Redundancy pay-offs for senior local authority staff will be capped at £95,000, under new plans published for consultation today.

The Government has pledged to cap redundancy pay-offs in local government and the wider public sector, in a bid to save tens of millions of pounds a year.

Chief secretary to the Treasury, Greg Hands, said nearly 2,000 public sector employees were awarded over £100,000 in redundancy pay-offs in 2013 alone.

‘It’s not right that highly-paid public sector workers should receive huge taxpayer-funded pay-outs when they’re made redundant,’ said Mr Hands.

‘I am not prepared to stand by and allow huge payoffs to be made at a time when we are having to find savings in our public services as we seek to run the strongest budget surplus for more than 40 years. That’s vital to ensuring economic security for the working people of Britain.

‘The cap we are bringing into law will mean no more six-figure payoffs in the civil service, local authorities and the NHS. We also expect other bodies who rely on taxpayers’ money to follow suit.’

The new cap, as outlined in the consultation, would apply to councils, the health service, schools and most quangos. The Government also announced it was considering further reforms to the calculation of compensation terms and will consult on these in due course.