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Public Sector Exit Payments (Limitation) Bill

Part of the debate – in the House of Commons at 2:16 pm on 13th March 2020.

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Photo of Joy Morrissey Joy Morrissey Conservative, Beaconsfield 2:16 pm, 13th March 2020

Absolutely. I thank my hon. Friend for that intervention. Mergers between the public and private sectors are something that I welcome. Bringing private sector efficiency to the public sector increases productivity and allows for a merger of ideas. I have seen a lot of success in the past, where local authorities and even the NHS have brought the two together. It is something we should look at.

In my constituency, we have many entrepreneurs and self-employed people who work very hard to be successful, and they are somewhat incredulous that a public sector employee who cannot be fired or let go can walk away to another job and take with them a £200,000 exit payment and not even have to declare that as an interest when starting at a new place of public employment. There is scope for looking at this and figuring out how we can hold public sector spending to account, making sure that we have value for money. In 2016-17, it was identified that 500,917 exit packages were paid that exceeded £50,000—almost double the average salary that year. Worse, 1,600 of those exit payments were for more than £100,000—that one-off payment was almost three times the average household income in 2016-17. The total cost of exit payments such as these was a staggering £1.2 billion.

In the running of any organisation, it is important to ensure that a payments system is constructed to incentivise the activities that are desired from employees. I have no problem with that, particularly in the private sector. However, when we are talking about public money that is being used for the public good, a different level of accountability is required. After all, it is all taxpayers’ money at the end of the day.

We need to look carefully at the diligent application of the Government’s balanced approach to economic management. The potentially unlimited sum being paid as exit payments is alarming. We really need to look at value for money and at ensuring that every penny that we give to a public body is used effectively and efficiently. As Members of Parliament, everything that we spend is on the public record—people can see it all. I welcome that level of transparency, but why has that level of transparency not been applied to other areas of the public sector, particularly to executives? We cannot easily access how much a chief executive of a council is being paid, and we certainly cannot access how much they were paid in an exit payment from another council. These are the things that we should be considering and I am glad that my hon. Friend Sir Christopher Chope has mentioned these important topics.

I hope that we can improve transparency and accountability in all aspects of public finance, leading to better value for money for the taxpayer. There can be some disagreement about the best criteria and what those are for judging what constitutes value for money, but the core concept is that, when we spend taxpayers’ money, we make sure that we know exactly where it is going.

As my hon. Friend mentioned, the Government have undertaken a consultation on this issue. I believe the consultation creates draft regulations that would apply to the civil service, all civil service agencies, non-ministerial departments, public bodies, the NHS and local authorities. This seems to be adequate scope for the application of this cap.

The Government are due to respond to the consultation by the summer, with the regulations laid before Parliament before the end of 2020. I hope that the Government’s measures will strike the right and fair balance and make sure that the scope of regulatory compensation and the regulatory framework that we put in place are appropriate for the circumstances. That will go a long way in dealing with this issue. I look forward to the consultation’s findings being released in the summer. I hope that this will be something that the Government take forward to ensure that we hold public sector spending to account in a much better way.