Dorset Council’s annual accounts for its first operating year have been published today (Monday 3 August).
The accounts show the council’s spending over the 2019/20 financial year, as well as the income it has received from various services and funding sources.
In its first year of operation Dorset Council carried the costs of merging six councils into one new unitary authority, following Local Government Reorganisation (LGR). One benefit of LGR is the significant reduction in the on-going staffing costs, which has saved around £10m.
To achieve this, a number of senior officers were made redundant, as the new council streamlined its management structures to slim down costs and protect front line services.
Any employee over the age of 55 who is made redundant and is a member of the Local Government Pension Scheme (LGPS) is entitled to receive their pension. When a pension is triggered there is an additional cost because the council has to make a payment to the pension fund to account for the fact it is being released early.
While the individual receives only the redundancy payment that they are contractually entitled to, the overall cost to the council can be considerably higher.
The average redundancy package is £86k. This is not the average amount received by the individuals concerned but rather the total cost of their package including the payment to the pension fund.
The most expensive redundancy was as a result of many factors including LGR, the age of the employee concerned, their long service and the transfer of a private pension to LGPS. The cost to the council in this case was £980k.
Currently, statutory pension rules allow individuals to transfer funds from private pensions into the LGPS. The council took legal advice which confirmed this.
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.”
The report published also outlines costs to the most senior officers’ salary and pension schemes in the council’s first year. These figures have been available on the council’s website since 1 April 2019.
Cllr Wharf added:
“Councillors set senior officer salaries having bench marked them against other similar sized authorities. Terms and conditions are nationally set, and 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.
Surely the costs associated with redundancy were considered prior to: the union of the six; and prior to selecting personnel for redundancy. It would be interesting to compare the cost of nearly £1M for one individual with the cost of continuing to employ them, and I hope this has been done.
The point about executive pay is fair, other than justifying why comparison results in ours being the most expensive in the country.
Sadly, I cannot scrutinise the accounts further as the links do not work (no back end server is available, apparantly). If a human reads this, I would like to know when I can.
Hello Mark, Kirstie here, a human! Are you able to access that link yet? It seems to be working ok for me, try this one… https://www.dorsetcouncil.gov.uk/your-council/about-your-council/budgets-and-spending/annual-accounts/dorset-council-accounts-docs/dorset-council-draft-financial-statements-2019-20-v4.pdf
Let me know if it’s still playing up.
£980,000 for one person ! You should of kept him employed until he reached retirement age surely? Someone in HR didn’t do the sums cross the t’s and dot the i’s. This is not great news is it?
Hi there, it’s important that we’re as honest and transparent with residents and taxpayers as we can be, which is why we have dhone a spotlight on this. Thanks, Kirstie