Newcastle council spends hundreds of thousands of pounds on redundancy packages

Newcastle council spent hundreds of thousands of pounds as it laid off more than a dozen employees in the last year, new figures show.

Newcastle council spent hundreds of thousands of pounds as it laid off more than a dozen employees in the last year, new figures show.

The Local Government Association said councils across the country have been forced to reduce their workforce sizes due to budget cuts despite dramatic increases in the volume and range of services provided

Department for Levelling Up, Housing and Communities figures show 17 people were laid off by Newcastle council in 2021-22 at an average of £26,571 per person.

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    It meant the council paid a total of £451,710 in exit packages last year – down from £1,863,570 in 2020-21.

    This was also below the £1,107,078 paid out in 2019-20, before the coronavirus pandemic.

    Newcastle council spent 92% less on redundancy packages than in 2014-15 – when it let go of 168 employees at a total cost of £5.4 million – despite exit payments typically being higher.

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    Across England, the total amount spent on exit payments fell for the fifth-successive year, from £250 million in 2020-21 to £210 million last year.

    However, more staff were laid off than the year before, 9,744 compared to 9,454.

    Andrew Western, chairman of the LGA's resources board, said councils have made layoffs in order to manage their budgets and avoid further pressure on taxpayers.

    "Without funding from the Government to meet the pressure of an accelerating National Living Wage on top of soaring energy and other costs, more redundancies are likely, exacerbating the capacity crisis that is already acute in some areas and impacting the delivery of services to the public," Mr Western added.

    The data also shows the average exit payment across England fell from £27,000 to £22,000 in the year to March.

    Ian Miller, honorary secretary of the Association of Local Authority Chief Executives and Senior Managers, said this shows there was no need for the exit-payment cap briefly introduced by the Government in 2020.

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    The cap, which meant public sector bodies' redundancy packages could not top £95,000, was brought in in November 2020, before being scrapped three months later.

    North Northamptonshire was the only council to have laid off at least five staff that had an average payment higher than the £95,000 cap in 2021-22 – though this does not mean other councils did not breach the cap on individual exit payments.

    There was also a discrepancy between senior and non-senior staff payments.

    Across England, some 255 senior employees were laid off last year, accounting for a total payment of more than £20 million at an average of £85,000 each.

    The 9,490 other staff made redundant received an average of £20,000 each in comparison.

    Local figures on payments to senior and other staff are not available to protect individuals' identities.

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    Mr Miller said exit payments are determined by staff's actual salary and time of service, meaning senior staff tend to have higher packages.

    Pension costs are a major element of exit payments for those aged 55 and above, he added, which is more likely to be relevant for senior staff.