The pay-off dwarfs the pounds 200,000 payment made by Greenwich Healthcare NHS Trust when it parted with its chief executive and the pounds 250,000 compensation payment made last year by the Burnley Trust to Maggie Aikman after the relationship between her and the consultants at the NHS hospital broke down
The figure was revealed yesterday by the Healthcare Financial Management Association, the association of NHS finance officers, as part of its annual statistics on chief executives' pay.
These show that 20 trust directors - half of them chief executives - earned more than pounds 100,000 last year, compared with six in 1993-94.
Cheviot and Wansbeck NHS Trust, which runs Wansbeck Hospital in Ashington, Northumberland, said John O'Brien, its chief executive until March this year, had taken early retirement "in the interests of the service". He had been appointed as chief executive of the trust only in April 1994.
Jonathan Tymms, acting finance director for the trust, whose total income last year was pounds 46m, said the half-million pound bill was made up of a pounds 41,000 compensation payment for loss of office, an element for salary, and pounds 414,000 in pension contributions which must be capitalised under new NHS rules.
He added that Mr O'Brien, who was in his early fifties, had spent 29 years in the NHS and was paid pounds 68,000 at the time of his departure. The cash was paid in accordance with NHS regulations and approved by NHS auditors, he said.
Alan Milburn, a Labour health spokesman, said paying out 1 per cent of the trust's annual income on a single severance package was "astonishing and unacceptable".
The pay-out comes amid continued criticism of a "hire and fire" mentality in the health service which has led to a growing NHS redundancy bill in recent years.
Andrew Wall, former chief executive of Bath Health Authority who was himself made redundant at the age of 56 in 1992, said yesterday that the present NHS arrangements were "chaotic" with "chief executives and others still losing their jobs at the whim of chairs of health authorities and trusts".Reuse content