Huge payoffs for redundant civil servants

£300,000 payments as Treasury jobs go

Some senior civil servants at the Treasury are set to receive individual payoffs of more than £300,000 as part of a redundancy programme which will see a quarter of the senior jobs in Whitehall's most powerful department axed by next April.

The payoffs are likely to prove controversial at the end of a week in which British Gas has been under fire for seeking to cut the wages of its showroom staff while justifying a 75 per cent pay increase for its chief executive, Cedric Brown.

Eight of the Treasury's 24 under-secretary posts, will go, carrying salaries of between £54,000 and £64,000. So will 15 of the 64 assistant secretary posts which pay between £37,000 and £56,000. The Treasury's management board will now consider how many of the more junior posts should be shed.

Sir Terry Burns, the Permanent Secretary to the Treasury, told a meeting of senior mandarins yesterday that the job cuts would be achieved as far as possible by voluntary redundancy. But some employees have already been told informally that their services are no longer required and officials believe sackings are inevitable as the "right" candidates are unlikely to apply. The cost to the taxpayer will run into millions.

The generosity of the redundancy terms depends on people's age, salary and the length of time they have been in their current posts. Some senior officials are set to receive a pay-off equal to five times their salary, with some officials in their mid-30sexpecting around £100,000.

The announcement was broadly in line with the recommendations of a "fundamental expenditure review" into the Treasury's operations ordered by Michael Portillo when he was Chief Secretary to the Treasury. The review was masterminded by Sir Terry and Jeremy Heywood, who was Norman Lamont's right-hand man during his period as Chancellor.

The review has devastated morale at the Treasury, already damaged by Britain's expulsion from the European exchange rate mechanism and the failure of Treasury economists to predict the depth of the recession.

With the prospect of possible redundancy looming, many officials have been trying to find jobs in the City or private sector consultancies.

Some top officials fear the job cuts will mean that the Treasury will not be able to carry out adequately its key tasks of managing the economy and controlling government spending.

Elizabeth Symons of the First Division Association, which represents senior civil servants, warned that cutting jobs could turn out to be a false economy if outside consultants had to be brought in to do the work. "If a minister uses a consultant to do the job of a full-time under-secretary, it will not show up in the running costs," she said.