£28m bill for ‘gagging’ ex-public officials

Civil servants receive large severance payments for signing ‘compromise agreements’ on exit

Margaret Hodge described some of the payments as 'obscene' (Reuters)

Departing public sector workers have received severance payments totalling £28.4m in the past three years in return for “gagging clauses” stopping them from talking about their exit.

Some of the 1,053 staff were given a good reference as part of their “compromise agreements” with government departments even though they were regarded as poor performers. In a report published today, Whitehall’s spending watchdog warned that the references could help such staff land another job in the public sector.

The average “special severance payment” was £15,000 but the Ministry of Defence paid out £120,000 in one case and the Department of Health £266,000 in another. By law, “compromise agreements” are not allowed to prevent whistleblowing, but 98 per cent of the departure deals included a “confidentiality clause”. Some staff said they had felt “gagged”.

The £28.4m bill for pay-offs is almost certainly an underestimate because it does not include payments to people working for private sector firms which run public services. The National Audit Office (NAO), which uncovered the scale of the pay-offs, was given only 60 per cent of the agreements it requested.

Amyas Morse, head of the NAO, said: “Compromise agreements are widely, and often legitimately used. But the lack of transparency, consistency and accountability is unacceptable.

“With the public purse under sustained pressure and services increasingly delivered at arm’s length, it is important that compromise agreements do not leave staff feeling gagged or reward the failure either of an employee or an organisation. The centre of government should get a grip on the use of compromise agreements in the public sector.”

Margaret Hodge, Labour chairman of the Commons Public Accounts Committee, described some of the payments as “obscene”. She said: “No one has any idea if departments use these agreements excessively to reward failure or avoid unwelcome publicity. Similarly, no one knows whether individuals abuse them by moving around to hide poor performance, picking up payments as they go.”

A government spokesman said: “All departments must weigh the importance of accountability and transparency, as well as value for money for the taxpayer, against any potential benefits when choosing to make a severance payment.”

He added: “As part of our robust approach to managing public money, departments wishing to make a special severance payment which is not contractually required must also seek approval from the Treasury.

“The decision on whether confidentiality clauses are included in settlements is a matter for individual departments … confidentiality clauses can have legitimate benefits – the Government’s legal advisers provide guidance on their use and we continue to look at ways to strengthen this central guidance.”