Scottish Government in crackdown on '˜golden goodbye' deals

A crackdown on lucrative taxpayer-funded 'golden goodbye' deals for public sector workers in Scotland is being considered by the Scottish Government.

Former Coatbridge College principal John Doyle, who secured a £304,000 payout.
Former Coatbridge College principal John Doyle, who secured a £304,000 payout.

The prospect of an English-style cap ending the six-figure payouts which have been branded “excessive” are among the measures in a newly published consultation on the issue.

Ministers are also looking at the prospect of “clawing back” money from staff who return to work for public bodies after accepting such a deal.

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The move was welcomed by opposition parties last night who say that millions of pounds in “excessive payouts” has been needlessly given out over the past decade.

It emerged last month that the cost of the “exit deals” had risen by £8 million last year to almost £120m.

Hundreds of staff at councils, the NHS and quangos enjoyed lucrative six-figure severance deals.

The high-profile case of former Coatbridge College principal John Doyle, who secured a £304,000 payout when the institution disappeared in a merger, is among those which have provoked widespread public anger over the issue.

The consultation states: “The Scottish Government seeks to ensure severance arrangements are fair and equitable while providing value for money for the people of Scotland.”

New devolved powers will give ministers in Edinburgh control over severance deals.

Ministers are looking to the situation south of the Border where a cap of £95,000 has been introduced on people leaving public sector bodies. This would apply to “all types of arrangements” including any pension top-up deals which are struck.

It also means that where staff return to work in the public sector within a year of having taken a deal, they face being forced to pay back a chunk of their exit package.

The consultation adds: “Scottish ministers can decide whether to adopt an exit payment cap and/or recovery measures similar to those being implemented by the UK government or set a different level of cap and/or salary ceiling in relation to recovery provisions.

“They could also specify the types of payments to be included in that cap and/or recovery provisions.”

A total of £119m was paid out in exit deals across the public sector last year, the paper published by Scottish ministers finds. This tallies with figures uncovered by The Scotsman earlier this year from the annual accounts of public bodies.

Councils account for the vast bulk of the payments, shelling out £97m as they seek to shed staff in an effort to meet the impact of budget cuts. This is up from £74 million the previous year. About £6.2m was paid out by police in 2015/16, the government consultation reveals, with £5m on college exit deals and £6.1m in the NHS.

The deals could be cash lump sums or may be a combination of these and pension costs to fund early retirement deals. They may also include paid leave and pay in lieu of notice.

The value of deals can vary depending which part of the public sector staff work in, or in which area they are based. The NHS offers one month’s pay for every year of service, up to a maximum of 24 years. In councils, about three-quarters say they use between 30 and 66 weeks to calculate pay, although the highest was 82 weeks.

The cost of exit deals are generally recovered from the year-on-year savings which are secured from not having to pay salary costs.

A spokesman for local government body Cosla said the higher figure for councils show the extent to which other parts of the public sector have been “protected” from financial cuts imposed by the Scottish Government.

He added: “Cosla and councils’ heads of HR are working closely with government on this subject, indeed we have assisted government in the content of its consultation paper.

“Cosla and member councils will respond fully to the consultation to further assist ministers’ deliberations later this year and to ensure that any scheme introduced in Scotland is fit for purpose and is flexible enough to permit councils to effectively and efficiently manage the size of their workforces.”

Scottish Conservative shadow finance secretary Murdo Fraser said that the crackdown is long overdue.

“It’s welcome the SNP is finally realising this is a problem which needs to be addressed,” he said.

“The time to do this should have been 10 years ago when the recession was beginning to bite across the country. Since then, millions of pounds in public money has been needlessly given to those who have enjoyed excessive pay-outs.

“That’s irresponsible government, and I hope ministers use this opportunity to finally address that.”

Liberal Democrat MSP Alex Cole-Hamilton added: “To maintain public trust it is important that the Scottish Government ensures that any pay-outs are proportionate and justified.”