While local government reorganisation has saved £10m in staff costs, Dorset Council has also revealed that it cost it £980k to just make one person redundant.
In publishing the first set of accounts for the newly formed Dorset Council, details have emerged of the costs and savings of reorganising the council system in Dorset. Last year, six councils including Purbeck District Council were merged into one new unitary authority, Dorset Council.
One benefit of the reorganisation was the reduction in the on-going staffing costs, which Dorset Council says it has saved it around £10m.
Average redundancy package was £86k
To achieve this, a number of senior officers were made redundant. The council has said that the average redundancy package was £86k but that this was not what was received by the individual but rather the total cost of their package including the payment to the pension fund.
Due to pension rules, the council is sometimes legally obliged to make extra payments into an individual’s pension under the Local Government Pension Scheme (LGPS).
The most expensive redundancy cost the council an unexpected £980k, that they were legally obliged to pay.
“Our costs were higher than expected”
Councillor Peter Wharf, Deputy Leader – Corporate Development and Change, said:
“We always knew that streamlining our management structures by making six councils into one would reap us long term financial gains, but that we needed to meet the one-off cost of doing this in order to protect front line services.
“Unfortunately, in this one specific case, our costs were higher than expected because of the way the LGPS is set up, allowing individuals to transfer private pensions into the Local Government Scheme. Legally, we had no choice but to honour this. It’s important to note that the costs outlined in the report do not reflect the amount we have directly paid these individuals.
“The Government has, for a number of years, proposed to introduce a £95k cap on the cost of exit payments in the public sector. If they had brought this forward, then it would have seen the costs very much reduced.
“As set out in the Council Plan – we are committed to being open, accessible and accountable, and we feel that by being honest about our salary costs and exit packages, we are being as transparent as possible.”
Dorset Council’s Chief Executive receives £240k in salary and pension contributions
The report published also gives the salary and pension details of Dorset Council’s top officials. It shows that Dorset Council’s Chief Executive, Matt Prosser received £240k in salary and pension contributions.
It also shows that Dorset’s Director of Public Health, Sam Crowe, who is steering the county through the coronavirus pandemic, received £144k in salary and pension contributions. Sam Crowe, whose responsibility is across the whole of Dorset, is employed by Dorset Council and Bournemouth, Christchurch and Poole, so the cost was split between the two councils.
“The COVID-19 pandemic has shown we have the right people in these roles”
Councillor Peter Wharf added:
“Councillors set senior officer salaries, having bench marked them against other similar sized authorities. Terms and conditions are nationally set, and the annual cost of living pay increases are negotiated nationally too.
“Our senior officers play a very important role in leading our organisation through significant times of change, and the COVID-19 pandemic has shown we have the right people in these roles to deliver critical services to our residents.
“Added to this, we have to support the future needs of the council in attracting and retaining people with the right skills in Dorset.”
Councillors will scrutinise this expenditure at the council’s Audit and Governance Committee in November 2020.