£95k pay-off cap to become reality as Treasury takes action
Union chief accuses Treasury chief secretary of "dog whistle" tactics over pay-off ceiling as Treasury launches consultation
The Treasury has confirmed its long-stalled move to impose a £95,000 cap on exit payments for public sector workers.
Liz Truss, chief secretary to the Treasury, announced today that the government is pressing ahead with the move to fix a ceiling on the sums that public servants can receive when they leave government employment.
The rules, which are out to consultation until 3 July, cover civil servants as well as council, emergency services, NHS and schools staff. Security services and armed forces personnel are not subject to the cap, which covers redundancy payments, according to the Treasury's consultation paper.
Accrued pension rights, including lump sums, will be exempt because they do not "normally" involve any cost to the employer.
However, additional employers’ pension exit costs, which the paper says can represent a "significant amount", are subject to the cap.
The government passed legislation to fix the £95,000 cap in May 2015, but has never subsequently implemented it.
Today's announcement confirms media reports last month that the Treasury had written to other departments to propose formally introducing the limit.
The consultation document claims that more than 1,600 highly-paid staff received payments of more than £100,000 in 2016-17 when they left public sector roles, costing a total of £198m. Total exit payments across the public sector that year were £1.2bn.
Truss said: “It is clearly wrong when people leave public sector roles with massive payoffs. It incenses the public when they see their hard-earned money used badly like this.
“That’s why we are capping exit payments to stop unacceptably large pay-outs for senior managers.”
Dave Penman, general secretary of the FDA union, accused Truss of using "dog whistle" tactics to demonise senior public servants.
He said: "Not satisfied with previous cuts to the pay, pensions and redundancy arrangements of public servants, the government is now imposing a further attack on redundancy terms. It is completely disingenuous of Liz Truss, the chief secretary of the Treasury, to dress this up as a way to 'stop large pay-outs for senior managers'.
"As she knows all too well, when the Conservatives first mooted this arbitrary cap in 2015, it included protection for those earning less than £27,000 a year. Not only has this protection been abandoned, but it demonstrates that their blunt approach to capping redundancy payments will hurt teachers, police officers, fire fighters, doctors, paramedics and other individuals serving the public.
"It is disappointing that a government minister - who day in, day out witnesses the incredible job that public servants do for her government - would use the dog-whistle tactics of demonising senior managers to hide the true impact of her policy."
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