The North East’s 12 councils reduce 622 staff through redundancy or termination of contract by mutual agreement costing an average of £23,395 – a total of £14,551,864.
Cost
Staff leaving Stockton Council in 2021-22 received payoffs averaging more than £50,000 each – more than double the national average.
Exit packages for 51 employees cost the council £2,551,525.
Neighbouring Darlington Council shed 12 staff at an average cost of £4,897 – a total of £58,768.
Councils in England paid an estimated* average of £21,978 to 9,744 departing employees – a total of £214,161,226.
Exit Packages
There are several elements of exit packages:
- Payments for redundancy or termination of contract by mutual agreement (e.g., for reasons of business efficiency or as a term in a conciliation agreement);
- strain costs, which are paid to a pension scheme resulting in the scheme member’s retirement benefit being immediately payable without reduction.
- an increase in statutory redundancy benefit; and
- ex gratia and other payments such as pay in lieu of notice or compensation under an arbitration scheme.
North East councils made different degrees of use of the different elements. Stockton Council paid strain costs in 31 of its 51 cases at a total cost of £1,642,025 (an average of £52,969) while Darlington made no use of this provision.
Darlington made ex gratia payments in 11 of its 12 cases at a total cost of £54,656 (average of £4,969) but paid no strain costs in any cases.
The total number of exit packages varied considerably.
Gateshead shed more staff than another council in the North East at 139, costing it £3,081,609, followed by Sunderland, where 86 staff left at a cost of £2,672,452. But Newcastle awarded only 17 exit packages at a total cost of £451,710.
Key objective
According to the Department for Levelling Up, Housing and Communities (DLUHC), the data are collected to help inform delivery of a key government objective – to end excessively high exit payments in the public sector.
The data were first collected by the department in their present form in 2021.
The government’s success in ending excessive payments has so far been marginal and mixed for both senior staff (such as chief officers and those on annual salaries over £150,000) and other staff.
Overall, the number of exit packages increased between 2020-21 and 2021-22 from approximately 9,500 to 9,700 but the average cost per package fell from £26,700 to £22,000.
Ex gratia payments
The number of ex gratia payments increased from 4,100 to 4,200 and their average value was also up from £8,500 to £8,700.
For senior staff, the average cost of exit packages was down from £101,400 to £84,700.
The proportion of packages with ex gratia payments increased from 59% to 60% but their average value fell from £40,600 to £36,500.
For other staff, the average cost of exit packages was down from £24,800 to £20,300.
The proportion of packages with ex gratia payments was also down, from 43% to 42% but their average value was up from £7,400 to £7,700.
Strain costs
Data on strain costs were collected for the first time in 2021-22 when 27% of all exit packages, with an average value of £33,200, included such costs.
Thirty-five per cent of senior staff packages, averaging £102,900, included strain costs, and 27% of other staff packages averaging £30,700 included strain costs.
*Estimates assume that data of authorities that had not yet provided valid data are not systemically different from similar authorities which had provided data in time for publication.
