By Richard Johnstone | 24 January 2014
Serious failings in the use of confidentiality clauses in public sector severence deals means they have been used to cover up failure and pay off whistleblowers, the Public Accounts Committee said today.
In an examination of confidentiality clauses and special severance payments, the MPs said there was deep concern about their use and called on the government to issue guidance governing them.
More than 1,000 special severance payments totalling £28.4m were made in the three years to March 2013, according to Treasury data. However, the true number is likely to be higher as no central approval is needed for payoffs from local government, police, the BBC or private sector providers of public services. MPs said there was no way to know the actual total.
PAC chair Margaret Hodge said severance deals were not intended to prevent legitimate whistleblowing. However, people who have been offered, or accepted, compromise agreements clearly felt gagged about speaking out about failure, she said.
‘It is clear that confidentiality clauses may have been used in compromise agreements to cover up failure, and this is simply outrageous. We heard evidence of shocking examples of using taxpayers’ money to “payoff” individuals who have flagged up concerns about patient or child safety.
‘It is vital that people feel free to speak out to help prevent terrible tragedies or even deaths, and protecting the reputation of an organisation, such as the NHS, at the expense of public safety is unacceptable.’
The Confidentiality clauses and special severance payments report said the government must take a more robust approach to the use of the agreements by both public sector bodies and private contractors receiving public funding.
Neither the Treasury nor the Cabinet Office currently review the confidentiality clauses contained within compromise agreements and recent high profile cases, particularly in the NHS, have highlighted where the employer’s interest may have masked the wider public interest, MPs stated.
The Cabinet Office must now provide guidance on the appropriate use of compromise agreements and severance deals, as well as setting out the governance arrangements that should be in place to approve them.
Standard terms and conditions for such agreements should also be used, stating that an employee’s rights under the Public Interest Disclosure Act are not prejudiced. Any requirement for these terms to be changed must get Cabinet Office approval.
In addition, the Treasury should be responsible for monitoring the use of payoffs across the wider public sector, and defining what action will be taken where significant patterns or trends are identified. The current lack of transparency over the extent and cost of compromise agreements entered into across the public sector means there is no proper accountability, MPs added.
Responding to the report, a government spokeswoman said: ‘Hard-working people do not expect their taxes to be spent to cover up failure – that's why we took action and are bringing in significant changes, which will ensure severance payments are not used to reward poor performance or prevent “whistle-blowing”.’
‘We will examine this report and welcome that the PAC recognises the work we have already done.’
NHS Employers said it was ‘absolutely essential that staff feel confident to speak out, whatever the circumstances’.
Employment services director Sue Covill said: ‘We accept that the wording of these compromise agreements has sometimes confused people and this had to change. NHS Employers is widely circulating guidance to ensure these documents leave signatories in no doubt that they retain the important legal right to raise concerns in the interests of patient care.
'Compromise and settlement agreements can be used wisely and help save taxpayers’ money.’
