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Nine Birmingham city council officials shared £1.6m redundancy pot

Nine Birmingham city council officials shared £1.6m redundancy pot

🕔30.Jan 2014

Redundancy packages worth a total of £1.6 million were handed to nine Birmingham City Council officials following a shake-up of senior management posts, it can be revealed.

Figures in the council’s accounts for the past three years show that the nine, who are not named, all accepted enhanced voluntary redundancy packages including additional pension contributions.

Each of the high-ranking officers were handed exit deals worth in excess of £150,000.

  • In 2010-11 two people received termination packages worth a total of £300,000.
  • The following year, 2011-12, five officials received packages worth a total of £900,000.
  • And in 2012-13 two people were paid off with packages worth a total of £400,000.

The council has paid £83 million in compulsory and voluntary redundancy agreements to 4,678 former members of staff since 2010-11, when public spending cuts first began to bite.

However, two-thirds of those leaving received relatively small redundancy payments, with 3,313 people getting less than £20,000 each.

A council spokesman said those leaving were “only getting what they are entitled to”.

The spokesman said: “The severe funding cuts and pressures that the council face are projected to be £839m in the period from 2010 to 2018. One consequence has been the widely publicised and unavoidable reduction in the council’s staffing levels. Our core workforce has reduced by a third since 2010 to its current total of approximately 13,500.

“This has been partially achieved through use of the redundancy process, through which we have to pay people what they are legally entitled to, or offer voluntary packages that make redundancy an option that is attractive to the individual, while also ultimately being in the best financial interests of the council and taxpayer.”

Staff accepting voluntary redundancies were given exit packages at enhanced rates as the council sought to get rid of employees quickly and reduce the wage bill. The Council is stressing that although initial cost of the redundancy program is large, substantial savings will be made in future years as the number of people employed continues to fall.

At the top end of the scale, high-earning officials and middle management walked away with substantial sums.

Council leader Sir Albert Bore said at a recent media briefing that the special rates could not be repeated in future because the city can no longer afford to pay enhanced redundancy deals.

Details of the packages appear in the accounts in bands according to the value of the payments.

In the £100,000 to £150,000 band, 12 officials took voluntary redundancy and one person was made compulsorily redundant in 2010-11 at a total cost of £1.5 million

In the same band during 2011-12 and 2012-13 there were 26 voluntary redundancies and two compulsory redundancies at a total cost of £3.2 million.

In the £80,000 to £100,000 band between2010-11 and 2012-13 there were five compulsory and 72 voluntary redundancies at a total cost of £7 million.

A note attached to the accounts explains that exit packages include “compulsory and voluntary redundancy, pension fund strain payments and other departure costs”.

The note adds: “The costs of exit packages are amounts payable as a result of either the council’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept voluntary redundancy in exchange for those benefits.”

The council has undergone substantial restructuring of its workforce since 2010, and last year decided to amalgamate five departments into three new strategic directorates called Economy, Place and People.

A decade ago the non-schools workforce stood at about 20,000 full time equivalent jobs. The figure is expected to fall to 7,000 by 2018 as many more council services are either discontinued or farmed out to the private and voluntary sectors.

A number of officials at chief officer level or just below have left in the past three years.

These include Corporate Director of Governance Mirza Ahmad, who left in July 2011, and strategic director for homes and neighbourhoods, Elaine Elkington, who left in February 2013.

Other big names to depart include Children, Young People and Families Strategic Director Peter Duxbury and the Strategic Director for Development, Mark Barrow. Details of exit packages for Mr Duxbury and Mr Barrow will appear in the 2013-14 accounts, to be published next year.

The accounts also detail the total remuneration paid to senior officials.

In 2012-13 chief executive Stephen Hughes topped the list with a package worth £260,360. His basic salary was £205,000 before employer pension contributions.

Most of the council’s strategic directors were on salaries of £145,000.

Paul Dransfield, Strategic Director Corporate Resources, received £158,501 in 2012-13, including back pay. His total remuneration, including employer pension contributions, was £184,178.

Mr Duxbury’s salary was £163,000, but with a £6,223 expense allowance and employer pension contributions the total remuneration package in 2012-13 was £195,609.

The accounts show that Mr Duxbury’s predecessor, Eleanor Brazil, the Interim Strategic Director for Children, Young people and Families, was paid £208,000 during 2011-12. Ms Brazil was paid as a consultant and was not a council employee.

The introduction to the 2012-13 accounts contains a warning about the council’s difficulties: “The management of the council’s finances continues to be set in the context of reducing resources as a consequence of the national Government’s policy of reducing expenditure in order to assist in addressing the deficit in the national public finances.

“The associated reduction in Government grants to local authorities has a particular impact on authorities such as Birmingham which are dependent on those grants for a significant proportion of their funding.

“These grant reductions, when taken together with cost pressures arising from inflation, changing population needs, changes in the law and the costs of borrowing, have meant that the Council has already needed to make savings of £275 million in the two year period up to 31 March 2013, with further savings of another £102 million being required in 2013-14.”

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