Ministers planning to cut civil servant redundancy pay at same time as 91,000 jobs

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Ministers are planning to reduce redundancy pay for civil servants while cutting 91,000 Whitehall jobs, setting up a bitter confrontation that unions warned may lead to legal and industrial action.

The proposals could result in average packages being cut by a quarter at a time when the minister for Brexit opportunities and government efficiency, Jacob Rees-Mogg, is aiming to shrink the civil service by a fifth.

The plans are set out in a consultation document that highlights how changes to redundancy payments would “create significant savings on the current cost of exits”.

The Cabinet Office insisted the proposed redundancy pay cuts would have happened regardless of the planned “headcount reductions”, which could result in the civil service being scaled back to the size it was in 2016.

However, the consultation comes after reports that the Treasury was concerned about the upfront cost of 91,000-strong reduction in civil servants after a review found it could cost at least ?1bn and lead to loss of public services.

Trade unions said relations between the government and civil service were already at “rock bottom”, with Whitehall suffering low morale and a brain drain as a result of the cuts.

The proposed changes also come on top of existing civil service anger over pay increases less than half of the current 7% rate of inflation, the Cabinet Office drive to get them back into the office and overwork from Covid backlogs.

Unions have also been infuriated by the refusal of ministers to meet to discuss the 91,000 headcount reduction, with one senior source saying this lack of engagement was “unparalleled in my experience”.

Civil servants were infuriated on Friday when the campaign of Tory leadership frontrunner Liz Truss suggested Whitehall had a “woke” culture “that strays into antisemitism”.

A previous effort by the government to cut civil service redundancy pay ended up being blocked in the courts in 2017 on the grounds that ministers had failed to consult sufficiently with trade unions.

Unions said they were shocked by the decision to go ahead with the consultation on reducing redundancy pay at the same time as proposing job cuts, and that it was unclear whether the plans to shrink the civil service to 2016 levels would be done on current or revised terms.

Mike Clancy, general secretary of the Prospect trade union, said: “Against the backdrop of the announcement to reduce civil service headcount by one in five, and the repeated refusal of ministers to meet with Prospect and other unions on the issue, we have no confidence that this ‘consultation’ is being carried out in good faith.

“No other employer, public or private, would propose reducing redundancy terms at the same time as savage job loss proposals and do so with the aim of reaching agreement. We will be working with other unions to oppose detrimental changes to the civil service compensation scheme and exploring every route – including industrial and legal ones.”

The Public and Commercial Services (PCS) union, representing about 180,000 public sector workers, is also balloting members in the UK civil service and related areas for industrial action from 26 September until 7 November over pay, pensions, jobs and the redundancy terms.

The PCS general secretary, Mark Serwotka, said: “Coming on top of a derisory 2% pay offer and the threat of 91,000 job cuts, these proposed cuts to our members’ redundancy terms add insult to injury. It’s clear the government wants to get job cuts done on the cheap.

“PCS will fight these proposals as we did in 2017, when we successfully persuaded the high court to overturn the government’s previous attempts to rip up our members’ redundancy rights.”

The current redundancy terms were negotiated in 2010 under former Tory minister Francis Maude. The proposal is for departing staff to get three weeks of pay for every year of service, down from the current month of pay. There would be a cap of 18 months of salary for voluntary redundancy and nine months for compulsory, down from the current 21 months and 12 months.

There would also be a minimum salary of ?26,000 when calculating the redundancy payouts and an upper limit of ?149,829.

This would mean someone paid ?26,000 with 10 years of service could currently expect to get a payout of ?20,000, but under the proposals would get ?15,000.

The consultation document warns that disabled employees could be disproportionately affected. It highlights the requirement for “efficiency departures” involving staff with underlying health conditions. The document said: “It is recognised that disabled staff may be disproportionately impacted by the proposals and so there is a risk of indirect discrimination. Less favourable treatment on grounds of age and disability is lawful if it is a proportionate means of achieving a legitimate social policy aim.”

In response to union criticism, a Cabinet Office spokesperson said: “In the context of high national debt and increasing cost pressures, it’s vital that all areas of government spending, including the civil service compensation scheme, are affordable as well as fair to both staff and the taxpayer.

“Reforming the scheme is a longstanding policy and not connected to headcount reductions. We will continue our close engagement with unions on these proposals.”

It would be a choice for the next prime minister, Truss or Rishi Sunak, whether to go ahead with the proposals. Truss, who is supported by Rees-Mogg, is backing plans to cut civil service costs and has pledged to wage “a war on Whitehall waste”.

Truss’s campaign received a further boost on Monday, when a former cabinet minister became the third MP to publicly announce they were moving from Sunak’s camp to her own.

Alun Cairns, who served as Welsh secretary, said Truss was full of “positive ambition” and was more likely to preserve the union.