Latest news with #severancepayments
Telegraph
30-07-2025
- Business
- Telegraph
Labour quietly relaxes rules for £100k civil servant payouts
Labour has relaxed rules allowing civil servants to receive up to £100,000 in 'golden goodbye' severance payments, even if they leave by choice. Previously, government departments had to seek Treasury approval to compensate departing junior and mid-level employees for unused employee benefits or shortened notice periods. However, changes announced this week mean that departments can hand out payments worth thousands of pounds without having to consult the Treasury. It comes as Labour battles to trim the size of what Sir Keir Starmer described in an article for The Telegraph as an 'over-cautious, flabby state'. In April, it emerged that up to 1,200 employees from the Cabinet Office, headed by Pat McFadden, were facing redundancy. Statutory redundancy payments and payment for unused leave are separate from special severance payments, which in some cases can be worth tens of thousands of pounds. Special severance payments are paid to employees if they resign, are dismissed or reach an agreed termination of their contracts. They are not a legal right, and are instead treated as a special payment. They are commonly awarded to ministers when there is a change in government. Jeremy Hunt, the former Chancellor, was paid £16,876 last year, according to Treasury accounts. Employees may receive a special severance payment if, for example, they have unused employee benefits that continue beyond their last working day. Payments may also be awarded as compensation in lieu of notice. Last year, the Department for Work and Pensions (DWP) paid out £370,000 in special severance payments to 21 civil servants, with a median value of £10,000. The highest individual payment awarded was £96,000, according to DWP accounts. HM Revenue and Customs (HMRC) similarly spent £85,535 on nine severance payments last year, the highest of which was worth £25,000. John O'Connell, of the TaxPayers' Alliance campaign group, said it was 'frustrating' to see the large cost to the taxpayer 'just to get rid of staff'. He said: 'Taxpayers will be furious to find out that there is going to be even less control on the size of these payouts now that the Treasury's role in approving exit payments is being reduced. 'Ministers need to be reversing this decision, as well as bringing in a long overdue cap of £95,000 on all golden goodbyes.' The guidance issued to departments grants accounting officers the power to approve severance payments worth up to £100,000 without Treasury approval. However, documents passed to departments grant accountants the power to approve payments exceeding the £100,000 threshold for early severance cases linked to upcoming redundancy programmes. The changes do not affect payments to senior civil servants, special advisers and 'anyone earning over the senior level pay threshold'. Departments have also been warned against payments that are 'not affordable', and against making payments that 'add unfunded pressure to departmental spending budgets'. Accountants have been similarly urged not to make any payment that would 'set a precedent or have implications for wider government policy or other settlements' by paying out sums that 'differ markedly' from previous settlements.
Times
28-07-2025
- Business
- Times
Financial Ombudsman Service boss paid £230,000 after ousting
The ousted head of the Financial Ombudsman Service received a pay-off of almost £230,000, it has been disclosed in the annual report. Abby Thomas, who left abruptly on 6 February, was paid £229,869 in severance payments on top of her normal salary. The payoff included £100,000 for loss of office, £107,692 in lieu of notice and £22,177 for a period of gardening leave that began on the day she left, the FOS said. MPs on the Treasury select committee have hit out at the manner of her departure and criticised the FOS chairwoman Baroness Manzoor for refusing to answer questions on why Thomas left and whether she was forced out. The FOS, which rules on complaints by consumers about financial services firms and can set compensation orders, is under pressure to reform. Rachel Reeves has pledged to curb its powers so it no longer acts like a regulator after complaints from the industry that it has increased the cost of 'mass redress events'. It has been dealing with a significant rise in claims, mainly related to car finance loans, but also because of concerns about other consumer loans and more people complaining about banks' handling of frauds. Dame Meg Hillier, chairwoman of the Treasury committee, said this month: 'The handling of this situation by the senior leadership has been deeply disappointing.' Thomas, a former Virgin Media executive, served for less than three years. She has been replaced by James Dipple-Johnstone as chief ombudsman and Jenny Simmonds as interim chief executive. Manzoor is due to retire on August 1. The FOS received 450,000 new inquiries in the year to March, up from 330,000. The motor finance industry is braced for a judgment from the Supreme Court this Friday that could determine the scale of compensation payments for failing to disclose commissions paid to dealers.
