‘Unintended consequences’: government scraps pay-off cap

CROYDON IN CRISIS: Political editor WALTER CRONXITE finds that the era of half-million-pound rewards for failure might not be over at the council just yet

Will any of the council’s exec directors be forced to clear their desks this week?

Those council exec directors on six-figure salaries who are sweating on the outcome of a possible disciplinary process at a couple of committee meetings later this week might be a bit less concerned than previously, after the government scrapped its £95,000 cap on public sector “golden handshakes”.

Jo “Negreedy” Negrini walked away from the job as council chief executive last year with a breathtaking £440,000 pay-off – just weeks before the cap was introduced.

But now the government has backed down on its attempt to block such egregious misuse of public money on “payments for failure”, after a court action by trade unions.

Last week, four executive directors at the council – Guy Van Dichele, Lisa Taylor, Hazel Simmonds and Shifa Mustafa – were summarily suspended, pending an investigation into their conduct in the months that led to the council financial crisis. A fifth, Jacqueline Harris-Baker, is expected also to be suspended from her duties, although last week she was on sick leave.

There is an appointments committee meeting on Wednesday afternoon (brought forward from Thursday morning), at which six councillors are asked, “To consider a report of the chief executive” on a “Review of management arrangements”. The report meant to accompany the agenda on this item has not yet been published by the council.

£440,000: Jo Negrini

It is widely expected that Katherine Kerswell, the council’s interim CEO, is moving in response to findings in the Penn Report, an investigation conducted before Christmas by Richard Penn, an independent local government and ethics expert recommended by the Local Government Association, into possible wrong-doing at the council.

In the past, when Penn has conducted similar investigations at other local authorities, they have often ended with a parting of the ways for some senior council staff, who have left their jobs with generous packages to ease their departures.

Only a handful of people have had sight of the Penn Report in Croydon so far, which is understood to run to about 100 pages and makes some “alarming” findings.

There has been speculation within the council offices at Fisher’s Folly that Penn’s recommendations could see two or three senior executives leave their jobs, though the financial arrangements now might be a good deal more costly for Croydon’s cash-strapped council than they might have been even a week ago.

At the weekend, a Treasury spokesman told the BBC that the government cap on public sector pay-offs was withdrawn due to “the unintended consequences” it had on employees.

They added that the government remained committed to bringing forward proposals to tackle unjustified exit payments.

Christina McAnea: got government cap removed

The cap came into force in November, with the aim of ensuring exit payments represented value for money and were fair to taxpayers. But public sector workers’ union Unison said that the rules, meant to prevent excessive payments to the highest earners, would hit ordinary workers.

Unison said long-serving public servants earning relatively low salaries of £25,000 a year would have been affected, and welcomed the decision to remove the cap.

Unison general secretary Christina McAnea described the cap as “damaging”, saying it had “threatened to blight the retirement of millions of workers”.

She said, “Through no fault of their own, long-serving staff over the age of 55 and facing redundancy would have been hit by the regulation. Because they’re obliged to take their pensions if they lose their jobs, when combined with redundancy payments, the final amount could have exceeded the £95,000 cap.”

Civil servants and council staff who had been subject to redundancy since November and had their settlements capped at £95,000 will now have their entitlements topped up.

The Tory government has been talking about introducing a cap on pay-offs since 2015. According to government figures, redundancy settlements in the public sector totalled about £6.5billion between 2011-2012 and 2013-2014. More than £1billion of this cost came as a result of exit payments costing more than £100,000, the government said.

£420,000: Katherine Kerswell

The £440,000 paid to Negrini last year is thought to be among the biggest pay-offs in the public sector in 2020, although it may not be the largest.

It has emerged that there are others currently working at Croydon Council who have themselves enjoyed a huge pay-off to entice them to leave a previous job with a local authority: in 2012, Kent County Council decided it no longer needed the services of its “managing director”, and eased them out the door by offering a pay-off of £420,000.

The name of that managing director? None other than Katherine Kerswell, who within a few months of leaving Kent managed to find herself another six-figure salaried job in the public sector, as the director-general for civil service reform at the Cabinet Office. From that position, Kerswell delivered informed articles to the Grauniad about delivering value for money to the public.

“Cost-effectiveness is the hallmark concept for public leaders in these austere times,” Kerswell once said, apparently unaware of any irony, or hypocrisy.

Clearly, many Croydon Council staffers, councillors and residents will be watching the events of this week with an eye on how “cost-effective” Kerswell can be.

Read more: ‘Autocratic’ CEO took ‘bizarre decisions that make you weep’
Read more: The Kerswell cull begins: five senior council execs go ‘off-grid’
Read more: Newman presided over ‘shocking bullying’, claims councillor

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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7 Responses to ‘Unintended consequences’: government scraps pay-off cap

  1. Jim Bush says:

    Local government fat cats lining their pockets at everyone else’s expense !

  2. Perry Freemason says:

    The cap would only be of interest to the suspended Directors if their silence had to be bought at our expense.

  3. Lewis White says:

    As a retired Local Government Officer, I think that the Unions had a good point, and I am very glad that the Government listened.

    I think that the “system” should look at the number of years served by the council employee.
    I was made redundant after 19 years with one council when the team was reduced in size.

    After that, I became depressed, and needed the redundancy money until I recovered and got a new job, which was over a year later. OK it was a very long way short of £ 95,000, or its 1995 equivalent.

    But I can imagine that if a local government employee has worked without break for an authority for decades, that amount might well be appropriate.

    Most local Government staff do not come into the “fat cat bracket”.

    The system needs to be fair, and take into consideration not only salary but service.

  4. Does anyone know who was in the room when it was agreed to pay Jo Negreedy the ridiculously over the top sum of £440,000?

    Assume Tony Newman and Simon Hall was there. Assume there was a token Tory there. The borough solicitor? Who else? Fitz-stupid?

    I think the people of Croydon should know who recklessly squandered their money on such an undeserving individual.

    • We’ve reported this, Seb. Do keep up.

      On Thursday, August 27, 2020 (just before the Bank Holiday weekend), there was a meeting of the appointments committee.

      A motion, under the Part B, secret section of the agenda (something proposed by Newman and seconded by Hall), was resolved by “a majority”, ie. the opposition Tories voted against.

      The motion stated: “To agree with the Chief Executive’s departure and the requisite authority be provided to the Executive Director of Place to exercise the functions of the Chief Executive during the transitional period between the departure of the Chief Executive and appointment of a new Chief Executive whether permanent or interim at a subsequent council meeting.”

      Present at the meeting were: Newman as chair, Alison Butler as deputy chair, Alisa Flemming, Simon Hall, Jason Perry and Tim Pollard, plus officials
      Jacqueline Harris Baker, Sue Moorman (head of HR) and Lisa Taylor.

  5. Richard Penn has a colourful and not very reassuring history. Do a browser search for “Richard Penn / Public Servants With Attitudes”

  6. BrendanB says:

    The Government clearly needs to do something about the extortionate cash payouts like the one Negrini got.

    But their scheme was forcing much more lowly paid council staff with long service made redundant at age 55 – so might never get another job – to essentially leave with zero redundancy pay. This is because the local government pension scheme forces them to take their pension early if made redundant at age 55 or above and the proposed exit cap would have meant the associated pension strain (cost to the council of their early pension payment) would have counted towards the £95k cap. So even a social worker or teaching assistant or planner on £30k with long service being made redundant would have been hit by the cap – but unlike Negrini got zero cash pay out.

    That was quite outrageous and unfair!

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