Councils defend £100m for pay-offs

Figures obtained under freedom of information laws show that local authorities have spent more than 20 million a year on severance, redundancy and early retirement payments.

Last night councils said that the payments demonstrated that authorities were "spending to save", but they faced criticism from the private sector over whether they represented value for money.

The Scotsman obtained figures from 27 of Scotland's 32 local authorities which showed that a total of 95.7 million has been spent on packages to allow staff to leave councils' employment between 2001-2 and 2004-5.

Since some authorities were unable to provide information going back four years and others refused to supply details, the total across Scotland is likely to be about 100 million.

According to the figures, the sums involved vary from 5.8 million spent on early retirement in 2003-4 by Glasgow, Scotland's largest authority, to just 83,000 spent by Dundee city council that year on redundancies.

While councils defended their different approaches, the large variation across the country will be a cause of concern to Audit Scotland, the public spending watchdog which last night warned councils to "rigorously appraise" the payments.

A spokesman for the business group CBI Scotland said: "In areas like absence management, the public sector has a worse record than the private sector. It is logical to assume that redundancy and severance payments could be better managed on behalf of council taxpayers.

"Perhaps it is time for councils and the Scottish Executive to look at this again to make sure that they are providing value for public money."

Ron Hewitt, the chief executive of Edinburgh Chamber of Commerce, said: "The question we have to ask is, 'Are these payments necessary under the law, or are they ex-gratia compensation agreements?'

"If the latter, then why on earth are councils and Scottish Executive agencies paying out in this way and throwing good taxpayers' money after bad?"

A spokesman for Audit Scotland said: "Local authorities should have clear policies on early retirement, approved by elected members, and regularly reviewed to reflect changes in regulations.

"Councils should rigorously appraise individual cases to ensure the expected savings associated with a retiral outweigh the costs. Elected members should be involved in approving early retirement decisions for senior staff."

But a spokesman for the Convention of Scottish Local Authorities said: "This is not about golden farewells. These are structured packages and councils are spending to save. These expenses are part of restructuring for efficiency in councils and making savings further down the road.

"In these situations, councils are damned if they do and damned if they don't. People moan abut the bloated public sector but still complain when something is being done about managing its reduction.

"We are talking about several thousand employees over a four-year period out of more than 270,000 employees in local government. Compared with individuals in the private sector who are getting pay-offs of millions of pounds, these are very reasonable sums of money."