Home Office’s settlement with ex-perm sec topped £370k

Payout to end Philip Rutnam’s constructive dismissal case cost at least £30k in legal fees alone, annual report confirms
Sir Philip Rutnam and home secretary Priti Patel Credit: PA

By Jim Dunton

09 Jul 2021

Priti Patel’s high-profile fallout with Home Office permanent secretary Sir Philip Rutnam cost the government more than £370,000 to settle ahead of an employment tribunal, the department’s annual report has confirmed.

Rutnam made an unprecedented public resignation statement at the end of February last year in which he accused home secretary Patel of being involved in a “vicious and orchestrated” briefing campaign against him and stated his intention to lodge a constructive-dismissal claim.

The perm sec also said he had “received allegations” that Patel had shouted and sworn at staff in the department, belittled people and made unreasonable demands. A formal investigation subsequently found that Patel had harassed Home Office staff, but prime minister Boris Johnson ruled that her behaviour did not amount to a breach of the ministerial code.

This March, Rutnam and the Home Office reached a compensation settlement that halted his employment tribunal. Sources at the time suggested it was worth £340,000.

The Home Office’s just-published annual report confirms the figure, but adds that the department also made a contribution of £30,000 plus VAT to Rutnam’s legal expenses. VAT on legal services is 20%, making the actual cost £376,000.

The department did not detail its own legal expenses for the case, which would be likely to mirror Rutnam’s.

The full report entry states: “Sir Philip Rutnam resigned from his post as permanent secretary of the Home Office on 29 February 2020 and subsequently began legal proceedings against the department.

“On 4 March 2021, the Home Office and Sir Philip signed an agreement to settle these proceedings.

“As part of this settlement, the Home Office made a special payment of £340,000. A contribution to his legal costs was also made of £30,000 plus VAT.”

In April this year members of parliament’s Public Accounts Committee wrote to Patel asking her why the government had chosen to settle with Rutnam for the then-unconfirmed sum of £340,000 when the maximum award an employment tribunal could have made was capped “well below” that figure.

In 2020-21 the maximum settlement Rutnam would have been entitled to would have been £104,659.

Responding on Patel’s behalf, current Home Office perm sec Matthew Rycroft told the committee it was “usual in employment tribunal cases to consider alternative methods of resolving claims”.

“Such considerations are taken in the normal course of events and are based on legal advice and consideration of value for money,” he said.

“Having engaged with Sir Philip and his representatives, it was jointly concluded that it was in both parties’ best interests to reach a settlement at this stage.”

According to the Home Office’s 2019-20 annual report, Rutnam’s final salary band at the department was £180,000-£185,000 a year, with additional pension benefits of £79,000. It gave a total remuneration package of £255,000-£260,000.

The latest report says successor Rycroft’s salary band for 2020-21 was £185,000-£190,000 with pension benefits of £72,000.

The FDA union, which represents senior public-sector leaders, is challenging the PM's decision that Patel did not breach the ministerial code at the High Court.

General secretary Dave Penman said the code is “the only means by which civil servants can raise complaints against the conduct of ministers” and that it is “vital” to ensure that decisions on its application are subject to the rule of law.  

Johnson’s independent adviser on standards, Sir Alex Allan, resigned on the day the PM announced his decision on Patel’s conduct.

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