£200m bill for making council staff redundant

4 April 2013

Town halls across London have paid out more than £200 million in redundancies over the past two years as deep spending cuts begin to bite.

More than 10,000 workers have received exit packages although experts claim the total number who have lost their jobs is likely to be as high as 25,000.

A Freedom of Information request by the Evening Standard shows the soaring rate of taxpayer-funded pay-outs since the introduction of austerity measures after the general election.

In 2011 local authorities in the capital paid out £79.4 million in redundancies which rose to £123.7 million last year.

The new data also shows that some of the capital’s poorest boroughs have laid off most staff, reflecting the fact inner-city authorities face the deepest cuts. There will also be concern over the handful of individuals who received pay-outs of as much as £365,000 while their identities were kept secret.

Local government expert Tony Travers said: “It’s no surprise that the cost of redundancies has gone up. It’s an inevitable consequence of the Government’s decision to cut local government spending so fast. If it had happened more slowly no doubt many of these redundancies could have been avoided.”

The figures from council accounts show that Tower Hamlets has spent £15.8 million on compulsory redundancies and exit packages in the past two years; Lewisham has paid out £14.5 million and Haringey £12.4 million.

Hackney had a redundancies bill of £10.5 million, Barking and Dagenham £11 million, Lambeth £10.3 million and Greenwich £9.5 million.

All are Labour-run and some are among the poorest councils in the country. In terms of numbers, Lambeth has made redundancy payments to the most staff with 816 losing their jobs over the two-year period — 465 last year alone. Meanwhile, Haringey has paid out to 711 workers, Lewisham to 649 workers, Waltham Forest to 549, Croydon to 521 and Brent to 455.

More council workers across London are thought to have departed voluntarily while further posts have been lost through natural wastage.

A handful of highly paid employees have received huge six-figure pay-offs while their identities have been kept secret by Freedom of Information laws.

Professor Travers said: “Even if the council is sticking to the letter of the law on the redundancy agreements the amounts they’ve paid out are never going to make much sense to members of the public who pay council tax and who know their services are being cut.” Last year 36 employees in London received exit packages over £100,000, up from 21 the year before.

Waltham Forest made the biggest individual payment of £365,000 in 2011 including an exit payment of £157,000 and a £208,000 “pension strain” — when an employer agrees to early payment of pension benefits, they have to pay this to the fund.

It is thought the sum related to the surprise departure of council chief executive Andrew Kilburn after less than two years in the job, although his total exit package was recorded elsewhere in the accounts as £432,213.

Bromley paid an individual exit package of £348,000 in 2011 to an unnamed employee followed by two others last year of £206,000 and £273,000. Westminster paid another unnamed individual £280,000 in 2011 and two further unidentified exit payments of £222,000 and £255,000 last year.

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£200m bill for making council staff redundant

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