The British government plans to cap redundancy payments for civil servants, it said today, at a time when spending cuts to tackle a record peacetime deficit could cost thousands of them their jobs.
Francis Maude, minister for the Cabinet Office, said the government had reluctantly decided to introduce legislation that would limit all compulsory redundancy deals to 12 months' pay and payments for voluntary exits to 15 months' pay.
"Sadly the huge deficit we inherited means there is a real urgency now for change. It is for this reason, and in the light of the current deadlock, that we have had to reluctantly start this process today," Mr Maude said in a statement.
He was referring to a legal challenge by PCS, one of six civil service unions, that blocked the previous government's attempt to reform the redundancy payments system earlier this year.
The Cabinet Office said that under the existing rules, some longstanding government employees were entitled to compensation packages that were "hugely out of kilter" with what prevailed in the private and wider public sectors.
Some civil servants were eligible for redundancy packages worth over six years' pay, the ministry said.
The Office for Budget Responsibility, set up by the new government to provide independent assessment of public finances, estimates that up to 600,000 public sector employees could lose their jobs in the budget cuts. The OBR said this would be offset by job creation in the private sector.
Mr Maude said the government hoped to agree with all civil service unions on a sustainable new scheme that would meet the need for budgetary constraint but also offer protection to lower paid civil servants.
George Osborne, the finance minister, unveiled a June 22nd budget that aims to shrink the budget deficit from 11 per cent of gross domestic product to almost nothing in five years.
Reuters