MSPS call for end to ‘hefty’ job severance pay-out deals
Public audit committee raises concerns with finance secretary
MSPS have called on the Scottish Government to stop “rewarding failure” in the public sector with generous severance deals.
Members of Holyrood’s public audit committee warned finance secretary Derek Mackay of “hefty” payouts that were being given to quango heads who leave after causing problems in their organisations.
The committee wrote to Mr Mackay after reports by the Auditor General for Scotland highlighted that staff at councils, the NHS and other public bodies enjoyed lucrative six-figure severance deals.
A Holyrood committee has called for an end to “hefty” payouts to public sector leaders who leave after causing problems in their organisation.
MSPS on the Scottish Parliament’s public audit committee have raised concerns about the practice with finance secretary Derek Mackay, claiming that severance payments in such a situation are essentially “rewarding failure”.
The committee wrote to Mr Mackay after reports by the Auditor General for Scotland highlighted various financial and governance concerns in public bodies.
MSPS said there were “some instances where individuals who may have been at least partly responsible for a performance issue at a public body were no longer in post” by the time they came to consider the public spending watchdog’s report.
This had “created some frustration about whether such individuals have been satisfactorily held to account,” the committee told Mr Mackay.
They also said the situation “raises questions about how they are recompensed” and with the government consulting on severance policy for the public sector, they made clear that “in the circumstances we have described, the award of an agreement should be very carefully considered by the body in question”.
Acting convener Jackie Baillie said: “We are concerned that some of those responsible for creating major problems within public bodies may be leaving without being held to account for the issues they may have caused.
“What’s worse is that some of these individuals could leave with a hefty pay-off in their pockets, which is essentially rewarding failure and is understandably frustrating for the Scottish public who pay for these public services.
“That’s why we’ve written to the Cabinet Secretary to highlight the problem, which is common to many organisations, and to ensure that the Scottish Government puts an end to rewarding failure as part of its severance policy for Scotland.”
A Scottish Government spokesman said: “The Scottish Public Finance Manual provides guidance on settlement agreements, severance, early retirement and redundancy, making clear that financial compensation should only be offered on a value for money basis with issues of propriety and regularity fully examined.”
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 cost of exit deals are generally recovered from the year-on-year savings which are secured from not having to pay salary costs.
One of the most bewildering aspects of the culture of the public sector is the tradition of using large pay-offs to remove failing leaders.
Senior managers whose poor performance may harm the organisations of which they are in charge can expect to receive generous financial compensation if they’re asked to leave.
The private sector simply would not tolerate the use of shareholders’ money to reward the failure of employees yet, in the public sector, taxpayers’ cash is routinely used to “solve” the problem of underperforming executives.
It is welcome news that this practice may soon come to an end.
MSPS serving on the Scottish Parliament’s public audit committee have raised with finance secretary Derek Mackay concerns about “hefty” severance payments in cases where the departing employee was “at least partly responsible for a performance issue”.
So widespread is the use of taxpayers’ money to get rid of failing employees that the issue has been highlighted in reports by the public spending watchdog, the Auditor General for Scotland.
Members of the Public Audit Committee are quite right to raise the question of whether highly-paid executives are being fully held to account for any negative consequences of their leadership.
Workers across both the public and private sectors have seen wages stagnate over the past decade. At the same time, budgets for the provision of vital services by the public sector have, effectively, been slashed.
The result of this has been frustration and insecurity among staff and an ever poorer standard of service from local authorities and other public bodies.
With public finances tighter than ever before, now is the perfect time to mark a step change when it comes to the awarding of severance payments. If a senior manager is performing so poorly that he or she must be removed from post then they must not be “bought off ” at public expense.
Those who authorise substantial pay-offs in the public sector should rethink their behaviour and ask whether each compensation package they offer is justified. And if they can’t show that their decisions are sensible then MSPS should call them before the public affairs committee to explain themselves. Perhaps that prospect would focus a few minds.