Quango paid unauthorised bonuses

A quango paid tens of thousands of pounds in unauthorised bonuses to staff in breach of a Government-agreed pay deal, a public spending watchdog said.

The National Audit Office refused to sign off the annual accounts for the East of England Development Agency (EEDA) after uncovering the illicit payments.

Despite a public sector pay freeze, bosses at the regional development agencies were granted extra money last year by the Government to help retain staff as they were wound down.

Essential staff were given up to a year's salary as part of a deal that involved a clear agreement not to give any other pay rises or performance bonuses.

But the NAO discovered that EEDA had nonetheless made £51,000 in "irregular ex-gratia payments" - in two £500 handouts to almost all of its staff barring executive directors.

They were designed to give "recognition of the additional responsibilities they had taken on and their continued hard work as the organisation closed down", the NAO said.

When the payments were uncovered by auditors the agency sought approval from the Department for Business Innovation and Skills - but it was refused.

NAO head Amyas Morse said: "I have concluded that these ex-gratia payments are irregular.

"I recognise that, in total, the sum involved is not substantial, but the payments exceeded a clearly understood pay remit and did not take into account the wider considerations of public sector pay restraint and the specific initiative already in place to reward those individuals considered key to delivering closure of the Agency."

A BIS spokesman said: "It is disappointing that, at a time of restraint and a pay freeze across the public sector, the East of England Development Agency showed poor judgment by going outside the strict pay remit they were working under and provided ex-gratia payments to staff, without the approval from the department.

"The qualification of their 2011/12 accounts falls short of the high professional standards we expect to see. The department was not approached until after the payments were made to staff, and they did not receive approval from BIS."

PA