A report has criticised the payment of more than £80,000 of taxpayers' money to Wales' former top civil servant Dame Shan Morgan. The Auditor General for Wales, Adrian Crompton, found the Welsh Government's payment "lacked transparency and did not comply with good governance principles".
Dame Shan — who partially retired in April 2018 — was paid a base salary in 2020-21 in the band of £135,000 to £140,000 a year. She received a payment of £80,519 when she left the Permanent Secretary role in October last year following the appointment of her successor Dr Andrew Goodall. After concerns were raised over the payment, Mr Crompton has written in a report: "I have been unable to satisfy myself that the decision to make a payment of £80,519 to the Permanent Secretary on termination of her employment was properly made and, to date, properly accounted for."
The Auditor General found the payment broke down into three elements — £31,843 in lieu of notice, £9,553 in untaken annual leave, and £39,123 for extra days worked. Starting with the payment in lieu of notice, he wrote: "In the circumstances under which I understand the Permanent Secretary left her employment, she was not entitled to receive a payment in lieu of notice under the terms of her contract, but it would not have been unreasonable for her to seek a severance payment as compensation for the termination of her employment."
Moving onto the annual leave part, Mr Crompton added: "In my view, the Welsh Government’s position regarding the Permanent Secretary’s working arrangements is inconsistent. If the Permanent Secretary was entitled to the annual leave allowance of a full-time employee, she had no entitlement to receive additional leave/partial retirement days on the basis of being a part-time worker. If her working hours were reduced after taking partial retirement and further reduced from 1 April 2019, she was not entitled to a full-time annual leave allowance."
And criticising the element for extra days worked, he wrote: "The payment was premised on the Permanent Secretary having a part-time working arrangement after she took partial retirement. The number of days used to calculate the payment was arbitrary and without proper basis. And there is no contemporaneous documentation evidencing that the Welsh Government complied with the requirements of Managing Welsh Public Money."
Writing about the overall payment, Mr Crompton added: "The Welsh Government did not keep contemporaneous records of its reasons for making the payment, the rationale for the amount paid or evidence of who authorised the payment. I have therefore been unable to satisfy myself that the payment was properly authorised in accordance with the framework of authorities governing the expenditure and whether the expenditure was incurred for the purposes intended by the Senedd."
Although he did not make "specific recommendations" in the report, Mr Crompton wrote that the Welsh Government acknowledges "the need for improved processes concerning payments to senior staff". He continued: "The Welsh Government has set out to me actions that it will be taking:
• better documentation of agreements reached in these circumstances so that there is an adequate audit trail;
• reviewing the terms of reference of its Remuneration Committee so that the agreement of the committee, or at least the chair, is sought for individual exit payments or other significant changes to terms and conditions for staff at director level and above;
• production of a documented set of processes, agreed with the chairs of the Audit and Risk Assurance Committee and the Remuneration Committee, for dealing with any significant HR [Human Resources] matters which arise in respect of the Permanent Secretary or other very senior staff of the Welsh Government. This will include guidance on notifying other interested parties;
• working with UK Cabinet Office to develop specific guidance for the line management of permanent secretaries in the devolved context."
Peter Fox, Conservative MS for Monmouth and Shadow Finance Minister, said: “The Auditor General’s report is damning and clearly shows a lack of transparency and openness in the workings of the Welsh Government. It is a very surprising that the Welsh Government paid the former Permanent Secretary nearly £40,000 and yet kept no records for why the payment was needed or who authorised it.
“Further still, the Auditor General is at a loss as to why the Welsh Government paid out more than £30,000 for payment in lieu of notice when the employee wasn’t entitled to it. This report raises more questions than it answers and the First Minister needs to urgently explain what action he is taking to get the answers the Welsh public deserves.”
A Welsh Government spokesman said last month: "The Welsh Government firmly believes that the former Permanent Secretary did not receive anything that she was not entitled to and was treated no differently by Welsh Government to any other civil servant."
However, the spokesperson acknowledged "the concerns about us not keeping contemporaneous records and the reasons for making the payment to the former Permanent Secretary". They also said steps had been taken to improve the process. You can read more Welsh politics news here.
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