Taxpayers foot £600 million bill for “perverse” austerity pay-offs


SCOTTISH taxpayers forked out more than £600 million for “perverse” public sector redundancy, early retirement and secret farewell deals.

The money – spent over the last five years – went towards axing 34,300 people from 180 public bodies including police, universities, health boards and councils.

Average costs show each worker received £17,500 with the Scottish Prison Service and Scottish Enterprise among those with the highest relative costs.


Critics said the money should be spent getting people into work
Critics said the money should be spent getting people into work


The amount is enough to pay the wages of 1100 nurses, teachers and police officers every year since 2007.

Over 10,000 people were even told to keep their mouth shut through gagging orders after receiving money.

The Scottish Government said any staff pay-offs are worked out by each individual body and the savings of austerity cuts would be seen over the next three years.

But critics said the spending was “fundamentally incompetent” and the Government should focus on getting people into work rather than “pushing them out the door”.

The figures – that date back to 2007 – were obtained by Scottish Labour in a Freedom of Information request.

Since 2007-08, around £274m has been used to shed 12,400 staff through voluntary redundancy schemes alone – the equivalent of £22,000 per person.

A further £133m was spent on early retirement for 4940 workers, an average of £27,000 each.

£42m went on secret compromise agreements with 10,773 staff – deals which could include a gagging clause – at an average of £3900 each.

More than £300m was spent in the years 2009-10 and 2010-11 when the recession led to shrinking public sector budgets.

And £143m was spent on various other forms of severance for 5000 staff – an average of £28,670 per person – although this category includes all pay-offs by the Scottish Government, which chose not to provide a detailed breakdown.

The data also reveals the highest single pay-offs made by each public body over the five years.

The highest single award was a £533,800 exit deal at Labour-led South Lanarkshire Council for former finance director Linda Hardie, who took early retirement aged 50 in April 2011.

Other bumper severance packages include two early retirees each worth £275,000 at Strathclyde and West of Scotland universities, and a £206,000 compromise agreement by the Scottish Funding Council.

The NHS accounted for less than 5% of the spending despite employing around 30% of public sector staff.

But councils, who in total employ 60% of public sector workers, accounted for the bulk of the bill – around £225m.



The area with the highest relative costs was made up of central government, the Scottish Prison Service, Scottish Enterprise and quangos.

This group accounted for 12.8% of all staff lost, but 31% of the goodbye bill, with the average exit deal worth £42,475 – more than four times the average deal for a council worker.

Although the SNP has a policy of no compulsory redundancies for central government staff, other public bodies spent £7.5m sacking 1212 people over the five years, with the country’s universities accounting for the largest block of compulsory lay-offs.

However, the sums also relate to costs of setting money aside to top up pension pots.

It was Labour MSP Ken Macintosh, the shadow finance secretary, who revealed the data through scores of Freedom of Information requests.

He said: “We are in the midst of the worst unemployment crisis for a generation and this government has spent more than half a billion pounds not on getting Scots into work, but on pushing them out the door.

“In one year alone, 2010-2011, the Scottish Government spent more than £200m getting rid of 10,000 people.

“What a perverse, misguided and fundamentally incompetent waste of taxpayers’ money.”

He said that while SNP Finance Secretary John Swinney’s refused to find £35m extra funding for colleges in next Wednesday’s final budget vote, the sector was spending £41m laying off staff.

Macintosh added: “John Swinney clearly thinks he can blame everything on the Tories and on Westminster, but this staggering increase in spending has happened under his allegedly ‘prudent’ stewardship.

“For two years running Mr Swinney has talked of a budget for jobs, but instead of spending money on wage subsidy or job creation programmes, he has spent £600m putting more people out of work.”

A spokesman for John Swinney said: “Public-sector employment is falling in Scotland as a result of the cuts in public spending applied by the Tory-led UK Government, who Labour are campaigning with in the anti-independence campaign.

“Despite these Tory cuts, the Scottish Government are committed to no compulsory redundancies as a means of supporting economic recovery and consumer confidence in Scotland.

“While we encourage councils to follow our lead, they are independent bodies, responsible for managing the terms and conditions of employment of local government employees.

“The costs of the Scottish Government voluntary exit scheme will be recouped in three years and will deliver recurring savings of £13m a year, as part of action to significantly cut our central spending.

“Last year alone we achieved savings of over £64m in our central spend.”