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Official Report (Hansard)

Session: 2008/2009

Date: 13 May 2009

COMMITTEE FOR FINANCE AND PERSONNEL

OFFICIAL REPORT
(Hansard)

Northern Ireland Civil Service Equal Pay Claim

13 May 2009

Members present for all or part of the proceedings:

Mr Mitchel McLaughlin (Chairperson) 
Mr Simon Hamilton (Deputy Chairperson) 
Dr Stephen Farry 
Ms Jennifer McCann 
Mr David McNarry 
Mr Declan O’Loan 
Mr Ian Paisley Jnr 
Ms Dawn Purvis 
Mr Peter Weir

Witnesses:

Mr Derek Baker ) 
Mr Michael Daly ) Department of Finance and Personnel 
Mr Leo O’Reilly )

The Chairperson (Mr McLaughlin):

Good morning and welcome, gentlemen. You have all been here before, so we know each other well enough. Leo, when you are comfortable and settled, perhaps you will make some introductory remarks.

Mr Leo O’Reilly (Department of Finance and Personnel):

The Committee has received the Department’s briefing note on our present position on the issue of the Civil Service equal pay claim, along with a copy of a note that was issued recently to all staff, updating them on the position. As the Committee has heard evidence on the matter on several occasions, members will know something of the background.

The number of staff who may be affected and the potential public expenditure implications mean that we are dealing with a major issue. Significantly, it affects not only Northern Ireland but the public sector across in GB. It is, therefore, also a live issue for public authorities there. Cases concerning the operation and application of equal pay legislation are ongoing in tribunals and courts in GB. That is a material consideration for the Department when we are assessing how to manage our position.

Before asking my colleagues whether they wish to add anything, I want to make one general point to the Committee. When we talk about equal pay, the full title is equal pay for work of equal value, and the latter part of that phrase is significant. It presents a particular difficulty for the Civil Service, which is a large, diverse and complex employer, because it requires there to be a complicated piece of ongoing work to determine how to measure whether different types of work are of equal value.

That task is relatively straightforward when the work is simple. For example, administrative jobs can generally be compared easily and, therefore, we have no difficulties in that respect. Difficulties arise when trying to make comparisons between jobs that are, on the face of it, very different from each other. Off the top of my head, for example, it is difficult to compare the work of a vehicle test examiner, who tests and checks the safety and roadworthiness of vehicles, with the work of someone who is doing an administrative job in an office. That is where comparisons become technically difficult, and that has caused much of the difficulty and uncertainty in the discussions between the Department and the trade union.

Ms Purvis:

What year does the legislation that you are dealing with date from?

Mr O’Reilly:

It dates from 1976.

Ms Purvis:

It has been around for some time, has it not?

Mr O’Reilly:

It has been around for 33 years.

Ms Purvis:

I did not notice a great deal of difference between the briefing that you have provided to the Committee and the one that was provided to Civil Service staff. We could have got the information that you have provided to the Committee from Civil Service staff on 8 April 2009. Do you wish to add anything else to the staff briefing?

Mr O’Reilly:

I will ask Derek and David to answer that, because they have been involved in direct discussions with the trade unions over recent months. They can give additional context.

Mr Derek Baker (Department of Finance and Personnel):

One of the difficulties with making public comment about the issue of the equal pay claims is that we are involved in detailed discussions with trade unions. Inevitably, discussion about that issue could involve a mention of money. Any public comments about amounts of money could be prejudicial to those discussions. We are in difficult territory because of the ongoing discussions.

We are committed to trying to reach a resolved position with the trade unions. Ministers have reiterated that point. As recently as last week, the Minister of Finance and Personnel had a face-to-face meeting with local NIPSA representatives, officers and members of its executive committee, in which he reiterated his personal commitment to attempting to resolve the issue as quickly as possible through negotiation.

When one is in negotiations, feeding a lot of detail into the public domain makes the situation very difficult and could be counterproductive. I can only add to what Leo has said, by commenting on the complexities of the issue. There are potentially a large number of grades involved. There are uncertainties and ambiguities as to whether we agree with NIPSA regarding some of the grades that they claim are involved.

To date, the Northern Ireland Civil Service has not received any formal claims from the industrial tribunal. They were lodged back in February, I think, and we are still awaiting those. We need to get those claims and examine them in great detail, to establish what our response will be. That is one ambiguity: until we receive the claims, we cannot look into that.

We know from our discussions with the trade unions that they are making claims in respect of some grades with which we do not agree. I will not bore you with the detail of which grades those are, but there are very clear differences between us in that respect.

There are all kinds of issues about timescales, such as how for back to go or when the clock would stop or start ticking. There are also issues regarding what would be included in a framework for negotiated settlements. That is something that the trade unions will have a view on, with which we may disagree.

We also have to have regard for the kinds of settlements for equal-pay disputes that have been established in other jurisdictions, and use those as a guide as to what is achievable and what can be achieved. There are differences between our view of that and the view of the trade unions. There are a huge number of ambiguities around this issue. There is very little certainty, which is why it is difficult to be definitive in saying anything publicly to staff or to the Committee.

Ms Purvis:

How many grades are you dealing with?

Mr Baker:

Primarily, the grades for which NIPSA is submitting a claim are the administrative officer (AO) grade, administrative assistant (AA) grade, and executive officer II (EOII) grade. We have a difference in relation to the latter grade, because the comparator that NIPSA is claiming against is what we call professional and technical officers. There is a clear difference between us on that point. We have not accepted that comparison. There are ambiguities elsewhere, even in relation to AAs and AOs, and Leo has mentioned that. There is a difficulty in making comparisons between one type of work and another.

Ms Purvis:

The Department has proposed to NIPSA that there should be a review of technical grade 1 (TG1) and technical grade 2 (TG2). When did the need for that review arise?

Mr Baker:

We concluded recently that there was an absolute imperative to do that. We have been looking at the issue as we have been talking to NIPSA, and we have been taking advice from various sources on all the issues, not least legal advice, because our understanding is that NIPSA had lodged claims with an industrial tribunal. Therefore, a legal process has been initiated. Notwithstanding the fact that we are in discussions with NIPSA, the fact that it has initiated a legal process means that we must prepare for that accordingly, so we will do that. It is right and proper that we continue to take legal advice.

In taking advice on all the issues in the past few months, it became apparent that the foundations on which some of the claims were made, as well as some of the previous staff-grading exercises, were shaky. Some of the reviews were quite old, were not comprehensive, nor did they cover all the people in certain grades or involve a detailed comparison of one grade with another. Rather, they were done in isolation. Given the potentially large amount of taxpayers’ money that is at stake, we concluded that we needed a firm foundation on which to move forward with the discussions if we were to resolve the issue. We felt that a thorough and comprehensive grading review of the technical grades was the only way to establish such a firm foundation.

That foundation will be an important component of our negotiations with the trade unions. We are very keen that the trade unions are as involved in that review as they wish to be. Normally, we carry out grading reviews in conjunction and consultation with the unions. However, we also feel that we need that foundation for any financial resolution of the matter. That may require an Executive decision, because they will ask hard questions about the issue. Alternatively, we may have to seek funding from the Treasury, which will also ask hard questions regarding our evidence base.

Ms Purvis:

Will the Department give the Committee an assurance that the negotiations on the other grades will progress, even though there is an ongoing review of TG1 and TG2?

Mr Baker:

Yes, we have discussed that matter. We do not want to park everything and sit waiting for that review to be completed. We want to engage quickly with the trade union side so that we can discuss in parallel some of the other detailed issues that I mentioned earlier and achieve a resolution or a meeting of minds. Failing that, we want to isolate the areas of difference so that we can use our time fruitfully.

Ms Purvis:

Is that a yes?

Mr Baker:

That is an absolute yes.

Ms Purvis:

Grading exercises are probably viewed by some as a delaying tactic, and you have set out clearly the complicated aspects of those. How often do you meet to try to resolve the issue as quickly as possible?

Mr Baker:

We had been meeting the trade union side nearly every fortnight since Christmas. Our proposal for a grading review was made at the most recent meeting. Since then, we have not had a meeting solely between Department officials and the trade union side.

Ms Purvis:

When did the most recent meeting take place?

Mr Michael Daly (Department of Finance and Personnel):

It was on 7 April 2009.

Mr Baker:

I am in continuous contact with my trade union side counterparts because both the Department and the trade unions recognise that it is important to keep the lines of communication open. We have not had a formal, set piece meeting under the Whitley machinery since then, but we are trying to arrange another meeting as soon as possible, with a view to taking forward the discussions that you mentioned. However, as I said, the Minister of Finance and Personnel had a meeting with NIPSA last Thursday to discuss the issue.

Ms Purvis:

Do you see the equal pay issue being resolved within the current Assembly’s lifetime?

Mr Baker:

It is difficult to outline a firm timescale, because many issues are outwith our direct control. As I said, a legal process has been initiated, which, to some extent, could have a life of its own. We do not have direct control over that. There is a whole constituency of staff out there, and NIPSA has always, rightly, made it plain that even if it reaches a resolved position with management, its members would still have to agree that. Neither NIPSA nor the Department is in a position to speculate on how members will react to any proposed agreement. However, we hope to resolve the matter as quickly as possible. I will not set a firm target. However, given that the current mandate of the Assembly lasts until 2011, I hope that the issue will be resolved before then.

The Chairperson:

Leo, you mentioned that there are wider considerations. Is this the only region that is dealing with the issue? Does the issue of equal pay for equal work affect our Assembly and Civil Service only?

Mr O’Reilly:

No, it affects central Government and, particularly, regional government in Great Britain. There have been many cases, which Michael will discuss.

Mr Daly:

Leo referred to cases in local government. Such cases are particularly common in the north-east of England, and members may be aware that many of those cases are being taken forward by “no win, no fee” lawyers. That has prolonged those discussions. A recent case in central Government involved a tribunal comparing staff from the Driving Standards Agency with staff from the Driver and Vehicle Agency. Such cases are widespread, particularly in local government but also now in central Government. Moreover, there have been a lot of cases in Health Service in Britain.

Mr Baker:

I have seen reports that estimated that the equal pay liability in local government in Great Britain is £5 billion. Therefore, it is a significant issue in Great Britain that exists to a lesser extent in Whitehall. Equal pay cases are always under way in Whitehall, and Michael referred to a significant one. The fact that individual Departments have pay delegation in Whitehall is a major issue. Therefore, the comparison of staff at different grades in different Departments has not been as big an issue there.

Mr O’Loan:

The delay in reaching a resolution on this matter seems wholly unreasonable. There is a fundamental duty on the employer side to ensure that the matter is resolved, because those workers have, for many years, not been paid the rate to which they are legally entitled. Given that circumstance, it is imperative that the employer redresses the situation urgently. The Civil Service, which is the employer, is not demonstrating such urgency.

Almost a year ago to the day, the previous Minister of Finance and Personnel, Peter Robinson, announced his willingness to settle on the matter. However, a year later, there has been remarkably little progress. I understand that the Department was to make an offer to the unions by Easter; that did not happen. That is my interpretation of the background. In light of that, I want to know whether senior managers are fully committed to reaching a reasonably negotiated result. Do you have ministerial authority to table a meaningful offer to the union?

Mr O’Reilly:

You used the phrase “legally entitled”. Ultimately, that is not a matter of absolute certainty. People’s legal entitlements are for tribunals and the courts to determine, if that becomes necessary. As I explained, the picture is quite complex. The equal pay for work of equal value legislation requires, by definition, the establishment of a clear, unambiguous comparison between different types of work.

The difficulty for the Civil Service, as Michael alluded to, is that it has a very wide and diverse workforce doing a vast range of tasks; everything from bridge inspectors, lawyers, administrators, and, in my Department, there is a post called drilling rig supervisor. There is a very wide and complex workforce.

It is not a simple thing to say that there is a legal entitlement. A legal entitlement depends on establishing a clear, unambiguous link between different types of work that are of equal value. That is done, as Derek said, through a process involving job weighting, job reviews and grading reviews, which seeks to establish instances of where work is of equal value. However, it is not straightforward; it is not, by any stretch of the imagination, a simple thing. Legal entitlements are, ultimately, for tribunals and the courts to determine.

A legal process has been initiated. That is something that we have to manage and it is not, as Derek said, within our control to say how, when, or in what way a tribunal will manage those cases. We understand that claims were submitted to a tribunal in February, but, as yet, those legal claims have not been sent to us for consideration. However, we have been in close consultation with our legal teams on potential options and outcomes.

The clear and unambiguous commitment of Ministers, which almost does not need stating, is that the Civil Service must abide by its legal obligations to its employees. That, I hope, is self-evident. However, as we have stressed, it is not a simple issue to resolve. Given that the implications for public services are potentially enormous, it is essential that we get it right now and for the future. As Ms Purvis said, the legislation has been around for quite a long time. We do not want to resolve the problem and then, one or two years down the track, discover that we have a further problem. As well as resolving this particular issue, we have to look for a strategy that takes the problem out of the system forever.

Mr O’Loan:

Accepting your explanation of the need to establish the proper context in which to discuss the issue, can you give a simple “yes” to the two parts of my question? Are senior managers fully committed to a reasonably negotiated result? Do those managers have ministerial authority to table a meaningful offer to the union?

Mr O’Reilly:

Certainly, in my time in the job, the senior management commitment has been a major preoccupation for me. Derek and Michael are in frequent contact with the union; formally, through the Whitley machinery, and through regular meetings with members of NIPSA. Every week, at a fixed time, I meet colleagues for a fairly lengthy discussion on what progress we have made on this issue since the previous week. There is a very clear and strong commitment on out part to seek to resolve the problem. We brief the Minister of Finance and Personnel on the latest events, often on a weekly basis, and it is an issue on which he is very focused.

Mr O’Loan:

I would have preferred “yes” and “yes”. I would have then known where we are.

Mr O’Reilly:

I could have said “yes” and “yes”. However, I wanted to illustrate what we are doing rather than simply saying that we are doing it.

Mr O’Loan:

I accept that there are matters that need to be negotiated in relation to grading and comparability between different grades. Essentially, however, have you conceded that the workers have a legitimate entitlement on their side, although there will have to be discussion on what, exactly, are the full consequences and nature of that legitimate entitlement?

Mr O’Reilly:

They have a legitimate entitlement to equal pay for work of equal value.

Mr O’Loan:

The fact that you have managed to state that is helpful. Given that, and given the long, drawn-out nature of the issue and the great and legitimate frustration felt by staff, including retired staff, would it not be possible to make an interim payment?

Mr Baker:

If we are to reach a negotiated settlement, it would be preferable to reach a settlement that takes all of the factors into account, and there are two elements involved. There is the retrospective element and there are the future implications for pay scales. All of those issues must be agreed in discussion with the trade union if we are to reach a negotiated settlement. Making some kind of upfront payment before we have resolved those issues could be prejudicial to the overall outcome. Furthermore, as Mr O’Reilly indicated, although Ministers and management are fully committed to meeting their legal obligations, legal entitlement has not been established here.

Mr O’Loan:

Mr Baker, a paragraph in your supplementary paper alarms me. It states:

“The Minister also has overall responsibility for public expenditure issues “

It also states that resolution has:

“the potential to impact significantly on the provision of public services. It is for this reason that care needs to be taken to resolve the current equal pay claims and meet legal obligations in a manner that minimises the impact on public services that will result.”

I take it as read that this matter has major implications for the public purse, and we all understand that. However, to present the case in such a way is exactly a Lord Denning “appalling vista” statement. It is as wrong in this case as it was wrong then. That paragraph seems to say that the consequences of this could be so awful that we cannot countenance them, and we have to factor that into how we behave now. They must be treated as quite separate issues.

There must be a settlement of the equal pay claim in the terms in which it has already been discussed. It must be negotiated around providing equal pay for equivalent duties and the fact that the staff are entitled to whatever they are entitled to. The consequences are a separate matter altogether. That is what I mean by adopting the “appalling vista” approach: that is quite wrong. The consequences have to be faced. However, it is fundamentally unjust and improper to say that because something so appalling will happen as a result, that must have a bearing on how we conduct negotiations.

Mr O’Reilly:

Mr Baker can come back on his words. I agree entirely that if people have an entitlement to remuneration on a certain basis, obviously, they have to receive that entitlement. I agree that the implications of that for public services, no matter what they may be, have to be considered, but considered as a separate issue.

The core point that we were making is that, given the potential scale of this — and it is only a potential scale — it is essential that we get it right. We should not rush into doing something quickly, discover that it has enormous implications and, perhaps, later discover that we “got it wrong” in some way and made a misjudgement.

We are not saying that people will not get their entitlements due to “the implications for public services”. As you rightly say, those must be considered, but in parallel. It underlines for us the importance of getting this right both for now and the future. The issue will not affect the Civil Service forever, but it is essential that we get it right so that it will not affect the Civil Service for a substantial period of time.

Mr Baker:

We have looked very carefully at negotiated settlements of equal pay in the local government sector in Great Britain. There has been intensive engagement between the management side and trade unions in an attempt to reach agreement. Those discussions have taken into account affordability and impact, and that has been part and parcel of the negotiated settlements. That is important because the reality is that there could be consequences.

Mr O’Loan:

I am much happier with the answer that Leo gave to my question than with the one that Derek has just given. Derek’s answer seems to merely repeat the essence of the paragraph that I take exception to. I will rest my point there, but I regard the issue as one of great importance.

Will you confirm that HM Treasury has not committed any extra money to the Northern Ireland block in order to pay for this matter?

Mr Daly:

In early March, I updated the Committee regarding the £100 million that has been mentioned. Last November’s negotiations with the Prime Minister provided access to an additional £100 million that can be used to deal with a range of pressures. The equal pay claim is one of those pressures, but the £100 million will not be used exclusively for the equal pay claim. As I said in March, ultimately, it is up to the Executive to decide how and when to make use of those funds.

Mr O’Loan:

I note the reference, once again, to the fact that there will be “access to” £100 million. That provides confirmation that no extra money is being put into the Northern Ireland block.

The Chairperson:

I presume that, as part of the overall negotiation, cognisance has been taken of the fact that the pressure on front line services will increase if lawyers become involved, because they will have to be paid. The more protracted the situation becomes and the more litigation that emerges, the more expensive the settlement will be for everyone. Is that part of the negotiators’ consideration?

Mr O’Reilly:

Yes. Derek may make a supplementary point, but these issues by their nature are more complicated if there is a legal process running in parallel. Everyone’s ideal outcome is for a negotiated settlement with the trade union. The tribunal route creates uncertainty for both of the parties involved and the process can be lengthy. Management’s clear preference is for a negotiated settlement that works for both sides.

Mr Hamilton:

The briefing paper refers to a tribunal process being started for a large number of female civil servants at different levels. How many people are involved in that process? Why has a claim been lodged? Why was it lodged in February? Was that expected as a part of how these things work out? Understandably, everyone is trying to deal with the matter as quickly as possible. Does the lodging of a claim protract the situation in any way, or does an industrial tribunal have time limits within which everything must be dealt with? Is the lodging of claims a help or a hindrance to getting the broader issue sorted early?

Mr Baker:

In answer to the first part of the question, we have not seen the claims, but our understanding is that claims have been lodged on behalf of 4,500 female staff at the administrative assistant, administrative officer and executive officer II grades.

The Chairperson:

Does the figure refer to current staff or does it include retired staff?

Mr Baker:

It refers to people who are currently in employment.

Mr Daly:

Some retired staff may be included in the figure. However, as we said earlier, we have not seen the claims yet.

Mr Baker:

We do not know exactly who the people are. The claims will relate to comparisons with technical grade 1 (TG1), technical grade 2 (TG2) and professional and technical officer (PTO) staff. We need to examine the claims, look at who has made them and establish whether they are in employment or have recently retired.

The tribunal will set the pace. I do not know why we have not received details from the industrial tribunal but I assume that the delay is due to the administrative process and the sheer volume of claims that it has received and has had to register. The claim forms will probably go to individual Departments as employers, but the Department of Finance and Personnel will probably gather them up and deal with them centrally.

There will be a set period of about one month for the Department to respond. Thereafter, it will be for the tribunal to set the pace and the timescales for how the claims are dealt with, which is outwith our control. What happens will be largely down to the nature of the Department’s response and whether it requires additional information to consider the claims. However, we will not know if that is required until we see the claims.

It is difficult to know whether lodging the claims is a hindrance or a help, although it concentrates the mind. As the Chairperson said, when one goes into legal proceedings one starts to incur legal costs, which increase the imperative to reach a negotiated settlement if possible. I have no doubt that the industrial tribunal would much prefer the Department and the trade unions to reach a negotiated settlement rather than have the claims go through the tribunal process, because such a large number of cases will clog up its system. Therefore, it focuses attention, concentrates minds and adds to the importance of trying to reach a negotiated settlement.

However, it is difficult to know what form the tribunal process will take and what the timescales will be until we see the detail of the forms. After that, we will consider our response.

Mr O’Reilly:

I will highlight an additional point. Claims to the tribunal are taken by individual employees. Although a trade union can co-ordinate the claims, as has happened in this case, the claims are taken by individuals. Ultimately, the decision on an individual’s claim is for that individual to take. That is a further consideration that we have to factor into how we manage the process as it develops.

The Chairperson:

Would the tribunal select a test case and apply it in a general assessment of similar cases?

Mr Daly:

As I understand it, it is probable that the trade union will have lodged a small number of lead cases and will have associated them with a number of other cases.

The Chairperson:

That is what I would expect.

Mr Daly:

The process is complex because we are not sure about the contents of the claims. They may identify comparators, such as that people are doing work that is equivalent to others in another Department or in the same Department. Once we see the claims, we will know how that will work, but we suspect that there will be a small number of lead cases.

The Chairperson:

Are you in danger in reinventing the wheel in going down the road of reviewing the TG1 and TG2 grades? Has that been done elsewhere? I can see at least one more appalling vista opening up if you go into protracted processes and people dig in behind multiple negotiations at the one time, because you will not conduct a successful review unless it goes through the staff side. The process could go on and on.

Mr Daly:

We are trying to get the review done as quickly as possible, ideally by the end of the summer; and that should be possible with the co-operation of the staff and the union. Other reviews have been done in the past. Indeed, the basis of the claims is that claimants will be arguing that past reviews have shown their jobs to be rated as equivalent to other posts, which, in this case, are predominantly male. However, as Derek said, many of those reviews are old, out of date, or sporadic. We want to take a rigorous look, once and for all, at the technical grades to establish a foundation for dealing with the issue.

The Chairperson:

Have similar exercises been conducted elsewhere?

Mr Daly:

In the Civil Service here?

The Chairperson:

No. Have exercises been conducted elsewhere that would be of benefit in resolving the issue?

Mr Daly:

Reviews of these particular posts would be the only ones that would be of benefit in resolving this issue. Posts in a Whitehall Department, for example, could not be reviewed and the results applied to this Department. As Leo said, this will not be the end of the matter. We want to ensure that we can deal with these sorts of issues once and for all. The intention is to carry out more comprehensive grading reviews across the Civil Service to put the matter to bed once and for all. One must remember that the whole purpose of job evaluation is to protect against pay inequalities. That is the position that we want to be in.

The Chairperson:

It is also intended to get people money to which they are entitled.

Ms Purvis:

I am conscious of another equal pay claim that was taken to tribunal by UNISON. That took 11 years because the negotiations with the employer did not work out and it was left to the tribunal to resolve, but it was successful. If negotiations between staff and management side do not come to fruition in this case, will it be left to a tribunal?

Mr Daly:

If possible, both sides are committed to resolving the issue without the need to go down that lengthy tribunal process. As Derek said, if the matter is left to a tribunal, it will be out of our hands. I am aware of the case that you are talking about and that is not what we want. We want to resolve the issue as quickly as possible, and both sides will work to do that.

Mr O’Reilly:

It is not within our control, because, as I stressed earlier, if an individual employee has lodged a claim with an industrial tribunal, the tribunal will continue processing that claim until such times as the individual withdraws it. That is where the matter gets even more complicated, because we could be in potentially fruitful negotiations with the trade union on the generality of the issue, but, equally, cases could still be running, and a tribunal would consider them and deal with them as individual cases. That is something down the track for us that we will have to seek to manage as best we can.

Mr Weir:

Mention has been made of what has happened in other parts of the United Kingdom. You mentioned central Government and local government, and I am aware that there has been a range of local government disputes in which there have been some settlements. A potential problem is that members could sue the union as they did when agreement was reached between the trade union and a council in England. Trade union members were unhappy with the compromise deal that was reached. Understandably, that creates a level of wariness among some of the unions who could potentially be sued by their members.

You mentioned that lawyers in some parts of England are involved on a no-win-no-fee basis. As a former member of the legal profession, I am appalled at the thought of lawyers working for no money on a no-win-no-fee basis.

However, leaving aside council and individual settlements at local government level, I want to pick up on the Chairperson’s point. Has the issue of equal pay come to complete fruition anywhere else? Has any Department settled at central or regional government level? Are all areas in the rest of the UK, to a greater or lesser extent, in a similar position to us, in that the situation remains unresolved?

Mr Baker:

I will try to answer that. The first question was about the potential of unions to find themselves in difficulty when, having reached a negotiated settlement, they are sued by their members subsequently. In a significant case, known as the Allen case, the trade union reached a settlement with the local council but was sued subsequently because that settlement was deemed unfavourable to some staff.

The key point in that case was that the union, in presenting the settlement to its members, was found not to have presented them with full and comprehensive information but to have held some back. The finding was based on a point of process, and NIPSA is acutely aware of that case. It is, therefore, incumbent on NIPSA, as part of any attempt at a negotiated settlement, to ensure that it adheres to the principle of disclosing all information.

Mr Weir:

So that finding was based on a failure of process and a point of principle?

Mr Baker:

Yes. NIPSA has made it clear to the Department that it is conscious of its vulnerability to members.

To turn to the second part of your question, no similar major cases have occurred in central Government from which we can draw parallels. There have been individual cases, and, by and large, those have been fairly small. Some have been fought through tribunals, others continue to be fought through tribunals, and others simply have been settled.

The closest analogy may come from a case that happened quite some years ago. There was an issue between administrative and technical grades in one of the main Whitehall Departments. The financial settlement resulted in a dramatic pay rise in the form of a one-off uplift for the administrative staff. I do not know whether any back pay was awarded. The uplift was taken forward into future years, and that resolved the issue of vulnerability to equal pay claims.

There have been many negotiated settlements in local government, the vast majority of which, to the best of my knowledge, were negotiated at a level that was deemed to be significantly lower than the amount that an industrial tribunal might have awarded. However, those settlements were accepted by the trade unions simply because of the greater good and potential impact on services and affordability.

Mr Weir:

I presume that that applies to almost any negotiation in which a legal route could be taken. You said that settlements were negotiated at a level below what an industrial tribunal could award. You mentioned that the unions settled because of the potential impact on services. I presume that anyone who goes to court has a certain level of uncertainty about the outcome. Most negotiated court settlements at court level will, generally speaking, amount to less than what could have been awarded. By definition, court settlements could also end up being for a higher amount than could have been awarded by an industrial tribunal.

I appreciate that there are sensitivities about the negotiations and about the amount of money involved, but I would like to probe further on two issues. A high level of complexity is involved in establishing the overall costs involved, and you mentioned that there is some dispute on certain issues. I appreciate that negotiation will be involved and that the figure may, therefore, alter. From that perspective, is the Department reasonably confident that it has scoped the amount that it considers should be the total liability? Has it bottomed out that process, or is that work ongoing at a departmental level?

Mr O’Reilly:

I want to return to a point that Derek made about a negotiated settlement. We can hypothesise; however, as Mr Weir knows better than any of us here, legal advice is always heavily qualified because the outcome is always uncertain. To that extent, neither side can be certain where the tribunal might end up. In these cases, in particular, there is significant uncertainty.

The purpose of a negotiated settlement is that although on the one hand you might say that it is less than what a tribunal might — and I emphasise the word “might” — have offered, it is also to address other issues that a trade union might be concerned about that would not be addressed by a tribunal. There is a balancing act to be done.

Mr Weir:

A tribunal will also focus on what went wrong in the past and try to rectify that. Potentially, any negotiated settlement could look at procedures being put in place in the future.

Mr Baker:

We see that as a fundamental part of a negotiation with the trade union. We have to look to the future as well as deal with the past. We have to examine what we are doing generally with grading in the Civil Service. Would you like to elaborate on that, Derek?

Mr Baker:

No.

Mr Weir:

Do you feel that you have bottomed-out what you believe the likely liability to be from your own perspective?

Mr O’Reilly:

The likely liability, to state the obvious, depends on what the outcome will be. We could start at one extreme and say that it will cost us practically nothing because we will defend these cases.

Mr Weir:

Presumably, you could estimate what you believe you owe. For the sake of argument, say that you, on the basis of the assertions that have been made, are likely to have to pay out £50 million, but the trade unions want £100 million. From that point of view, has the calculation been made of what you believe to be the level of liability?

Mr O’Reilly:

Inevitably, one can model a wide range of potential outcomes and put numbers against them.

Mr Weir:

You mentioned the dispute around the TG1 and TG2 grades. You indicated that there is common ground with some of the trade union’s views, and that there are areas where there is clearly no agreement as to whether there is liability in the Civil Service.

I realise that you may not yet have reached the stage in your discussions with the trade union about the scale of the difference involved, but is it twice what you have assessed it to be or is it three times that amount? What is the gap between your position and that of the trade unions generally?

Mr Baker:

We have not yet reached that position. There are still too many uncertainties. We have spoken about some of them, but a very important case is winding its way through the tribunal system in Great Britain at the moment. That cases raises a question as to whether if, for example, female staff are the claimants, male staff at the same grade would receive back pay. The outcome of that case could have a dramatic impact on the quantum of any award either through a tribunal or a negotiated settlement. Those issues have to play through.

Going back to earlier comments about prejudicing negotiations, we would not like to say that we are out by a factor of 1%, 2%, 50% or whatever between us. We are just modelling different scenarios. There are a lot of issues to work through.

Mr Weir:

Without quantifying it vaguely, do you believe that there is likely to be a considerable gap between your assessment and that of the trade union?

Mr O’Reilly:

Inevitably, particularly in the early stages, the gap between the trade union and the employer will be wide. The purpose of the process is —

Mr Weir:

Maybe we are too early in the process to make that assessment. I am just trying to get a handle on that side of it.

Ms J McCann:

You have recommended a comprehensive grading review to the union for staff in TG1 and TG2 grades. We have heard in previous evidence sessions about the under-representation of certain groups of people in the lower and higher grades of the Civil Service. Women, in particular, are represented at the lower grades but not at the higher grades. Furthermore, staff in the lower grades are not eligible for the same type of bonuses as senior civil servants.

Given that a light has been shone there and that a lot of things need to be looked at in a more focused fashion, would it not make sense to have an overall review of the Civil Service grading system instead of having a comprehensive grading review for staff in those two grades? Are there any plans to review the grading system, incorporating pay and performance? We have heard in evidence sessions about the under-representation of particular groups of people such as women, who are represented very well at the lower grades but do not seem to progress any higher.

Mr Baker:

There is a general point, and it is not necessarily to do with equal pay, it is to do with diversity in the Civil Service. We have a strong commitment to diversity in the Civil Service. It comes within my bailiwick and we produce regular reports on it. In fact, we are just about to produce our latest statutory report on it, which we have to submit to the Equality Commission. We also produce our three-year review under equality legislation, which, hopefully, will be published soon. The review shows the representation at every grade in the Civil Service and within each occupational grouping of planners or engineers; for example, there may be over or under-representation of one group. Therefore, it is an issue that we take very seriously and we address it in all kinds of ways. We try to address such under-representation at the recruitment stage while obviously operating within the law, because there are constraints.

You specifically mentioned the representation of women at senior levels of the Civil Service. Females and Catholics were under-represented at senior levels, but we have just achieved fair representation of Catholics in the Senior Civil Service. We still have a way to go with female representation, but significant improvements have been made over the past five years. I do not have the exact percentages available, but I can provide them to the Committee. The Committee is having a session in the not-too-distant future with one of my colleagues on equality and diversity, and I am sure that all that information will be available then. The diversity agenda is important. We are taking it seriously, and there is a lot of stuff going on. That information will be provided to the Committee.

I agree entirely with the point about the need for a more widespread and comprehensive pay and grading review. We have an extraordinarily complex pay and grading structure in the Civil Service: a lot of it is a legacy of history. The Civil Service goes way beyond the general administrative grades. There are also all kinds of professional staff and technical groupings involved. It is a very complicated pay and grading system and contains vulnerabilities. There are weaknesses, and we need to address those weaknesses.

As part of the process, we have been talking to NIPSA, and we need to move very quickly to carry out the review of the technical grade staff, because that is the immediate problem. However, we need to move to a full-blown comprehensive pay and grading review in the Civil Service.

Michael’s team is examining what such a review might look like; we have likened it to the exercise that was carried out in health and social services under the Agenda for Change programme. We need to do that so that we can drive all the anomalies out of the system and set things right for the future so that we do not find ourselves in the same situation again. I agree entirely with you on that point.

Ms J McCann:

Should that review be carried out by an independent body?

Mr Baker:

We have not decided on the methodology for the review. There are people who can do that work. The review will have to be carried out with the appropriate expertise and safeguards built-in and in conjunction with the trade unions. I do not have any fixed view —

The Chairperson:

Is the review of the TG1 and TG2 grades an independent review? Have its terms of reference been agreed with NIPSA?

Mr Baker:

No, we have not agreed the terms of reference. We have passed draft terms of reference and a draft modus operandi to NIPSA. We have teams of people —

The Chairperson:

Are those draft terms of reference only now under consideration, or are they a matter of dispute between the two sides?

Mr Baker:

They are not a matter of dispute yet, because we have not received NIPSA’s response to them. However, our proposal for undertaking the review is to use what we used to call staff inspectors. We have teams of staff inspectors in the Civil Service who are trained in the methodology that will be used. We would like trade union input into that process, but we are considering how to obtain independent oversight of the process from people who are experts in the job evaluation system that we are planning to use. We are examining the possibility of getting some Whitehall Departments to provide oversight on this matter, to ensure that the review is carried out appropriately.

Mr O’Reilly:

In order to supplement the point that was made about the trade union perspective, I will read from the equal pay bulletin that NIPSA issued to its members yesterday:

“While we do not consider that a TG1/TG2 review exercise is necessary at this stage … the Executive Committee agreed to … ensure that the Management Side’s review of TG1/TG2 posts is undertaken in full and appropriate consultation with the Trade Union Side with scope to challenge the outcomes if necessary”.

Although that has not yet been conveyed to the Committee formally, I assume that NIPSA’s response will reflect the position as set out in that bulletin.

The Chairperson:

OK. I will not bother you any further on that point.

Mr McNarry:

I am sure that I am no different from the other 107 MLAs who have been visited by, or have received letters from, people about this matter. It is a live issue, and the basic complaint is that there is a lack of information. My constituents have told me about trying to get through to staff in the Department’s offices, and the number of times that they used the phrase “fobbed off” was noticeable. There may be a reason for that; it may be that departmental staff are not privy to the type of discussions that we are having. There is a lot of fobbing off going on here as well, and that is because you do not have the information.

From talking to people, I get the impression that they feel that they are in the dark. Is there anything that you could do to inform the workers of what is happening? That could be, for example, in the form of a bulletin or an information sheet posted somewhere. I am ineffective in the sense that I cannot deal with the questions that are being asked of me. Even after today’s session, I will find it difficult to answer such questions. You have given dates, you have said that this or that might happen, and you have talked about negotiations. I understand that the unions will give information to their members. I do not know whether you do that, but would you consider finding a way to get information through to the workers, just to let them know your position?

The Chairperson:

The Committee papers include a letter that was sent from Derek to Civil Service staff.

Mr McNarry:

I know that. Obviously, people are talking among themselves, and I think that it may be necessary for the Department to take a slightly different approach to how it passes on information. Whether it is done through a bulletin being stuck on a noticeboard or some other means, it seems to me that a different approach might be helpful.

Mr O’Reilly:

Derek may have further comments to make on this point. The key method by which we communicate with staff is through equal pay update notes to all staff. Similarly, members of the trade union will receive their pay bulletin from NIPSA. However, I accept entirely the point that you are making, which is that sometimes those updates are not that helpful in answering the questions that people would like answered. When your constituents contact you, they are seeking that clarity.

The difficulty is not so much that we do not have the information; it is that more often than not, we are uncertain as to where particular issues are at, because of the tribunals and the discussions with the trade union that are ongoing. Unfortunately, during a process of negotiation and discussion with the trade union, sometimes we have to be careful about what we say publicly, so as not to prejudice the negotiations in either direction. Sometimes, we will be having discussions with the trade union and it is not appropriate for the management side to say something publicly.

Mr McNarry:

My constituents may not want to say this, but I think that I can: staff are not totally reliant on their union. The people about whom we are talking are career civil servants. They have been brought up in the establishment and they feel a sense of neglect. Yes, they are part of a union, but they feel that there is a dual role. They expect the union to be fighting, but they also expect you, as employers, to be giving them more feedback. They do not want you to do anything that is going to pull the rug from under your feet, but they want you to respect their position.

From talking to civil servants, particularly those in lower grades, my view is that they feel let down by you. I am only flagging that up and saying that you should look at it. That is how they feel. I am not suggesting that you would mislead them in any way; I know you would not, but a bit of PR on this might help. Certainly, it would help the members also.

Mr Baker:

That is a fair comment. We have struggled on this. We desire to communicate better, and I am sure that we could, and should, communicate a lot better. As Leo said, there are two reasons why we feel more than a little constrained: one, we are in negotiations; and two, we are in a legal process. However, I think that the general point is a fair one. We need to look at how we communicate with, and at what we communicate to, our staff on this issue. I am happy to take that away.

Mr McNarry:

Derek, in your letter to staff, paragraph 4 is appalling. I do not know what the hell was in your mind.

Mr Baker:

Sorry for that.

Mr McNarry:

You have written it, and that is that. I have heard two explanations for it. However, I have to take the matter bit further than Peter did. Have you set aside money to deal with the settlement?

Mr O’Reilly:

To say that we have set aside money would imply that we have put aside £X million and said that we will not use that money for anything else until such a time as we know the outcome of this process.

Mr McNarry:

That is what a business would do, and I am asking you: why is there a difference?

Mr O’Reilly:

There is a fundamental difference in the way that public finances are managed. As you know, public finances are managed on a year-to-year basis. If, hypothetically, we had set aside a sum of money last year — whatever that sum may be — to be used for that purpose and then discovered, as we have now, that last year we were unable to spend that money for that purpose, the difficulty is that because of the way that public finances work, that money would not be available for anything else.

We constantly have to strike a balance between our anticipation of when the potential cost will hit and when we need to make a decision on the public finance costs. I understand that if either you or me were not sure as to the amount of a potential bill, we would put some money aside in the bank and keep it there to meet that cost. The problem is that if the Department were to set aside money in its bank, it would disappear on 31 March.

Mr McNarry:

I am worried that if you have not set aside the money, the bill will come as one hell of a shock. Where will you get the money from? You are more professional than to say that you have not thought about that, or that you have not factored it in. I acknowledge that “set aside” are my words for this. If you have not set aside money or made provision somewhere, where will you find the money when the bill arrives on the desk? Do you find it in the Health Department or in the Department of Education? Where do you get it from?

Mr Paisley Jnr:

He has just explained that he cannot do that.

Mr O’Reilly:

We certainly have thought a lot about the potential size of the bill. As we have explained, it is wide-ranging, and we have certainly thought a lot about when, or if, a particular bill arrives, how we will manage it. The difficulty for us is ensuring that we have access to the funding when we need it while also ensuring that we do not unnecessarily defer other expenditure on public services and, thereby, lose the opportunity to spend that money while we are waiting for the equal pay issue to be clarified. I am sorry to be so —

Mr McNarry:

I appreciate what you are saying, and I thank you for putting it in that way. I appreciate that that is the way that things are. My question was asked as a result of reading paragraph 4 of Mr Baker’s letter and in light of the potentially significant impact of such a bill. Part of our job involves anticipating such things, and that is why I would rather not have seen that paragraph. I would rather not have read it, to be honest.

On the one hand, it seems that you must be wrestling with the issue, and you have already said that the settlement and the impact of that settlement are separate matters. However, on the other hand, we, as elected representatives, do not really know what the impact might be. We do not have a clue; we can speculate, but it is very dangerous to speculate. My speculations have reached £200 million, and no one is challenging that figure.

Without impinging on your negotiations, some kind of figure needs to be realised, or we need to be told that a figure can been realised. I would not want you to tell me what that might be, as you would be disclosing your hand. Nevertheless, I would feel more comfortable if I knew that you had a hand to play. I can understand your position.

Mr O’Reilly:

I know that you have discussed the matter previously with Michael Daly and Richard Pengelly, and Michael has referred to that. The point at which we will definitely have a figure to disclose is either when we reach a negotiated settlement with the trade union that it is prepared to recommend to its membership, or when we get to a point in the tribunal proceedings when the tribunal makes a legal award. That is when we will know for certain what amount of money is involved. I do not want to give the impression that we have just set the matter aside and have not been thinking about it.

Mr McNarry:

No, you have not left that impression. Finally, returning to the £100 million that is accessible; is it true to say that if that is accessed, it will have to be paid back?

Mr Daly:

The £100 million was made up of two main components. One was bringing forward some major flexibility on capital, the rest was additional borrowing.

Mr McNarry:

Can we put to bed the speculation that all that money can be accessed to resolve the equal pay issue? Can we put to bed the speculation that the £100 million was provided exclusively because of the need to settle on equal pay?

Mr Daly:

The £100 million was provided to contribute to the resolution of a range of pressures, one of which happened to be equal pay, but it was not allocated solely for equal pay. A range of pressures were discussed with the Prime Minister, and that was the figure that came out.

Mr McNarry:

What are the other pressures?

Mr Daly:

I do not have the details of the other pressures with me today.

Mr McNarry:

Can you not remember? Can you not tell me what the other pressures are?

Mr O’Reilly:

The other major pressure was dealing with managing the water charging issue. There were two components to that: one was the non-cash element, that is, the £400 million non-cash a year; the second was the non-arrival of the anticipated water charging revenue, which has a direct impact on our revenue stream. That was the other main issue that the discussions focused on.

Mr McNarry:

I want to clear up another matter. Can you be positive in telling me that if you access the £100 million, you have cover to use that for the equal pay settlement? Will you assure us that even though you are borrowing that money, there are no conditions attached to it that might prohibit it from being used for equal pay?

Mr Daly:

If they so decide, the Executive could access the £100 million and use it for equal pay.

Mr McNarry:

Has the Treasury placed no conditions on the money?

Mr Daly:

None other than the normal condition; that is, if you borrow money, you have to pay it back.

Mr McNarry:

So, if you borrow it, you have to pay it back with interest?

Mr Daly:

Yes; it is the normal reinvestment and reform initiative borrowing arrangement.

The Chairperson:

Thank you. The session took longer than we initially thought, but the Committee is exercised by the matter, and we are interested in it. There will be all the predictable suspicions and cynicisms from staff about whether the review is absolutely necessary and whether it will facilitate a settlement. Is it possible to get an indicative timetable of the process that we are now involved in, which will flag up the milestones, such as the conclusions of the review and when we expect the issue to be brought to resolution?

Mr O’Reilly:

As Derek said earlier, it is difficult to give a precise timetable, given the range of uncertainties around the process.

The Chairperson:

Are we playing it out until the economy recovers and the crisis is over?

Mr O’Reilly:

No.

The Chairperson:

Some people think that that is exactly what you are doing.

Mr O’Reilly:

Based on what the Minister has said, we would all like to see the issue resolved sooner rather than later. The “wider economy” issue does not impact on the timetable at all. If we had the scope for an early negotiated settlement, we would want to implement it and get to a resolution as quickly as possible.

The Chairperson:

David asked whether you have some view on the likely financial impacts. I assume that you also have some sort of indicative timetable in your mind.

Mr Baker:

I can give you hard information about our proposals for the review, the timetable, how we hope to take it forward, and when we want to conclude it.

The Chairperson:

We would like to see that information.

Mr Baker:

We will certainly provide that.

Mr O’Reilly:

The other constraint is the tribunal, but we will set that aside, because it is not within our control. However, we will seek to re-engage in negotiations with the trade union immediately, because we need to get back to going through the details.

The Chairperson:

I presume that the update on the review will include the terms of reference?

Mr Baker:

We can provide all of that detail to the Committee.

The Chairperson:

Thank you for your assistance. We look forward to receiving the follow-up information. The Committee does not wish to complicate the issue further. It is an intractable issue that is intensely frustrating for the affected staff, and there is a clear onus on the Assembly to address the problem.

If the underlying implication of paragraph 4 is that the Treasury has told us to chase ourselves and that it will not accept responsibility, a degree of transparency on that might, ultimately, help us all. It might be a difficult pill to swallow but at least everyone, including the staff, will know the scope of our finite resources, rather than there being an expectation or hope that somehow the Treasury will come to the rescue and that everyone will receive their just desserts. That is not the case. We should tell people the facts and work with those facts. I will leave that issue with you. If suspicions reach the point where negotiations break down amid allegations of bad faith, no one will win except the lawyers. Thank you very much for your attendance

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