Page last updated at 11:35 GMT, Tuesday, 13 October 2009 12:35 UK

Council bosses 'setting own pay'

By Julian O'Halloran
File on 4

Like other councils seeking to appoint the best person to be their chief executive, Coventry City Council called in a team of head-hunters.

Recycling bins
The Audit Commission is concerned at the level of pay for council chief executives

However Solace Enterprises, which played a key role in helping to pick the new chief executive for the £175,000 a year post, was an unusual recruitment consultancy because it is a division of the Society of Local Authority Chief Executives (Solace).

The new appointment sparked a row among some councillors who were unhappy that the new chief executive received £30,000 a year more than the previous incumbent.

Socialist Party councillor Rob Windsor told File on 4: "These are chief executives setting their own pay."

He added: "You can't set your pay. Neither can I... These are council chief executives who run Solace. I would worry about them going round the country doing this."

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However these claims were rejected by David Clark, director general of Solace, whose recruitment arm has helped more than 20 councils hire chief executives in recent years.

"If you are a local authority like Coventry, one of the things any consultant will do is look at similar size local authorities and look at average pay rates. That's precisely what happened in that case and that is normal," he said.

Free market

Mr Clark also discounted the views of some analysts that the organisation either causes pay inflation or is compromised by its commitment to improving the lot of its members.

He cited market forces as driving up pay for the top bosses of local councils, and added: "No one consultant could do that since there are so many consultants out there, so it wouldn't be possible for any one organisation to get close to that."

Whatever the role of recruitment consultancies in the increase of the pay for top executives in councils, there are concerns that the pay rises are too much.

A number of chief executives receive a higher salary than the Prime Minister.

Diane Ridley, of The Audit Commission, said a commission study of 150 local authorities showed a steep rise in a five year period.

Pay scrutiny

"The pay has gone up by 34% over that period... a higher rate of increase than in comparable public sector bodies such as NHS Trusts and Housing Associations," she said.

Ms Ridley believes that, with councils focussing on their star ratings, there is competition to recruit from a small pool of chief executives. And when demand exceeds supply, salaries will be driven upwards.

The Communities Secretary, John Denham told File on 4 that the time has come for ruling parties on UK councils to prove that every penny of their spending is justified.

"The issue really is that salaries seem to leap up when chief executives move from job to job. But there's precious little evidence that changing your executive actually improves the performance of your local authority," said Mr Denham.

Communities Secretary John Denham
One of my worries is that public anger at what is seen as excess at the top could become pressure to drag down the pay and pensions right across local government
John Denham, Communities and Local Government Secretary

He added that the government could not freeze the pay of local authority bosses like it had done for judges and NHS chiefs but he added: "I am setting some pretty clear mood music about the demand for value for money we would expect to see."

Solace's David Clark is sceptical about such talk from government dismissing it as sound-bite politics.

"If it were an issue, surely they would have done something about it... I sometimes wonder if it's simply because they cannot get their hands on bankers and their much bigger payouts that they have a pop at council chief executives," he said.

But with councils bracing themselves for likely spending cuts, Mr Denham said the government is keen to get the salaries of council chief executives under control.

He added: "One of my worries is that public anger at what is seen as excess at the top could become pressure to drag down the pay and pensions right across local government.

"Typical local government workers are modestly paid, very dedicated to the job. Their pensions are not huge and there is a real danger that coverage of what is a relatively small number of people on extremely high salaries becomes a general drive against a very large number of hard working local government public servants."

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