Public sector organisations are using taxpayer's money to cover up their own failures and gag whistleblowers, a committee of MPs has said.

The Public Accounts Committee (PAC) said it had encountered 'outrageous' examples of where confidentiality clauses might have been used to 'pay off' individuals who flagged up concerns about patient and child safety.

Data has revealed the Treasury approved 1,053 special severance payments when staff contracts are terminated over the three years to March, totalling £28.4m.

However the cost is expected to be much higher, with the Treasury not required to approve payments in areas such as local government and private sector providers of public services.

The PAC said it was still 'not clear' who would monitor pay off trends in local authorities and private companies working in the public sector.

'We are deeply concerned about the use of compromise agreements and special severance payments to terminate employment in the public sector,' chair of the PAC, Margaret Hodge, said.

'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.'

While confidentiality clauses are not intended to stop individuals from speaking out, Hodge said people who were offered, or accepted compromise agreements had 'clearly felt gagged'.

MPs on the committee spoke of a 'worrying' lack of accountability and oversight around the use of compromise agreements and special severance payments in the public sector.

The Cabinet Office was told to issue guidance on the appropriate use of compromise agreements and special severance payments, outlining governance arrangements for their use and accountability.

'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,' Hodge added.

'The end result here is the risk that public bodies reward failure just to avoid attracting unwelcome publicity.'

A Government spokesperson said: 'Hard-working people do not expect their taxes to be spent to cover up failure - that's why we took action and are bringing in significant changes, which will ensure severance payments are not used to reward poor performance or prevent "whistle-blowing".'

'We will examine this report and welcome that the PAC recognises the work we have already done.'