Government plans to curb civil service compensation

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The Government was heading for a clash with civil servants today as ministers prepared to unveil controversial plans to cut compensation payments to staff leaving their jobs.

The Public and Commercial Services union warned that it would use "all means" at its disposal to fight moves by the coalition administration to target payments to public sector employees who were laid off.

The union won a High Court case against the previous Labour government which had attempted to reduce compensation pay, but ministers are believed to have drawn up plans to introduce new legislation which would overcome the legal ruling.

The Cabinet Office confirmed that ministers intended to go ahead with reform of the Civil Service Compensation Scheme (CSCS) to bring it more in line with the private sector.

The move follows the disclosure at the weekend that Chancellor George Osborne ordered Government departments to draw up plans for budget cuts of up to 40% as they prepare for the spending review in October.

Although Treasury sources insisted it was only the start of the review process and that no department would face cuts on that scale, the Government is expecting 600,000 public sector jobs to go over the next five years.

Details of the move against Civil Service payouts will be announced later today by Cabinet Office Minister Francis Maude.

Union leaders have been called to a meeting at which they expect to be given details of any new legislation, as well as the possibility of introducing regional rates of pay in the Civil Service.

PCS general secretary Mark Serwotka told the Press Association: "It would be absolutely outrageous if the Government were to seek to change the law to get around the clear decision of the High Court, which has ruled twice in our favour.

"The court has ruled that detrimental changes to our members' terms and conditions cannot be made without their agreement. This is clearly at attempt to make massive job cuts, which makes no economic sense at a time of recession.

"We will use all means at our disposal to protect our members jobs and the public services they provide."

A commitment to reform the CSCS was part of the coalition agreement between the Conservatives and the Liberal Democrats.

A Cabinet Office spokesman said: "As outlined in the coalition agreement, we are looking at ways to reform the CSCS to bring it more into line with good practice in the private sector.

"As in any process like this, our intention would always be to seek to reach a negotiated agreement, which would include protection for lower paid civil servants. We will make an announcement to Parliament in due course."