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Exclusive: Government planning revival of £95,000 exit cap


The government is looking at reviving a proposal to cap exit payments for public sector workers at £95,000, LGC understands.

Two sources familiar with the Treasury’s thinking indicated that a consultation was in the works on the regulations to bring in the cap, which had seemingly been abandoned by the government.

The Enterprise Act 2016 had granted ministers the powers to implement the cap in February 2017, but these have not been acted on, with some suggesting the policy was being rethought.

No date has yet been agreed for the consultation to begin, LGC understands. When consultations do begin they will likely last for 12 weeks, after which subsequent legislation will have to go through Parliament.

Karen Grave, president of the Public Services People Managers Association (PPMA), said: “When this legislation was first mooted, the PPMA and other public sector organisations raised substantial concerns with respect to the mechanics of the cap.”

While her organisation “supports the need to ensure that taxpayers’ money is spent wisely … any regulations need to appear fair and proportionate”, she added.

“Whilst the intention is to limit payments for the highest earning, with the likely inclusion of employer pension payments together with redundancy payments in the cap calculation, the reality is that there are many long-serving public service employees on lower than might be classed high salary rates who would be disproportionately impacted by this legislation.

“We do not believe that this is equitable. “

The launch of any consultation would follow a row over the departure of South Cambridgeshire DC’s chief executive Beverly Agass with a £202,500 pension contribution.

James Palmer, elected mayor of Cambridgeshire and Peterborough CA, subsequently expressed frustration that the district council had to pay £202,500 to the Local Government Pension Scheme (LGPS) to allow Ms Agass early access to her pension.

In its response to a previous consultation on the cap, the government said it did “not believe that six figure exit payments, which are far in excess of those available to most workers in the public sector or wider economy, are fair or offer value for money to the taxpayer who funds them”.



Readers' comments (4)

  • This cap would unfairly penalise the pay of lower paid long serving public servants facing redundancy while those at the top will continue to hop from council to council and find clever ways around it.

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  • Exit payments for poor performance should be minimal (eg accrued annual leave). Exit payments on a redundancy basis should be calculated in line with locally set policy. But exit payments because a Leader simply does not like their chief executive (or other senior officer), for example because of a change of Administration, should not be capped because the person is not being made redundant on a performance basis - instead, in effect their contract is being bought out.

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  • I know a number of senior people took early or flexible retirement when this was first suggested to get around the limit, this follows a brain drain when the pension changes came in. The people who do best are those now on interim contracts. Unintended outcomes from ill thought through meausres.

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  • If they do revive this proposal, let's hope the Government has learnt its lesson from the first consultation and engages its collective brain to actually give some consideration as to a reasonable level for any cap. Last time around, senior civil servants just blindly tried to turn a rather crass political soundbite promising to "end six figure pay-outs in the public sector" into government policy. If there has to be a cap then set it at a reasonable level so it does not detrimentally affect long serving staff who no reasonable person would consider to be high earners.

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