Rachel Reeves Proposes £100k Severance for Exiting Civil Servants
Chancellor Rachel Reeves has introduced a new voluntary redundancy scheme for civil servants, offering payouts up to £100,000. This initiative is part of a broader plan to restructure the Treasury and cut down its workforce.
Details of the £100,000 Severance Scheme
The redundancy scheme aims to reduce the Treasury’s staff size from 2,100 to about 1,800 by 2030. The government has set a goal of reducing administrative costs by 16% across Whitehall. This plan involves:
- Encouraging voluntary departures.
- Implementing a hiring freeze for non-essential roles.
- Managing workforce levels through natural attrition.
In case the department does not meet its target, compulsory redundancies may be considered.
Workforce Context and Challenges
The Treasury’s workforce has nearly doubled in the last decade, spurred by challenges from Brexit and the COVID-19 pandemic. This growth has led to high employee turnover rates and growing dissatisfaction related to pay and job security.
Payout Structure Explained
The redundancy payouts are calculated based on three weeks’ salary for each year of service, capped at 15 months’ earnings. A base salary threshold of £80,000 applies, with employees who have over 21 years of service eligible for the maximum payout of £100,000.
This payout structure was first introduced in London last summer. Successful applicants can expect to receive their payments by late February.
Concerns and Future Implications
There are significant worries about how workforce reductions will impact the Treasury’s operational efficiency. Union leaders emphasize the importance of retaining experienced staff to manage economic growth. The government’s aim of a leaner civil service raises uncertainty about job security for many civil servants.
As of March, there are 36 exit schemes in place across the government, backed by a budget of £300 million for redundancy payouts. The Cabinet Office oversees these schemes, ensuring the preservation of critical expertise amid ongoing reductions. The government estimates around 5,000 departures from various departments, with both voluntary and compulsory redundancies likely necessary to align with budgetary needs.
