By Richard Johnstone | 23 May 2013
Around 14,000 public sector staff in Scotland received redundancy or early retirement payments between 2010 and 2012 at an initial cost of £561m, an Audit Scotland report revealed today.
An examination of early departure pay-offs across the public sector concluded that these arrangements can eventually lead to savings but it was not always possible to show value for money for taxpayers.
Managing early departures from the Scottish public sector found that good practice was generally followed but there were ‘striking differences’ in the design and implementation of the schemes, auditors said.
For example, some organisations looked to recoup the initial payments within a year, while others waited three years or longer, the report concluded. The quality of the business cases used to determine payments also varied, and organisations differed in the extent to which councillors or board members were kept informed.
There was also ‘inconsistency’ in the information provided to the public on the costs of early departures and the savings expected, the report added.
These differences made it difficult to demonstrate that schemes represented value for money.
The report set out good practice principles. It said councillors or board members should approve early departure schemes to ensure that proposals represented value for money. All proposals should be supported by business cases that show the full additional costs of early departures and anticipated savings over time.
Auditor general for Scotland Caroline Gardner said there was evidence that savings were being made as a result of the programme. But she added: ‘They need to be more consistent in how they manage schemes, and tell the public more about the costs and the expected savings.’
Accounts Commission chair John Baillie added that the public and private sectors used early release deals to both avoid compulsory redundancies and quickly reduce costs.
However, public bodies needed to ensure and demonstrate value for money. ‘Board members and councillors have a duty to scrutinise and oversee these schemes effectively. This is to ensure their organisations follow the correct processes and authorisations. They should pay particular attention to deals proposed for senior managers.’
Responding to the report, a Scottish Government spokesman said the schemes were intended to reduce costs at a time when the Scottish Government’s budget had been cut by almost 9% in real terms over four years.
‘Voluntary exit schemes deliver significant, year-on-year savings to the public purse and under the current civil service compensation scheme, costs are recouped in two years with recurring annual savings thereafter,’ he added.
The Convention of Scottish Local Authorities said the payments were an attempt by councils to ‘invest to save’.
President David O’Neill added: ‘At the end of the day you cannot make an omelette without cracking eggs.
‘Leaner organisations that have smaller operating costs do come with a front-end price tag but it does allow for a cost-effective way of managing overall employee numbers and staff costs and the redesigning of services over the medium to long term. As the report points out, there are risks involved in this but as the report also says councils are aware of these risks and are managing them well.’
