Wallace Mark Wallace of the Taxpayers Alliance, says Council Chief Executives who thwart the policies of elected leaders should be sacked – not paid off.

A fascinating study was released by the Audit Commission over the weekend. It was commissioned in 2009 by John Denham who, as Communities and Local Government Secretary, has at least started to face up to the high level of public concern about the amounts being paid to council Chief Executives.

The focus for the AC report, though, was not the pay or perks given to council bosses but the severance pay they get when leaving their jobs early.

These payments have clearly been on the rise, and larger and larger golden parachutes have featured in our Town Hall Rich List in recent years. This is the first report to study them as a stand-alone trend.

Amazingly, the Commission found that the 37 Chief Executives who had received such payments since 2006, the average sum had been almost £257,000.

This is a seriously big bill, particularly considering the generous salaries, benefits in kind and of course pension packages such staff already receive. The payments further underline the vast gulf between the lives of the council taxpayers who fund these deals and the fortunate circle of executives who receive them.

The idea of severance pay is, of course, as compensation for the earlier than planned ending of a contract. Essentially it is to cover some portion of lost earnings. The first question, which apparently John Denham is concerned about, is whether they are really deserved?

As many have pointed out, if a council chief executive has political disagreements with the council’s leadership, should they really get a huge reward for being so awkward? Often, councillors have been left with little choice but to ask their chief executive to leave simply because the executive has refused to accept their authority to run the council as they wish – in the name of the people.

In some cases, there is surely a strong argument that council leaders should be bolder and actually sack chief executives who fail to perform either through incompetence or through wilful disobedience. It is understandable why many councils have chosen the easy way out by effectively buying intransigent chief executives off, but this is taxpayers’ money and it should not be used to reward failure.

Even if a severance payment is justified in principal, it is high time that councils started reducing the amounts being handed out. These same executives constantly say they are comparable to private sector senior managers, in which case they should accept that the prevailing conditions in the private sector dictate that there is less money around, so there payments should fall drastically.

Crucially, the Commission also investigated the subsequent employment experience of the Chief Executives who had pocketed so much money. One in six of them picked up another senior council job within the next 12 months. Of course, any council taking on someone who has been pushed out should think twice about their decision – if they weren’t up to the job at the old council, is it a good idea to take them on? Furthermore, if they are able to walk into another job fairly soon did they really need a cool quarter of a million to tide them over?

Like so many of the topics that turn up on this local government blog, this is an issue which has much wider ramifications. It is clearly necessary to reduce the costly senior management payroll throughout the public sector, and political leaders at every level must steel themselves to refuse demands for similarly hefty payouts whether it is in Whitehall, the NHS or elsewhere.

For local government specifically, we are about to enter a very turbulent period. Spending as a whole must be reduced, including funding from central government, and as well as making cuts in the number of managers many councils may find themselves in conflict with their chief executives over the essential spending cuts that must be made. This cycle of bigger and bigger severance payments must be broken.

38 comments for: Council CEOs pay offs average £260,000

Leave a Reply

You must be logged in to post a comment.