The Mayor of London, Sadiq Khan, has commissioned a review into notice periods and severance arrangements for senior staff across the GLA Group, to assess whether they are in the best interests of the London taxpayer and if any changes are required.
The review will look at whether contractual requirements for pay-outs for departing senior staff across the GLA Group remain appropriate, and will make recommendations to the Mayor later in the summer.
The review comes as TfL continues with the biggest overhaul of the organisation in its history, reducing costs and making the organisation more efficient. TfL’s latest Annual Report shows cuts to year-on-year operating costs for the second year running, with total savings of £608m, including through reducing unnecessary management layers. Under previous Mayors, operating costs rose every year.
Overall the number of TfL employees on a base salary of more than £100,000 who earned that amount during the financial year reduced by 11 per cent - 169 in 2017/18 compared to 189 people in 2016/17. With TfL absorbing an average £700m per year cut in Government funding over five years the reduction in senior managers is saving £111m a year by 2021/22 as part of reducing year-on-year operating costs.
However, figures from the latest Annual Report show that the cost of severance payments contractually necessary to achieve this totalled slightly above £50M in 2017/18 for the second year running. While TfL reduced the number of staff on a base salary of more than £100,000, 224 people who were on a base salary of less than £100,000 received one-off severance payments which took their total remuneration above £100,000.
Severance payments can include salary in lieu of notice, a one-off voluntary severance payment and payments for annual leave not taken, all in line with contractual agreements.
The review will not look at changing any existing contracts, which the Mayor does not have the power to amend unilaterally. Instead it will assess the terms for future contracts of employment for senior staff across the GLA Group, including MOPAC, LLDC, the new London Fire Commissioner Office, and TfL – looking at arrangements for new employees on salaries above around £100K.
Sadiq Khan, Mayor of London, said:
“It is essential that London and the GLA continues to attract the very best talent from around the world, and this expertise is essential in keeping London moving and delivering huge projects like the Elizabeth Line opening later this year. However, with cuts in funding from central Government across the GLA group, we have to continue to be sharply focussed on ensuring taxpayer money is well spent.
“TfL have taken huge strides in cutting their year-on-year operating costs and reducing the number of senior staff is an important part of this. We have to abide by pre-existing contractual commitments, but I want to ensure that future contractual arrangements for senior staff are in the best interests of Londoners.”
Notes to editors
The Mayor has appointed Dawn Jarvis, previously HR Director at the Department of Education to conduct the review.
Dawn has worked in the public sector for 27 years, working across six central government departments including the Department for Education where she was Director of People and Change. Dawn has also been Executive Director of a large Foundation Trust in the NHS, and as Turnaround Director at Doncaster and Bassetlaw Teaching Hospitals (DBTH) NHS Foundation Trust, she turned around a huge deficit bring the Trust back well inside its agreed levels.
She is a Fellow of the Chartered Institute of Personnel and Development, a graduate of the NTL Global Organisation Development Certificate Programme and is Founder and MD of a consultancy firm.
Dawn will be paid under 10K to conduct the review.
TfL efficiencies:
TfL continues to overhaul its organisation through cutting management layers and merging functions, including cutting year-on-year operating costs by £608m. TfL continues on its trajectory to achieve an operating surplus by 2021/22.
TfL’s reduction in reliance on agency staff has saved TfL £3.4m per week or more than £175m a year. And TfL have continued to reduce the number of contractors earning over £100,000 and this year represents a drop of 60 per cent from 267 in March 2017 to 107 in March 2018.
Further efficiencies include:
Reducing the number of TfL office buildings from over 30 to three accommodation hubs in Stratford, Southwark and North Greenwich, supported by a small number of operational and 'satellite' type premises. This will save more than £110m by 2022/23;
Continuing the modernisation of London Underground, including exiting a major private partnership maintenance contract, saving £200m;
- TfL employs external remuneration advisers to benchmark the remuneration of its Chief Officers against a peer group of comparable companies from transport, infrastructure, property, and public services sectors with which TfL competes for senior staff. The base salaries and total target remuneration of the Commissioner and other senior members of staff is significantly lower compared to an equivalent role in the private sector.
Figures