Confidentiality clauses and special severance payments

21 June 2013


A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:


It is staggering that no one has any idea how many compromise agreements are used and whether, overall, they are value for money. Pulling disparate bits of information together reveals a worrying picture. In the 3 years up to March 2013, the Treasury approved an estimated £28.4m of special severance payments, across 1,053 compromise agreements. But this number is not complete and doesn’t include any such payment approvals in private sector contractors delivering public services. The absence of central records means no one knows the true numbers.

98% of agreements sampled included a confidentiality clause. It is illegal for a compromise agreement to be used to stop people from whistleblowing. But this is not made clear enough and some people who have signed these agreements say they feel like they had been gagged. It is simply unacceptable for people who speak up about failures in service delivery to feel like they have been silenced in this way.

The Treasury looks at cases individually, so it can’t say where most applications come from, what the total sums involved are or how much of the amounts it approves are paid by departments, following negotiations. Even within departments central records are rare. This total absence of oversight means the figures approved may be just the tip of the iceberg. No one has any idea if departments use these agreements excessively to reward failure or avoid unwelcome publicity. Similarly no one knows whether individuals abuse them by moving around to hide poor performance, picking up payments as they go. Payments may be lower on average and included in contracts, but there are individual cases where obscene amounts have been approved; as much as £266,000 in the Department of Health and £120,000 in the Ministry of Defence. 

The centre of government must take control and assure itself that the use of these agreements is not squandering taxpayers’ money or covering up government failures. The current state of affairs cannot continue.

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