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Gagging clauses used to cover up failure

The Public Accounts Committee is “deeply concerned” about the use of confidentiality clauses and special severance payments in the public sector, its new report shows.

Evidence suggests they have been used to cover up failure, including compromised patient safety in the NHS. A lack of transparency, accountability and central oversight also means that the use of these arrangements cannot be effectively monitored or controlled.

The MPs called for the Cabinet Office to issues guidance on the appropriate use of such clauses and payments for all public organisations, including the health service.

All public sector organisations should have to secure approval for special severance payments from the Treasury, which should make decisions based on economy, efficiency and effectiveness, not just cost.

Margaret Hodge MP, chair of the Committee of Public Accounts, said: “We are deeply concerned about the use of compromise agreements and special severance payments to terminate employment in the public sector.

“It is clear that confidentiality clauses may have been used in compromise agreements to cover up failure, and this is simply outrageous. We heard evidence of shocking examples of using taxpayers’ money to ‘pay-off’ individuals who have flagged up concerns about patient or child safety.

“There is simply no way of knowing how many of these special severance payments have been made across the public sector – or whether the compromise agreements have been used to ‘gag’ employees. To date neither the Treasury nor individual departments have monitored this adequately.

“The end result here is the risk that public bodies reward failure just to avoid attracting unwelcome publicity. No one has taken responsibility for identifying early warnings of service failure, such as organizations with unusually high numbers of agreements, or individuals transferring between departments receiving large severance payments.”

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