to change the pension from this point forwards then the employee could decide he no longer liked the deal, move elsewhere, and not have lost anything.

Cancelling a PFI contract is like the former, changing the redundancy rights is like the latter.

Do I agree with what the government is doing? No - it is fundamentally bad faith to do what they are doing, but the analogy is a bad one.

More technically, you might ask why does the government not activate the "Force Majure" clauses (by redefining force majure) in the contracts, pay back the debt and equity (without any return included, so all parties are just back to where they were before the contract started).

In theory the private sector has lost the right to future profits (and technically a slice of profits to date), but is no longer required to provide the services - it is worse off but not out of pocket based on services to date.

A government, probably a long time ago, promised very generous redundancy terms, which, on the face of it, are several times as good as most people (other than the most highly paid - such as the bankers who contributed to the present mess) could get. Presumably it was a good thing (in the short term) to cede in negotiations, knowing that it was unlikely to become a problem any time soon.

Now, another government reckons it needs to make some people redundant, presumably because it is not possible to extract enough tax* to keep paying them all. It can't do so in such a way that reduces the financial mess unless it changes the amound of redundancy pay given.

Which government is doing wrong? Are the both wrong, just one, or neither?

*By my calculation, to nearly balance the income and expenditure would need every individual (all 60 million) in the UK, not just every worker, to pay an average of £2,500 per year extra tax per year. I think that it would be impossible to extract that much extra tax. Even then the national debt would continue to grow slowly (assuming that no other economic factors changed - which they surely would).

As it is, with believable cuts and tax increases, S&P still calculate that the national debt will reach 100% of GDP in 4 to 5 years, and still be growing.

It is a widely-established constitutional principle that no Parliament can bind its successors. So if the redundancy package was set out in primary legislation by Parliament as mentioned further up the thread, then it was implicitly subject to amendment or repeal by any future Parliament.

Under that circumstances, I'd say the naughty government was the one that agreed to the original terms, unless of course their negotiators explained this point to the unions at the time (mind, you'd think Civil Servants ought to be aware of the issue)

[link] [parent] [reply]

July