Kevin Brennan – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Kevin Brennan on 2016-01-27.

To ask Mr Chancellor of the Exchequer, whether his Department has carried out benchmarking of the public sector exit payment cap against comparable private sector roles.

Greg Hands

At the 2015 Spending Review the Government announced it will consult on further cross public sector action on exit payment terms. This consultation will provide a good opportunity to collect further information on the trends in the level of exit payments between the private and public sector.

Exit payment terms vary significantly across the private sector, and there will be examples of terms that match or even exceed those in the public sector. However, the Government has seen no evidence that redundancy terms such as employer-funded early retirement, which are widely available across the public sector and often cost employers tens, or even hundreds of thousands of pounds per person, are replicated to anything like the same extent in the private sector.

The precise number of those affected by the public sector exit payment cap will depend on the number and type of exits in coming years.

However, as the average cost of an exit in the public sector in recent years has been around £25,000 the vast majority of exits are below the level of the cap. For example, less than 2% of recent exits in local government were above the level of the cap.