A government pledge, made in 2015, to ban publicly funded redundancy payments of more than £95,000 has not been implemented, with more than 1,000 employees leaving their jobs with packages worth up to almost £500,000.
According to the results of a freedom of information request made by The Times, the Department of Health and Social Care was the worst offender with 563 six-figure exit packages, followed by the departments of culture, media and sport (246); business, energy and industrial strategy (87); transport (35); and, work and pensions (20).
Executive pay
Executive pay ratio reporting an ‘opportunity’ to win employees’ trust
Executive pay ratio reporting: Six issues for employers to consider now
Remuneration committees are key to restraining executive pay
How rethinking executive pay can act as a catalyst for change
The Department for Education saw 19 six-figure departures with the highest proportion of payoffs above £200,000 of any sector.
Seventeen of these were at the Construction Industry Training Board, a DfE arm’s-length body, which paid four staff more than £400,000. When asked by The Times who these people were, the CITB said they were not “senior staff” and that “It would be unfair to the individuals as it may cause them distress for these details to be made public”.
In 2016 when the CITB paid the largest exit packages, it was also in receipt of £51m of public money to fund apprenticeships, The Times noted.
Another £198m of income came from a levy that the quango charged construction firms. The redundancies stemmed from the government requiring it to streamline its work. A spokesperson told The Times that pension contributions has to be included in the payouts because of contractual obligations. Without these, none of the payments would have been more than £80,000, it claimed.
At the Ministry of Defence, where there were nine exit pages over the cap since 2016, one person was paid £289,723 tax-free. Their name was not revealed to The Times in order to protect personal information, the MoD said.
Eight employees at HS2 Ltd, the publicly funded company building the new rail line, were given exit packages of above £200,000. The redundancies were made as the scheme restructured in 2016-17. In 2017, the National Audit Office found that HS2 got around the government cap by paying off the staff within the cap but then putting them on gardening leave for months, paying them thousands of pounds for doing no work.
The Times also revealed that one council chief, Steven Mason, a former Northumberland Council chief executive, was given a £370,000 payoff but then four months later took a job at South Tees Hospitals NHS Foundation Trust on £180,000 a year. This was despite ministers pledging to take back exit payments if the recipient returned to the public sector.
When the ban on the high payments was announced in January 2015, then treasury minister Priti Patel, described it as long overdue, adding: “It’s not right that hard-working taxpayers, many on low salaries, have to fund huge payouts.” After the Conservative election win in May 2015 chancellor George Osborne confirmed the commitment, which was also laid out in the 2015 Conservative Party manifesto, which stated: “We will end taxpayer-funded six-figure payoffs for the best-paid public sector workers.”
A public consultation was launched on the cap last April, despite the policy appearing to be active since 2015. The consultation has now closed, with the web page stating “We are analysing your feedback”.
For the High Pay Centre, the payouts sent the wrong signal to public sector workers. A spokesperson told Personnel Today: “UK real wages have only just recovered to pre-financial crisis levels including a decade long public sector pay freeze. Against this backdrop huge redundancy payouts to senior civil servants does not send a good message, particularly to public sector workers still struggling on low pay.”
In response to The Times story the government said it was committed to enforcing the cap and would shortly publish its response to the consultation.
