7 ways to bolt the redundancy revolving door

HM Treasury reportedly wants to crack down on “revolving door” redundancy payoffs for civil servants who are then re-hired. Does the plan stack up? Here are 7 ways to make it better.

The Guardian and Independent are both reporting that Nicky Morgan, the Financial Secretary to the Treasury, wants to crack down on “revolving door” redundancy payments for civil servants who are subsequently re-hired. At first glance this looks like a sensible idea.

Why is the government doing this now? Well, a phrase involving stable, horse, and bolted comes to mind. The enormous NHS reorganisation arguably wasted a huge amount of money on precisely this practice of re-hiring people who had been made redundant. The National Audit Office reported that 2,200 staff, with average payouts of £43,000, had been re-hired as part of that process. (Yes, that makes around £95 million – it’s an estimate but still useful)

Governments (of all political colours) are great at coming up with fixes that address the symptoms but not really the underlying problem. What they should really be asking is why people are made redundant and then re-hired at all. It points to bad planning and bad management. Ultimately, it is ministers who chair departmental boards, so it reflects badly on them. Until recently government didn’t have a clue how much it had in the bank on a daily basis (and still only knows for central government, with some uncertainty). HR is much worse – finding out the number of employees is a huge survey exercise. Fix #1: Sort out workforce planning, across the public sector.

Even if people want to move around the public sector on their own initiative, it’s pretty difficult. There is no single website where someone can look up jobs in a council, government department and in the NHS. Many public bodies resort to using all sorts of private temp and recruitment agencies. At best this results in unfilled vacancies or wastes money. At worst doctors and nurses can be working for various employers in a given month (one full-time post, another locum/bank post, maybe some private work too) on minimal sleep. Job descriptions are sometimes written as if they have specific people in mind. Are those “essential” criteria really so essential? And what about duplication of security clearances? It makes moving around tricky. Fix #2: Make it easier to transfer around the public sector, and encourage some movement. Monitor what people are doing and plan some career structure for them.

What about the proposal then? As ever, the devil is in the detail. Here’s what the Guardian says:

Redundancy payments will be recouped from anyone earning more than £100,000 a year if they go back into a similar role within 12 months of leaving their job.

The clawback of redundancy payments will only apply to the top executives – those on over £100,000 per year. Unsurprisingly there are not many of them around. An even tinier fraction would be made redundant at a given time. So this seems like a lot of fanfare for something that doesn’t affect many. Fix #3: Apply clawbacks to all pay bands.

What’s a “similar role”? Let’s think of a public health specialist in an NHS organisation, who is in charge of vaccinating school children. If she loses her job and is then employed by the local council to lead on broader aspects of public health is that a similar role? Fix #4: Apply the clawback to any move within the wider public sector.

Why didn’t anyone have Nicky Morgan’s flash of brilliance about clawback before? Well, they did. Here’s what the Civil Service Compensation Scheme says:

You will have to repay a proportionate part of your compensation payment if you join any employer covered by the Civil Service Compensation Scheme. You will not, currently, need to repay if you join another public sector employer (although this may change in the future).

Let’s imagine that an NHS trust has a restructuing and loses a top director. And let’s suppose that the director gets a new job with the Department of Health as the national lead for something. Under the current rules, that person is leaving the NHS and joining the civil service, so there is no clawback. The same would technically apply to a teacher made redundant due to the closure of a failing school (say, local authority) moving to an academy (central gov). Fix #5: Apply it to all compensation schemes, across the public sector (including the NHS, local authorities, Parliament, independent bodies, teaching, the BBC and Network Rail).

And here is another exemption reported in the Guardian:

All parts of the public sector will be included except the armed forces, national museums and some majority-state-owned financial institutions.

Now let’s look at someone whose job is to run the armoury on a military base. The MoD decides to outsource armoury services to a private company. A normal practice would be to transfer their employment under the  TUPE regulations. But at the bidding stage the company has its own (cheaper) people and the military personnel lose their jobs.  The company discovers that nobody wants to move to the middle of nowhere, or that it can’t find private sector aircraft armourers, so it re-hires the personnel. Fix #6: Apply the clawback to public services that are outsourced to the voluntary sector and private companies (Serco, G4S, Capita, etc.). The rules should also apply to “consultants” and contractors.

Interestingly the proposals don’t mention the great and good of public life. The chairmen, the non-execs, the MPs… It’s amazing how some manage to hold down a portfolio of public appointments as well as a full-time job and some private work on the side. Ministers receive severance payments for loss of office. It’s a question I asked about Maria Miller’s case recently. She received a £17,000 payoff, despite being censured by the Commons Standards Committee and despite remaining an MP.

The rights or wrongs of the particular case are a separate matter, but should the clawback provisions apply to them? Arguably, if they are to apply to the worker bees, they should apply to the queen bees too. Fix #7: Show leadership and apply the clawback to public appointments, MPs, peers and ministers. Bring schemes for such roles into line with the wider public sector.


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One thought on “7 ways to bolt the redundancy revolving door”

  1. Surely also the underlying quickfix attitude that loudly trumpets ‘we’ve saved thousands by cutting excessive backroom staff, no frontline services have been affected’. Then discovers that actually those ‘backroomers’ had essential skills and knowledge so need to be rehired, VERY quietly. The public sector cuts a few years ago were typical of this: major savings had to be achieved in year one rather than taking 3 years to make sensible, planned restructuring changes that really got rid of expensive duplication and deadwood. #processesandoutputs NOT #outputsnotprocesses

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