Page last updated at 11:28 GMT, Tuesday, 16 March 2010

Too many big pay-offs for council bosses, says watchdog

Some council bosses receive pay-offs of more than half a million pounds

Too many English councils are agreeing large payoffs to get rid of their chief executives, often because of personal differences, a spending watchdog says.

A review by the Audit Commission found 37 council bosses left their jobs by "mutual agreement" and were given payoffs of, on average, £256,104.

Some leave because of a "personality clash" with elected councillors - some should be sacked, it said.

The government said new ways to "claw back" taxpayers' money had to be found.

The Conservatives said the pay-offs were an "affront" and that councils had to provide "clearer guidance".

Boomerang bosses

Of the 37 severance agreements between January 2007 and September 2009, the Audit Commission said 13 were for more than £300,000 and three were for more than £500,000. A total of £9.5m was handed out over 33 months.

The commission said the main reason for the deals - which accounted for nearly a third of chief executives' departures in that period - was personal differences with elected councillors rather than poor performance.


But it said it was "unusual" for departing chief executives to go straight into a new highly paid job - so-called "boomerang bosses" - after receiving a large payoff - with only six of the 37 cases doing so.

It recommended that, in future, severance deals should be fully disclosed and subjected to tighter scrutiny.

The commission found competent chief executives had been laid off needlessly and those not up to the job were being paid off when they should have been sacked.

'Reward for failure'

It recommends that consideration be given to advance "pre-nuptial" agreements setting out the severance terms before chief executives are hired.

Proposed severance packages should be reviewed by cross-party committees first and details of any payouts should be published shortly afterwards.

The report said payoffs, often following a change of political leadership, were "not always justified" and said they should not be a "reward for failure".

Councils need talented people so they can improve on their record as the most efficient part of the public sector
Jo Miller
Local Government Association

Chief executives should have appraisals, to mount evidence for a dismissal if necessary and mediation should be used "more widely" and not as a last resort.

Audit Commission chairman Michael O'Higgins told the BBC: "There are three key issues coming out of this report.

"Firstly, are too many people being paid off? The answer is yes, because councils are not following procedures designed to reduce payoffs for chief executives.

"Secondly, are some payments excessive? The answer is yes, because councils haven't thought about this in advance of employing somebody and they haven't followed the best procedures to keep the cost to a minimum.

"And thirdly, is there adequate scrutiny and transparency of this process? There isn't and there should be."

Local Government Secretary John Denham backed the report's recommendations and has urged the Local Government Association to see they are adopted.

He said: "Taxpayers' money should not be used to resolve personal differences. It is time we find a way to change the rules so taxpayers' money can be clawed back where the system has been exploited."

'Huge organisations'

For the Conservatives, Bob Neill said: "Such payments are an outrageous waste of taxpayers' money and an affront to families facing soaring council tax bills. There should be no rewards for failure, either in the public or private sector."

Jo Miller, deputy chief executive of the Local Government Association, said council chief executives ran huge organisations with multi-million pound budgets running vital services.

"Councils need talented people so they can improve on their record as the most efficient part of the public sector. In deciding salary levels they need to balance that with the need for all salaries to be demonstrably reasonable.

"It is right that chief executive pay is subject to public scrutiny. All council senior pay and severance packages are subject to scrutiny by external auditors.

"Council leaders are very aware of the impact of decisions about senior staff as they are subject to the voters' judgement through the ballot box."

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