Public Sector Payments Cap

Dear constituent,

Thank you for contacting me about the cap on public sector exit payments and the Restriction on Public Sector Exit Payments Regulations 2020.

I appreciate your concerns on this issue. No one believes that huge exit payments from the public sector are right, and it is an issue that needs to be addressed. But I am concerned that the Government is implementing the regulations in a way that is unnecessary, premature and unhelpful. In addition, it is placing burdens on the public sector that are disproportionate to their purpose and, in some cases, present perverse incentives.

I am concerned, for example, at the inclusion of pension strain payments in the cap. While the cap is supposedly aimed at the very highest paid public sector workers, the inclusion of pension strain payments means it will also catch ordinary workers on ordinary levels of pay, particularly those with the longest service. The Local Government Association has given examples, for instance, of how the cap would affect long-serving employees earning around £23,000 to £25,000 a year.

In addition, I worry that the failure to link the cap to the level of public sector pay over time means the restriction will catch ever more workers within its scope. It is also worrying that the Government has not carried out a comprehensive equality impact assessment for the policy.

I am also aware of the specific concerns at how the cap could affect those working in nuclear decommissioning. These workers are often employed by private sector organisations and the successful completion of their work involves making themselves redundant. It is therefore unclear why the Government should interfere in agreements between them and their employers in this way.

The Government says that nuclear decommissioning workers will be covered by a mandatory waiver from the cap. However, I know the Prospect union has expressed concern that some may still be caught out and has called for the regulations to be redrawn to specifically exclude those working in nuclear decommissioning. I believe it is important that the Government effectively addresses this issue.

The Restriction on Public Sector Exit Payments Regulations 2020 came to a vote in the House of Commons on 30 September 2020. I opposed the regulations. Unfortunately, they nevertheless passed with the support of Government MPs and will come into force later this month.

Thank you once again for contacting me about this issue.

Yours sincerely,

Peter Dowd MP