LLG and chief executive groups send Treasury pre-action letter over making of regulations for exit payment cap

LLG and organisations representing chief executives and senior managers in local government have issued a pre-action protocol letter to HM Treasury over what they say are “significant legal flaws” in the proposed regulations for the exit payment cap and the process by which they have been brought thus far.

The groups are being advised on the potential legal action by Nigel Giffin QC of 11KBW and law firm Greenburgh & Co.

The pre-action letter, which can be viewed here, says the immediate proposed challenge is to the making of the Restriction of Public Sector Exit Payments Regulations 2020 on 14 October.

The letter also gives notice of a potential challenge to the draft Local Government Pension Scheme (Restriction of Exit Payments) (Early Termination of Employment)(Discretionary Compensation and Exit Payments) (England and Wales) Regulations 2020, “were a statutory instrument in that form eventually to be made by the Secretary of State for Housing, Communities and Local Government”. The consultation on these regulations is currently ongoing.

The letter says LLG, ALACE and SOLACE were “astonished to learn” on 15 October that the Treasury Ministers had, the previous day, signed the Exit Regulations into law (the House of Lords resolution of approval having been passed on 23rd September and the House of Commons resolution having been passed on 30 September).

The effect of their having done so, rather than waiting for the outcome of the consultation, is that the Exit Regulations were made on 14 October 2020 and will come into force on 4 November 2020, it notes.

“That is of course several days before the Consultation even closes, let alone the time by which responses will have been considered, decisions taken in the light of them, and any consequent re-drafting of the Consultation Regulations undertaken prior to laying them before Parliament (since the Consultation Regulations already purport to amend the Exit Regulations in one respect, and will in fact need to do so in others, they will themselves need to be made using appropriate powers for that purpose, and to follow the affirmative resolution procedure), the letter says.

Describing the situation as both “hugely unsatisfactory, reflecting muddled thinking and inept drafting on the part of Government, and unlawful in a number of respects”, the letter calls for an urgent stay.

In his latest blog, LLG President Quentin Baker said: “Many of you will be aware of the growing concern about some Regulations introduced by HM Treasury which would have the effect of reducing the benefits paid to long serving local government officers in the event they're made redundant.

“Given the increased likelihood of redundancy in the sector the timing of this seems particularly pernicious. However, the concerns about the regs are wider than their unfairness and extend to their lawfulness both in the procedural and substantive sense.”

Baker added: “In light of Nigel's advice and given the potential impact for a sizeable number of our members, we have decided to write to HM Treasury to set out our concerns about the process, drafting and substantive legality of the regulations in the hope that HMT and MHCLG will pause to reflect on the problems which will arise from these regulations if they are implemented as currently proposed.”

The President said he also noted that a number of other bodies including the BMA, GMB and Unison had issued pre-action letters, adding that LLG was liaising with them “in the interests of mutually beneficial collaboration”.

Baker concluded: “Naturally, our preference is to resolve this matter without resorting to formal legal action and such a step would not be taken without full and careful consideration by the LLG Board.”