Treasury reaffirms commitment to 'golden goodbyes' crackdown after £182m paid out in a year

Redundancy bill includes payments of £100,000 to 389 departing civil servants and ALB staff
Photo: Jeff Djevdet/Flickr/CC BY 2.0

The Treasury has reiterated its commitment to reforming “golden goodbyes” after it was reported that nearly 400 former civil servants received exit packages worth more than £100,000.

A Treasury spokesperson said the department is “consulting on proposals to make sure there is a rigorous process in place” around severance pay – referring to a consultation process that closed in October and is the latest step in a long-running saga in its attempts to crack down on hefty exit payments.

The consultation closed two years after legislation was passed to limit exit payments for civil servants and other public sector workers at £95,000. Just three months later, the Treasury announced a U-turn on the regulations, which had been due to face a High Court challenge.

Analysis by the TaxPayers' Alliance pressure group, which is lobbying for the £95,000 cap to be reintroduced, found that 389 payments of more than £100,000 were made in 2021-22.

Of those payments, 66 were worth more than £150,000, and one was worth more than £250,000.

The total cost of redundancy payments that year was £182.2m. The number has dropped considerably since a decade ago, when it stood at around £250m a year.

More than a quarter of the total was paid to outgoing officials – including employees of arm's-length bodies, such as BBC executives – at the Department for Digital, Culture, Media and Sport. The 201 payments made by DCMS added up to £54.5m.

The Department for Transport and its arm's-length bodies paid out £50m. Fifty-three departing officials received sums of more than £100,000 and nine received more than £150,000.

The Department of Health and Social Care paid out £42.8m, followed by the Ministry of Justice on £17.3m.

At the Department for Work and Pensions – which has laid off hundreds of staff in the last few years under its office-closure programme – the redundancy bill came to £4.7m, while the Ministry of Defence’s was £4.3m and the then-Department for Business, Energy and Industrial Strategy’s was £3.2m. In each department, only one civil servant took home a payoff worth more than £100,000.

The Treasury’s proposed reforms to exit payments would mean officials who receive large payoffs when they leave the public sector could be made to pay them back if they return to public service soon afterwards.

Other changes outlined in last year’s consultation include requiring a secretary of state’s sign-off on payments of more than £95,000.

The Treasury dropped plans to cut redundancy payments for rank-and-file civil servants last year. The proposed changes to the Civil Service Compensation Scheme would have capped payments for voluntary redundancy at three weeks’ pay per year, up to an 18-month cap – down from a month's salary a year, up to 21 months; and for compulsory redundancy  at nine months’ salary – down from 12 months.

However, ministers have agreed to a moratorium on any changes to the CSCS as part of a recent agreement on pay and conditions to bring an end to ongoing strikes.

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