Council big wigs get £100k payoffs

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Bob NeillChris Young/PA

A newspaper investigation has revealed that local council pay-offs for departing big wigs regularly top £100,000 - and can be more than £420,000.

So which councils squandered the biggest sums, and why is this happening?

Massive pay-offs

The Telegraph compiled figures from across various councils. It found that Birmingham was one of the most generous to departing chiefs, paying between £100,000 and £150,000 to 27 staff. Newcastle city council gave 12 big-wigs this size of pay-off, and Gateshead nine. The biggest individual pay-offs were made by Kent County Council.

However, the payments are spread across the country. A freedom of information request from the Norwich Evening News revealed that Norfolk and Suffolk councils paid £13 million to council and police workers made redundant in just one year.

Why?

A spokesman for the Local Government Association told the Telegraph: "To help manage government funding cuts, councils have reduced significantly the number of senior staff and middle managers.... This has led to a small spike in one-off redundancy payments, which is mostly responsible for the increase in the number of officers receiving more than £100,000."

This is an inherent problem when you are making cuts by making people redundant: many people's contracts mean they are entitled to large pay-outs, so a redundancy will actually cost money in the first year, and will only break even in the second or third year.

This isn't something that is confined to the public sector. The Chartered Institute of Personnel and Development has calculated that since the start of the recession, the private sector has been hit with a redundancy bill of £28.6 billion.

Public sector

However, many public sector contracts are particularly generous, negotiated by unions and federations, and in some cases enshrined by law. At the moment, we are feeling the effects particularly keenly, as the cuts imposed on councils are leading many to axe jobs in an effort to cut their costs. When they are dismissing hundreds of staff, the redundancy bill is going to be shocking.

And we're discovering all this for the first time this year, as councils now have to disclose their entry and exit payments. In September when they were first revealed, Bob Neill, the local government minister (pictured), said: "Our new transparency rules are forcing these pay-offs into the open, meaning councils must face public scrutiny and account for what in many instances appears to be a very casual attitude to spending public money."

Galling

The TaxPayer's Alliance says that within the public sector the pay-offs feel particularly galling, because officials can leave one publicly-funded post with a massive payout, and walk into another shortly afterwards. Andrew Allison highlights the example of Mark Hammond, who was made redundant from West Sussex County Council with a payout of £256,000 and then eight months later he took a £130,000 job at the Equality and Human Rights Commission.

The bodies concerned argue that they are employing the right person for the job. The rest of us wonder whether our money is being spent fairly.

But what do you think? Are redundancies a necessary step, and therefore the money is justified, or is this an outrage? Let us know in the comments.

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