£1.8 million council pay-offs funded by the taxpayer

Shropshire Council spent £1.4 million on 'exit packages' for 39 employees in 2020-21, while 17 left Telford & Wrekin Council with pay-outs totalling £396,400.

In Shropshire there were 119 staff laid off the previous year, at a cost of £2.8 million, with 14 in Telford & Wrekin costing £309,500.

The details came from the Association of Local Authority Chief Executives and Senior Managers (MHCLG), who today warned job losses will continue across England because the Government does not see local councils as a priority.

Figures, accessed from the Ministry of Housing, Communities and Local Government, show the total value of exit packages nationally more than halved from £544 million in 2016-17 to £252 million last year in real terms.

Ian Miller, honorary secretary of the ALACE, said: "The higher spend between 2014 and 2017 reflects that councils were making very significant reductions in their workforce at that time as a result of the Government's austerity programme which has cut funding for local government since 2010.

"Job cuts will continue because local government has not been a priority for this or previous governments."

He added that councils aim to protect frontline services, and that workforce reductions slowed in 2020-21 because the focus was on responding to the pandemic.

Since 2014-15, the average cost of exit payments has risen by 31 per cent for senior employees, when adjusted for inflation, and 15 per cent for those below this level.

Earlier this month it was confirmed Shropshire Council had paid its former chief executive Clive Wright, £124,036, as part of his severance, and £121,687 for former director of workforce and transformation Michelle Leith.

Mr Wright left the authority as a result of a decision taken by the council’s then leader, Councillor Peter Nutting, while Ms Leith’s position was made redundant.

Mr Miller said costs for older employees tend to be higher as the local government pension scheme requires immediate payment of pension rights where someone over 55 is made redundant, or let go to make the council run more efficiently.

The figures were made public as part of the Government's research into ending "excessively high" exit payments in the public sector. Legislation passed last year – which capped payments at £95,000 – was revoked in February after the Government admitted it may have had "unintended consequences" for the lowest paid workers.

Mr Miller said the figures show there is no need for a cap when the average exit payment is just £26,703.

The average cost of all exit packages in Shropshire last year was much higher, at £36,187 – up from £23,598 in 2019-20. For Telford and Wrekin it was £23,319 – up from £22,107 in 2019-20.

The Local Government Association said its survey of local authorities indicated that many planned redundancies in 2020 and 2021 for several reasons, including funding shortages and local government reorganisation.

It said council restructures tend to be focused on removing senior posts, which means older, longer-serving and higher paid staff are often the ones affected – and these workers are also more likely to volunteer for redundancy.

An LGA spokesman said: "Councils are required to ensure termination payments are fair, proportionate, lawful and provide value for money for the taxpayer."

The MHCLG said councils are best placed to make decisions, but that the Government is still committed to tackling excessive exit payments. A spokeswoman added: “Severance pay is the responsibility of individual councils and we urge them to ensure that payments reflect value for money to the taxpayers who fund them.”

No end in sight for job losses 'until councils get better deal'

Councils will have to continue to cut their cloth without further help from the government, according to leading public officials.

It follows a decade of cuts to workforce levels for local government, with continuing cuts to grant funding from government forcing authorities to trim accordingly.

Shropshire Council said that the majority of its redundancies – 158 in two years – were a result of ‘service transformation’. There have been high profile casualties at the councils resulting in large payouts – usually as a result of political decisions around a change of direction for the authority, rather than trimming the day-to-day costs.

Councillor Shaun Davies, leader of Telford & Wrekin Council, who has also recently taken on a position with the Local government Association as the chair of its resources board, said all local authorities had struggled with balancing reduced funding.

Using the example of his own council he said that around 1,400 jobs had gone over 10 years.

He said: “The vast majority of the money paid out is to provide efficiencies. At Telford & Wrekin Council for example there is a business case decision on redundancy where we look as a council to make sure we can recover the cost within three years.

“Sometimes for some local authorities and some positions it is not strictly an efficiencies argument. People might want to change the culture of a service area or merge them into one another and you need to make the redundancy for that reason. If you look at Telford & Wrekin Council we have lost something like 1,400 posts in the last 10 years and all of that has been done because of reductions in government funding.

“The whole of local government across the piece has had to the same. Employees have rights on redundancy and rightly so, and if they are made redundant they are entitled to a package to leave the association, and that is the same in business or any walk of life – as it should be.”

Councillor Davies said there had been a complete shift in how councils receive their funding which has led to major changes in the way they operate.

He said: “Ten years ago the majority of the block of funding councils received would be government grants but over the last ten years that has been reduced to significantly less in some cases, and no grant at all in others. the council tax element of councils’ income has become the highest share coming into a council.

“They are dealing with less money coming in and residents are paying the same council tax for no more but where that money has gone is central government.”

Ian Miller, honorary secretary of the Association of Local Authority Chief Executives and Senior Managers (ALACE), said councils were continuing to reduce their workforces due to government budget cuts.

“Job cuts will continue because local government has not been a priority for this or previous governments,” added Mr Miller, who is chief executive of Wyre Forest District Council.

The Local Government Association said its survey of councils indicated many were planning redundancies because of funding shortages and local government reorganisation. It said council restructures tend to be focused on removing senior posts, which means older, longer-serving and higher paid staff are often affected – and these workers are also more likely to volunteer for redundancy.