Public And Commercial Services Union & Ors v Minister for the Cabinet Office

This is an application for judicial review of the decision of the defendant Minister of 8 November 2016 to make a scheme under section 1 of the Superannuation Act 1972, which amended the Civil Service Compensation Scheme (“the CSCS”) to reduce the value of certain benefits paid to civil servants on redundancy or taking early retirement or other forms of exit from the civil service (“the 2016 amendments”). It came before the court on a “rolled up” basis, for consideration of permission with the substantive hearing to follow if permission was granted. The court had read the papers in advance of the hearing and granted permission at the outset. The hearing proceeded as a full substantive judicial review.

The 2016 amendments were made by the Minister and laid before Parliament, as required by the 1972 Act. The process of making amendments to the CSCS is not subject to a positive or negative resolution procedure in Parliament.

The particular reductions in benefits to which the application relates are those in respect of compulsory redundancy (CR), voluntary redundancy (VR), voluntary exit (VE) and what are termed “inefficiency payments.” VR payments are made when a government department invites civil servants to apply for voluntary redundancy, and are typically at a higher rate than CR payments. VE payments are made when, even though no redundancy situation exists, a government department invites civil servants to leave their posts in order to reduce staffing costs. Inefficiency payments are made when a government department is seeking to deal with a civil servant who has a poor performance or attendance record, but is not liable to dismissal. The department can invite the civil servant to accept an inefficiency payment as the price for terminating his post.

The first claimant trade union (“the PCSU”) is the largest of the civil service trade unions. It currently has around 160,000 members in the civil service and related bodies. We were told that it tends to represent civil servants at the lower end of the salary scale. The second and third claimants are civil servants who are members of the PCSU.

The claimants’ grounds of challenge to the 2016 amendments are that: (1) there has been inadequate consultation by the Minister with the PCSU about the 2016 amendments, in contravention of his statutory duty to consult with the PCSU contained in section 1(3) and section 2(3D) of the 1972 Act; (2) the Minister wrongly excluded the PCSU from the process of consultation regarding the 2016 amendments, in breach of its rights and those of its members under Article 11 of the European Convention on Human Rights (“ECHR”); (3) the 2016 amendments violate the rights of civil servants under Article 1 of Protocol 1 to the ECHR (protection of property); and (4) the Minister breached his obligation under section 149 of the Equality Act 2010 (the public sector equality duty) in making the 2016 amendments, in that he did not have due regard to the impact which the change to the inefficiency payments would be likely to have upon civil servants with disabilities. The Minister disputes all these grounds of challenge. He also submits that, even if he is found to have acted unlawfully in some respect, it is highly likely that if he had not done so the outcome would still have been the same or substantially the same: the 2016 amendments would still have been made to make the same changes to the CSCS. Therefore, by virtue of section 31(2A) of the Senior Courts Act 1981, relief should be refused and the 2016 amendments should not be quashed.

The amendments to the CSCS made on 8 November 2016 are part of a further round of reform of public sector pension and exit payments, and follow previous reforms of the CSCS in 2010. A first set of changes was introduced by the then Minister in April 2010. At that time, as I held in R (Public and Commercial Services Union) v Minister for the Civil Service [2010] EWHC 1027 (Admin); [2010] ICR 1198 (“PCSU (No. 1)”), section 2(3) of the 1972 Act as it then stood required the agreement of relevant trade unions to the changes. The PCSU, which was the claimant in that case as well as in this, had not agreed the changes. Accordingly, the April 2010 amendments to the CSCS were quashed by the court. The Minister did not appeal.

Instead, after the General Election in 2010, the government sought and obtained from Parliament primary legislation to cap payments under the CSCS and also amendments to section 2 of the 1972 Act. The unions’ right of veto was removed and replaced with an obligation of the Minister to consult on any proposed changes to the CSCS with a view to reaching agreement on them, as is set out in section 2(3D) of the 1972 Act. I address the effect of the amended provisions in the judgment below.

In December 2010, the Minister made amendments to the CSCS under the as yet unamended provisions in sections 1 and 2 of the 1972 Act. The statutory caps on benefits were to come into effect if the amendments to the CSCS were quashed in any new challenge. This background is explained in the judgment of McCombe J (as he then was) in R (Public and Commercial Services Union) v Minister for the Civil Service [2011] EWHC 2014 (Admin); [2011] IRLR 903 (“PCSU (No. 2)”).

The PCSU brought a challenge to these changes to the CSCS and the statutory caps on benefits set out in the amended CSCS, principally on the ground that the changes and the caps constituted unlawful interferences with civil servants’ rights to peaceful enjoyment of their possessions under Article 1 of Protocol 1 to the ECHR. In PCSU (No. 2), McCombe J dismissed this challenge. He held that, although civil servants had legitimate expectations regarding the payments they would receive under the CSCS as it stood before the amendments in December 2010, which qualified as “possessions” for the purposes of Article 1 of Protocol 1, the changes made by those amendments to reduce the level of payments were objectively justified in light of the public interest identified by the government and Parliament of reducing the public spending deficit.

At the time when the December 2010 changes to the CSCS were introduced and when union members were balloted on whether to accept them, a number of statements were made by or on behalf of the then Minister to the effect that the new CSCS terms would represent “a sustainable and affordable long-term successor scheme.” The Minister at that time (Francis Maude MP) said, “I believe we now have a scheme which is fair, protects those who need the most support, addresses the inequities in the current system and is right for the long term”. The Head of the Civil Service described the new CSCS terms as “sustainable” and “affordable”. As appears below, the claimants place emphasis upon these statements in the context of their present challenge. They say that these statements amounted to assurances that no further changes to the CSCS to the detriment of civil servants would be introduced for a considerable period after 2010 and that the 2016 amendments to the CSCS, which further reduce payments to be made under it, breach those assurances. They also say that the fact that such assurances were made in 2010 undermines the Minister’s case on objective justification under Article 1 of Protocol 1 in the context of the present challenge.

Section 1 of the 1972 Act provides in relevant part as follows:

“1.— Superannuation schemes as respects civil servants, etc.

(1)

The Minister for the Civil Service (in this Act referred to as “the Minister”)—

(a)

may make, maintain, and administer schemes (whether contributory or not) whereby provision is made with respect to the pensions, allowances or gratuities which, subject to the fulfilment of such requirements and conditions as may be prescribed by the scheme, are to be paid, or may be paid, by the Minister to or in respect of such of the persons to whom this section applies as he may determine; …

(3)

Before making any scheme under this section the Minister … shall consult with persons appearing to the Minister … to represent persons likely to be affected by the proposed scheme ….”

Section 2 of the 1972 Act provides in relevant part, and as amended, as follows:

“2.— Further provisions relating to schemes under s. 1.

…

(2)

Any scheme under the said section 1 may make provision for the payment by the Minister of pensions, allowances or gratuities by way of compensation to or in respect of persons—

(a)

to whom that section applies; and

(b)

who suffer loss of office or employment, or loss or diminution of emoluments, in such circumstances, or by reason of the happening of such an event, as may be prescribed by the scheme.

(3)

Subject to subsection (3A) below, no scheme under the said section 1 shall make any provision which would have the effect of reducing the amount of any pension, allowance or gratuity, in so far as that amount is directly or indirectly referable to rights which have accrued (whether by virtue of service rendered, contributions paid or any other thing done) before the coming into operation of the scheme, unless the persons consulted in accordance with section 1(3) of this Act have agreed to the inclusion of that provision.

(3A) Subsection (3) above does not apply to a provision which would have the effect of reducing the amount of a compensation benefit except in so far as the compensation benefit is one provided in respect of a loss of office or employment which is the consequence of—

(a)

a notice of dismissal given before the coming into operation of the scheme which would have that effect, or

(b)

an agreement made before the coming into operation of that scheme.

(3B) In this section—

“compensation benefit” means so much of any pension, allowance or gratuity as is provided under the civil service compensation scheme by way of compensation to or in respect of a person by reason only of the person's having suffered loss of office or employment;

“the civil service compensation scheme” means so much of any scheme under the said section 1 (whenever made) as provides by virtue of subsection (2) above for benefits to be provided by way of compensation to or in respect of persons who suffer loss of office or employment.

(3C) In subsection (3B) above a reference to suffering loss of office or employment includes a reference to suffering loss or diminution of emoluments as a consequence of suffering loss of office or employment.

(3D) So far as it relates to a provision of a scheme under the said section 1 which would have the effect of reducing the amount of a compensation benefit, the duty to consult in section 1(3) of this Act is a duty to consult with a view to reaching agreement with the persons consulted.

…

(11)

Before a scheme made under the said section 1, being the principal civil service pension scheme or a scheme amending or revoking that scheme, comes into operation the Minister shall lay a copy of the scheme before Parliament.

(11A) Subsection (11B) below applies if a scheme made under the said section 1 makes any provision which would have the effect of reducing the amount of a compensation benefit.

(11B) Before the scheme comes into operation, the Minister must have laid before Parliament a report providing information about—

(a)

the consultation that took place for the purposes of section 1(3) of this Act, so far as relating to the provision,

(b)

the steps taken in connection with that consultation with a view to reaching agreement in relation to the provision with the persons consulted, and

(c)

whether such agreement has been reached.

…”

Prior to amendment in 2010, section 2(3) provided for a right of veto for civil service trade unions in relation to changes to the CSCS which were detrimental to their members: see PCSU (No. 1). So far as is relevant for present purposes, that protection was modified and reduced by amendment of section 2, by its replacement by the obligation of consultation with civil service trade unions with a view to reaching agreement with them as set out in section 1(3) read with section 2(3D), backed up by the requirement of a report to Parliament under subsections (11A) and (11B).

Section 3(1) of the Human Rights Act 1998 (“the HRA”) requires the court to read and give effect to primary legislation in a way which is compatible with Convention rights, so far as it is possible to do so. Section 6(1) of the HRA provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right.

The Convention rights relied on in this case are Article 11 and Article 1 of Protocol 1 (“A1P1”). Article 11(1) provides:

“Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and join trade unions for the protection of his interests.”

A1P1 provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest of to secure the payment of taxes or other contributions or penalties.”

The Minister is a public authority. Section 149 of the Equality Act 2010 provides in relevant part as follows:

“149 Public sector equality duty

(1)

A public authority must, in the exercise of its functions, have due regard to the need to—

(a)

eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act;

(b)

advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;

(c)

foster good relations between persons who share a relevant protected characteristic and persons who do not share it.

…

(3)

Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to—

(a)

remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;

(b)

take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;

(c)

encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low.

(4)

The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons' disabilities.

(5)

Having due regard to the need to foster good relations between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to—

(a)

tackle prejudice, and

(b)

promote understanding.

(6)

Compliance with the duties in this section may involve treating some persons more favourably than others; but that is not to be taken as permitting conduct that would otherwise be prohibited by or under this Act.

(7)

The relevant protected characteristics are—

…
disability;
…”

Section 31(2A) of the Senior Courts Act 1981 states in relevant part:

“The High Court-

(a)

Must refuse to grant relief on an application for judicial review …

If it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred.”

In PCSU (No. 1) I described the legal position of civil servants and the nature of benefits under the CSCS: see [10]ff. It is not necessary to repeat what is said there.

The payments under the CSCS upon leaving the civil service prior to retirement at pensionable age were and remain in legal theory a matter of discretion on the part of the Crown, but we were told by Mr Sheldon QC for the Minister that as a matter of invariable administrative practice they were and are paid when the events to which they relate occur. In addition to the formally discretionary nature of all payments under the CSCS, the operation of the CSCS involves other elements of discretion for government departments. It is a matter for the choice of a government department whether it decides to make a civil servant compulsorily redundant, or to offer VR or VE or an inefficiency payment to a civil servant. But when it decides to do so, the CSCS defines the way in which termination payments will be made and as a matter of invariable administrative practice the department will make payments in accordance with the calculation set out in the CSCS. In relation to both a VE payment and an inefficiency payment, the terms of the CSCS accord a government department a discretion as to the amount of the payment to be made, within certain defined parameters. But again, in a case where a department decides that a civil servant should be dismissed in a situation in which the CSCS stipulates that a VE payment or an inefficiency payment is due, it is a matter of invariable administrative practice that an inefficiency payment will be made within the scope of the parameters defined in the CSCS.

It is not necessary to set out the provisions of the CSCS in detail. The payments for which it provides are a function of length of service (giving a multiplier based on a set tariff relating to each year of service) and current salary (subject to a minimum assumed salary for lower paid workers, “the underpin salary”). In addition, prior to the 2016 amendments, it provided for some people leaving the civil service in their early 50s to take their pensions early (i.e. before reaching retirement age), in full (i.e. as if they had reached retirement age) and without actuarial reduction in respect of early receipt, to be funded by the employing department to the extent that the value of such early receipt could not be funded out of the termination payment to the employee under the CSCS. This latter benefit is referred to as funded top up for early access to pension.

On 8 February 2016 the Minister issued a public consultation document on proposed reform of the CSCS (“the CSCS consultation paper”), seeking responses by 4 May 2016. In parallel with that consultation, HM Treasury issued a public consultation document on wider proposed reforms to public sector exit payments.

The CSCS consultation paper set out the Minister’s proposals to change the CSCS so as significantly to reduce payments under it. The tariff was to be reduced from four weeks to three weeks per year of service; VE payments were to be capped at a multiplier of 18 months; VR payments were to be capped at 12 months; CR payments were to be capped at 9 months; the funded top up for early access to pension was only to be allowed where a civil servant had reached minimum pension age for a new entrant to the scheme (i.e. 55 at a minimum); there was to be a cap on CSCS compensation payments at £95,000, in line with the general cap on public sector termination payments which the government was proposing to introduce in legislation; and there was to be a three month notice period for all early exits from the civil service. The CSCS consultation paper also proposed changes to inefficiency payments. The proposals in the paper did not refer to any possible change to the underpin salary in the CSCS, then set at £23,000 p.a..

Four particular reasons were given in the CSCS consultation paper why the Minister wished to revisit the terms of the CSCS as amended in 2010:

“This reformed scheme has been in place for over four years now and the experience of its use has led the Government to believe that it is not fully delivering against its aims. In particular the Government is concerned that:

•

The Voluntary Redundancy (VR) terms are limiting the flexible use of the Voluntary Exit (VE) terms. The scheme is therefore not functioning as intended but is still encouraging staff to hold on in the expectation of better terms later;

•

Early access to pension was included to allow staff to retire and draw all of their Civil Service pension without reduction for early payment. Given the significant costs, the limited eligibility and that Government’s aim in encouraging longer working lives (for example the recent pension reforms) it is questionable as to whether it is still appropriate for the employer to be funding this as an option;

•

Overall the scheme remains too expensive in light of the national debt and budget deficit leaving less money available to support those where necessary. This is especially acute because of the requirement to reduce current staff numbers due to both the spending review and the need to create space to allow for the recruitment of apprentices; and

•

More broadly the scheme is out of line with the terms that the Government considers should be generally available in the public sector. In particular the Government does not believe that six figure compensation payments are likely to be fair or to offer value for money.”

The Minister’s analysis underlying the CSCS consultation paper indicated that the savings in relation to CSCS payments which had been expected when the 2010 amendments to the CSCS were introduced had not been realised. It had been expected that the average cost of VE or VR after those amendments would be £33,754, whereas the actual average cost of a VE or VR exit in 2014/15 was £40,376. The evidence filed for the Minister did not give a detailed breakdown or explanation for this difference. Mr Segal QC, for the claimants, suggested that it was to be inferred that it arose because as things transpired more civil servants on higher salaries had been removed than had been expected in 2010, and that this was overall a benefit for the Government in terms of reducing the future cost of the civil service, with the result that this point could not be relied upon in support of the Minister’s submissions on justification for the 2016 amendments.

I do not accept that this is the correct inference to be drawn. As Mr Sheldon for the Minister pointed out, the size of salary is not the only variable which affects the amount of VR and VE payments. Also relevant is the civil servant’s period of service and his age, in particular where he may be entitled to a funded top up for early access to pension. Mr Sheldon told us that these were significant reasons for the difference in actual average payments under the CSCS as compared with what had been expected in 2010. Although the evidence for the Minister does not go into detail about this, it is clearly intended to convey that the full contribution to improving the public finances which was expected from the changes in 2010 had not materialised, which point could not properly have been maintained if the position was as suggested by Mr Segal. In the CSCS consultation paper, the point was made that completely removing the employer funded top up for early access to pension would save around 12% of the costs of the CSCS. I see no reason to doubt the accuracy of the basic point made in the Minister’s evidence, nor the broad thrust of the explanation for it given by Mr Sheldon.

The principles underlying the proposed amendments to the CSCS were explained in the CSCS consultation paper as follows:

“The Government is seeking to make changes to the CSCS so that it remains a suitable and appropriate tool. Specifically it is looking to reform to meet the following principles:

•

to align with wider compensation reforms proposed across the public sector, including the Government’s manifesto commitment to prevent excessive payouts to the better paid by ending six-figure exit packages;

•

to support employers in reshaping and restructuring their workforce to ensure it has the skills required for the future;

•

to increase the relative attractiveness of the scheme for staff exiting earlier in the process, and to maintain flexibility in voluntary exits to support this aim;

•

to create significant savings on the current cost of exits and ensure appropriate use of taxpayers money; and

•

to ensure any early access to pension provisions remains appropriate.”

The CSCS consultation paper was made available to the public. It was posted on the Cabinet Office website. It was not directed only to civil service trade unions, but invited representations from anyone who wished to make them.

The Minister received many responses to the CSCS consultation paper, including from the PCSU and other civil service unions. The unions were generally very hostile to the proposals. The proposals would mean significant reductions in payments under the CSCS to civil servants across the board, with particularly substantial reductions in relation to such payments to those in the 50-54 age bracket. In that age bracket, the mean value of exit payments (cost of exit) would be reduced from £26,900 to £20,000 for CR and from £64,300 to £30,600 for VR and VE. Although this was not distinctly explained in the evidence, Mr Sheldon told us that these differences were due in large part to the non-availability of funded top up for early access to pension for persons in that age bracket under the 2016 amendments.

In June 2016 the Minister produced an Equality Analysis in relation to the proposals in the CSCS consultation paper (“the 2016 Equality Analysis”). This did not deal with the equality impacts of proposed changes to inefficiency payments which were eventually included in the 2016 amendments.

However, reform of the inefficiency payments along the lines eventually included in the 2016 amendments had been considered by the Minister and debated with civil service unions in late 2014 and 2015, before being overtaken by the General Election in 2015 and put to one side. An Equality Analysis conducted by the Minister in December 2014 (“the 2014 Equality Analysis”) had assessed the likely equality impacts of such a change, finding that there was a marked difference between the proportion of employees with a declared disability who were dismissed with inefficiency payments as compared with the proportion of employees so dismissed across the whole of the civil service. This was an unsurprising finding. The evidence adduced for the Minister from Mr Peter Jinks, Deputy Director, Workforce, Policy and Reward at the Cabinet Office, in answer to the present challenge, is that this finding was borne in mind and given consideration when the 2016 amendments were introduced, and that the potential detrimental impact of the changes to inefficiency payments in those amendments was considered to be justified by the rationale underpinning the reforms. I see no reason to doubt this evidence: at a meeting with the unions on 15 April 2016 express reference was made to the previous discussions with the unions about changing the inefficiency payments under the CSCS.

Running in parallel with the request for written responses to the CSCS consultation paper, the Minister provided information to and held a number of meetings with the National Trade Union Council (“the NTUC”) in the period between 11 February and 4 May 2016. The NTUC was formed in 2010, to provide a single body with which the Minister could discuss issues such as pay policy and pensions in the civil service. At the relevant time, the PCSU was part of the NTUC, as were the Prison Officers’ Association (“POA”), Prospect, FDA, NIPSA, Unite and the GMB. Having the NTUC in place made it easier for the Minister to carry out his obligation of consultation pursuant to sections 1(3) and 2(3D) of the 1972 Act.

At an initial meeting on 11 February 2016, the Minister’s representatives indicated that the government was looking to find savings of about a third of the cost of operating the CSCS. The NTUC wrote on 29 February 2016 to say that the proposed changes to the CSCS were unjustified and contravened the statement by the Minister when the 2010 changes had been made. A reply dated 4 March 2016 on behalf of the Minister referred to the principles identified in the CSCS consultation paper and stated, “We are consulting with trade unions with a view to reaching agreement on a set of proposals that meet these overall principles”. This was clearly a reference to the duty of consultation in the 1972 Act. The Minister also indicated that it might be possible to extend the consultation beyond 4 May 2016.

Further meetings with NTUC representatives, including representatives from the PCSU, took place on 18 March, 6 April, 15 April, 25 April and 4 May to discuss the proposed reforms. I will refer to the meetings between 11 February and 4 May 2016 as “the first round of discussions”. Points made by the union side included that there was already scope to offer better VE terms than VR terms, which was underused, so they questioned the need for reform in relation to this. Points made on the Minister’s side included that the current CSCS terms were considered to be relatively generous compared to others, especially as a large number of employers in the private sector used statutory redundancy terms in similar circumstances, which were markedly less generous than both the current CSCS terms and the proposed amended CSCS terms. At the meeting on 4 May, the Minister’s representatives confirmed that the consultation closed that day and that they would consider with him what would happen next, and whether to hold further discussions.

On 3 June 2016, Mr Simon Claydon, Director, Civil Service Workforce Strategy and Inclusion at the Cabinet Office wrote to the NTUC (copied to individual union representatives) as follows:

“1.

As you will be aware the consultation on changes to the Civil Service Compensation Scheme (CSCS) closed on 4 May. We committed to write to set out next steps.

2.

The Government has not yet reached a decision on what changes to make to the Compensation Scheme. However, based on consideration of the responses received through the consultation period including those expressed by trade unions, the Minister for the Cabinet Office is still minded to amend the scheme.

3.

The Minister has taken particular note of the comments made from trade unions throughout our discussions, especially on the issue around the relative levels of compensation payable under the VE and VR terms. He has agreed that we should hold a further series of meetings with trade union colleagues who can engage with the intention of reaching an agreement on a revised proposal, as well as on inefficiency compensation terms.

4.

If we are able to reach agreement then it is likely that the proposal below would become the basis of a final Government position. The base structure of this proposal is that:

- the CSCS terms will be reformed to produce significant savings;

- the tariff to be three weeks per year of service;

- the compulsory notice period to be reduced to three months;

- the limits for both VE and VR exits to be set at 15 months’ salary; and

- for employer funded early access to unreduced pension to be available from age 55 (and then track 10 years behind state pension age).

5.

Within these further discussions we note that several unions have expressed a desire to ensure that any reforms to be of an enduring nature; to discuss the interaction between early access to pension and the cap on the value of exits at £95,000; to discuss the transition and a desire for a clear commitment to redeployment where possible. We also want to discuss streamlining the exit process to deliver cost saving and a more efficient process. We are willing to discuss these areas in more detail with the ultimate aim of delivering against the principles outlined in the consultation document. We recognise that equalising the VE and VR position may be seen to run counter to incentivising VE but this is something we could accept as part of an overall agreement. There will be come scope to slightly amend the base structure of the proposal, but it is unlikely that these discussions would lead to comprehensive changes.

6.

I want to be clear that attendance at any further discussions will be taken as a clear commitment that those unions engaging in the talks have accepted that the proposal above will form the basis of a reformed, negotiated, set of arrangements that their relevant executives can recommend acceptance to their members in any ballot. The aim of these further discussions is to reach agreement on the precise form that those changes will take.

7.

To provide this commitment, we are aware this may require exceptional meetings of Executive Committees, and we will encourage employers to assist in ensuring that appropriate facility time is provided if requested.

8.

I will shortly be inviting you, NTUC colleagues and other unions that have engaged with the consultation, to a series of further meetings over the next three weeks. To participate in these discussions, I would expect a commitment in writing to engage on the basis outlined in paragraph 6 by the end of Wednesday 15 June at the latest.

9.

Following these further meetings we will consider the views of unions and advise the Minister accordingly, before making a formal offer…”

The PCSU, Unite and the POA replied in a joint letter dated 19 June 2016:

“We are writing on behalf of our 3 trade Unions in response to your letter of 3 June 2016. You will note that PCS, POA and Unite represent an overwhelming majority of civil servants who are union members and predictably our unions also represent a majority of the civil servants affected by redundancy situations in future years.

Taking each point in turn.

1.

We note your views on next steps. We hereby put forward ours.

2.

We are at a loss to understand how the Minister can be minded to amend the scheme if the Government has not yet reached a decision on what changes to make to the CS Compensation Scheme, or any changes to other Public Sector schemes. Can you please explain this situation?

You state that the Minister’s view is based on consideration of the responses received through the consultation period including those expressed by trade unions. Can you please furnish us with copies of the responses to the consultation, the analysis of those responses and explain what is contained within the Reponses that has drawn the Minister to this view?

Can you also provide us with a full equality impact assessment of the proposed amendments to inform our discussions going forward?

3.

We note that the Minister has taken particular note of the comments made from trade unions throughout our discussions, especially on the issue around the relative levels of compensation payable under the VE and the VR terms. We can confirm that we are prepared to engage in a further series of meetings with the intention of reaching an agreement on this issue, as well as on inefficiency compensation terms.

4.

It is premature to conclude what the basis of a final Government position will look like, primarily for two reasons: firstly, you state that the Government has yet to reach a decision on what changes to make to the Compensation Scheme; secondly, it is simply illogical to conclude what the outcome of discussions will be before those discussions have taken place.

We are happy to enter discussions with an open mind and with a view to reaching agreement on a final package and a set of arrangements that our relevant executives can recommend to our members in any ballot. …”

Mr Claydon responded by letter dated 21 June 2016 to Mark Serwotka, the general secretary of the PCSU, expressing his disappointment that that union’s response did not “fully meet the commitment requested in paragraph 6 of my letter [of 3 June 2016]”. He wished to be clear that attendance at any future meetings “will be taken as a clear commitment that you have accepted that you are engaging in talks having agreed with your union executive that the proposal in paragraph 4 [of the letter of 3 June 2016] will form the starting basis of a reformed, negotiated, set of arrangements that your executive believe could result in recommending acceptance to their members in any ballot” and invited the PCSU’s confirmation that it would agree to engage on that basis. In response to the request for the consultation responses, Mr Claydon said that the formal offer, which would follow any further meetings, would be accompanied with an analysis of the consultation responses and equality impacts.

The PCSU, Unite and the POA replied in a joint letter dated 4 July 2016:

“Our unions have genuine concerns regarding the refusal to provide us with important information, the refusal to respond to the questions and points we have previously raised, the attempt to impose a restrictive framework on talks and the unseemly rush to conclude matters. Taken together, these concerns can only lead us to suspect that the process you are embarking on is a sham. Your insistence upon unreasonable restrictions and illogical sequencing also undermines the entire concept of free collective bargaining.

…

All of this notwithstanding, our unions are prepared to engage in further talks with a view to seeking agreement. We will do so unfettered, in accordance with our status as free Trade Unions operating in a democratic society.”

Mr Jinks responded in Simon Claydon’s absence, by letter dated 8 July 2016. He disagreed with the assertion that the process was a sham. He said:

“We have given ample time for consultation and we have made every effort to reach agreement with unions on a revised set of CSCS terms in line with our requirement to consult with a view to reaching agreement. You have given no indication of seeking to reach agreement on the basis set out in Simon [Claydon]’s letters. Simon’s letter of 21 June specifically stated that if you were unable or unwilling to reach agreement then it was unclear what utility there would be in entering into further discussions beyond the comprehensive ones that took place during the consultation period.”

He confirmed that Cabinet Office representatives were still prepared to meet if the commitment requested in previous letters was provided.

There were further exchanges of correspondence in which each side repeated points already made. The PCSU, Unite and POA maintained their refusal to provide the commitment sought by the Cabinet Office. They were in consequence excluded from further discussions.

In a witness statement dated 12 May 2017 prepared for this judicial review, Mr Jinks characterised the commitment sought from the trade unions in this way at para. 8:

“ … The only requirement was that, in order to participate, a trade union should at least be prepared to confirm that the discussions might lead to an agreement i.e. they should indicate that there was at least a possibility of an agreement being reached.”

However, the commitment sought by Mr Claydon at paragraph 6 of his 3 June 2016 letter, substantially repeated in his 21 June 2016 letter, was much more demanding than that. It required an acceptance that the current proposals would form the basis of a negotiated package which the unions could recommend to their members in a ballot. It was not surprising that the PCSU, Unite and POA, all of whom were in general opposed to the proposals, were unable to give such a commitment.

Other trade unions replied to Mr Claydon’s letter of 3 June 2016 to give the commitment requested by him (some, it should be said, in somewhat equivocal terms, but sufficient to satisfy the Cabinet Office). Those that did (the FDA, Prospect, GMB, UNISON and the Defence Police Federation) were then invited to participate in a further round of meetings to discuss the revised proposals which Mr Claydon had set out in his letter of 3 June 2016. There were thirteen further meetings between Cabinet Office representatives on behalf of the Minister and these unions between 23 June 2016 and 22 September 2016 to discuss the proposals (“the second round of discussions”). The minutes of these meetings have not been put in evidence by the Minister.

At the end of the second round of discussions, on 26 September 2016 the Cabinet Office published its response to the public consultation between 8 February and 4 May 2016.

Also on 26 September, Mr Claydon wrote to all the unions (including now the PCSU) to set out a formal offer by the Minister regarding the changes to the CSCS which he proposed and inviting them to agree. The letter referred to the public consultation, which closed on 4 May 2016; to the first round of discussions with the NTUC; and to the second round of discussions. Mr Claydon referred to his letter of 3 June: “I … wrote on 3 June to all unions who provided substantive responses to the consultation to invite them to continue with talks with the aim of reaching agreement on a set of reforms focused around a basic structure outlined in that letter.” He wrote:

“Our intention has always been to agree a negotiated package of reforms that meets the Government’s objectives as set out in the consultation document and has the support of the majority of trade unions representing staff covered by the [CSCS]. I am grateful to the FDA, Prospect, GMB, UNISON and the Defence Police Federation who responded positively to my letter of 3 June and have continued constructive discussions on this basis with a view to reaching agreement.”

The formal offer contained two sets of terms. The first set was more advantageous for civil servants, but was conditional on acceptance by what the Minister would regard as a sufficient number of unions. The first set of terms were: the standard tariff to be three weeks per year of service; VE and VR payments capped at 18 months’ salary; CR payments at 9 months’ salary; only to allow employer funded top up for access to pension from age 55 and for this to track 10 years behind state pension age; to offer a partial buy out option for certain employees; CR notice periods to be 3 months for new starters; and an increase in the underpin salary to £24,500. Mr Claydon gave an assurance for the Minister that if there was sufficient acceptance of the first set of terms, the government would regard them as “a firm foundation for the management of the Civil Service and its people for a generation” and that “This administration will not seek to deviate from this agreement”.

Eight unions (the FDA, Prospect, GMB, UNISON, Unite, NCOA, the Defence Police Federation and PGA) replied to agree the first set of terms. The PCSU and the POA did not accept the terms.

The Minister decided that this represented sufficient union acceptance of the first set of terms and therefore made the 2016 amendments to the CSCS to reflect them.

The Minister laid a report before Parliament, pursuant to section 2(11B) of the 1972 Act. In the report, the Minister referred to the public consultation and to the first round of discussions with the NTUC. He went on, “Following the closure of the consultation, the Government considered the responses it had received to date and thereafter sought to continue to engage with trade unions with the aim of reaching agreement on a set of reforms.” This was a reference to the second round of discussions. The report explained that participation of unions in the second round of discussions “was made conditional upon their acceptance that a proposed basic structure would form the starting basis of a reformed, negotiated, set of arrangements that could lead to a final agreement”. The report then referred to the letter of 26 September 2016, which had been sent “[W]ith the intention of securing agreement”, and reported that in the government’s view the offer on the first set of terms had been agreed by a sufficient number of unions.