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.
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.
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
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.
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.
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.
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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.
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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 that have been made in the past then I'll take it.
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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
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(Anonymous) 2010-07-07 05:07 pm (UTC)(link)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.
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(Anonymous) - 2010-07-07 17:12 (UTC) - Expandno subject
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.
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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.
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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.
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