Alarm at rise in six-figure '˜golden goodbyes' at Scots councils

A rising number of high earners in Town Halls across Scotland have received six-figure 'golden goodbye' pay-offs, prompting questions about whether taxpayers are receiving 'value for money'.

More six-figure payouts were recorded at Scottish councils during the last financial year. Picture: Maurice van der Velden
More six-figure payouts were recorded at Scottish councils during the last financial year. Picture: Maurice van der Velden

More than £135 million was shelled out by Scotland’s councils over the past two years. Hundreds of workers benefited from overall packages worth more than £100,000.

The rise in staff securing the most lucrative deals comes despite a fall in the total of cash paid out. A total of £67.1m was paid out by councils across Scotland in 2017/18, local authority annual accounts reveal. This is down from £72.7m in 2016/17. But the number of staff benefiting from lucrative six-figure deals has gone up from 152 to 171. This includes individual packages of up to £250,000.

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Tory local government spokesman Alexander Stewart said: “This is a staggering amount of money to be spent on golden goodbyes.

The top 15 Scottish councils in terms of six-figure payouts for 2017/18

“Despite councils’ budgets continually being squeezed, it beggars belief that the amount of six-figure sums paid out have significantly increased. They often contest that their amounts are reducing. However in this long-running saga, they are not decreasing nearly quickly enough and this calls into question as to whether councils are receiving value for money.

“Whilst some of these decisions can ultimately save money in the long-term, we must always ensure that public funds are being spent in a sensible manner.”

Fife – the country’s third biggest council – had the highest overall exit package cost in Scotland with £11.7m paid out in total, while 34 staff enjoyed six-figure deals.

Eileen Rowand, executive director at Fife Council, said the authority’s workforce had been reduced by around 12 per cent since 2010 on a “planned” basis.

Former Lothian Buses and Transport for Edinburgh board finance director Norman Strachan has been among those to receive six-figure payouts in the past two years

“To meet the continuing financial pressures over the last few years, the council has improved efficiency, while minimising the impact of any reductions on frontline services,” she said.

“We have reduced our workforce by around 12 per cent since 2010 on a planned and phased basis, and we know our overall workforce will continue to shrink. However, we have also invested in growth areas such as early years, where additional posts have been created to allow increased provision for pre-school children.

“Exit package costs are incurred through retirements as well as redundancy. They’re subject to scrutiny and strict controls to make sure we reduce workforce costs and generate future savings. Although the costs are significant, it should be noted that not all of this is payable to the employee. A proportion is used to offset any impact on the pension fund in line with early retirement policy.”

Aberdeen was next with overall costs of £11.3m, while 38 workers enjoyed packages worth more than £100,000.

Renfrewshire paid out £6.2m in exit deals as 25 staff left with six-figure packages.

A Renfrewshire Council spokesperson said: “Voluntary redundancy and early retirement schemes are part of our long-term financial planning and we have secured savings of more than £40 million over the past five years, recovering up-front costs within two years.

“Employees generally receive less than 15 per cent of the cost listed in the accounts, which is required by law to provide a notional cost taking into account pension payments over their estimated remaining life expectancy.”

A total of 3,707 workers left council jobs over the past two years with exit deals. They include former Lothian Buses pair Norman Strachan and Bill Devlin.

The figures fell by 335 in 2017/18 to reach 1686.

The packages are largely made up of the cash which individuals receive through redundancy payments, as well lump sums paid in compensation and additional strain on the council’s pension scheme.

The prospect of an English-style cap to end the six-figure payouts in Scotland’s public sector had been considered by the Scottish Government last year after newly devolved powers gave ministers control over severance deals.

The situation south of the Border sees a cap of £95,000 on people leaving public sector bodies and applies to “all types of arrangements” including any pension top-up deals.

A spokesman for local government body Cosla said councils had undergone “incredible transformational change”, which had meant the departure of many senior posts to streamline operations. He said: “We need to see beyond the headline figures, this is not like councils handing over sums of money for people to leave from a zero base.

“The figures used clearly include staff leaving who have paid into a pension scheme throughout their working lives and who are entitled to such pension payments.

“Two final things also worth pointing out – firstly, these payments are not set by the councils and secondly, this is actually about spending now to save in the longer term.”

John O’Connell, chief executive of the Taxpayers’ Alliance, welcomed the decrease in the total amount paid out, but added: “The growing tendency to allow six-figure payouts is worrisome.

“Across the public sector, there should be a cap on these ‘golden goodbyes’. The legislation for prohibiting exit payments above £95,000 is in place, but has not gone into force.

“The sooner this limit is in place, the better. This kind of staggering excess should not be permissible in the public sector.”