Councils should
have the power to claw back taxpayers’ money paid out to cut ties
with their town hall chief if they later get re-hired to another
local government job.
Communities Secretary John Denham welcomed the report and made
clear taxpayers’ money should not be used by councils to resolve
personal differences and called on Local Government to quickly
adopt the recommendations.
It found that pay-offs for 37 chief executives cost £9.5m.The
average was over a quarter of a million pounds but a few cases
exceeded £500,000. It called for publication of pay-off details;
recouping where necessary; ending pay-offs to remove poor
performers; formal appraisals for chief executives; and management
training for councillors.
Mr Denham said every council needed to set up remuneration
committees with some outside representation to set pay levels and
structures for senior posts that also decided severance and
discretionary payments.
Last August, John Denham asked the Audit Commission to
investigate the so called ‘Boomerang Bosses’ phenomenon where Town
Hall chief officers are being allowed to walk off with big
pay-offs after falling out with the council's political leadership.
The Audit Commission report, ‘By Mutual Agreement’ found that
between 2007 and 2009:
• More than a third of council chief executives lost their jobs.
35 per cent resigned for new posts, 30 per cent left under
mutually-agreed contract terminations with pay-offs (37 from 122)
and one in six took up a job at another council within a year;
• The average payment was £256,104 while 34 per cent were
over £300,000. 70 per cent of cases included either lump sums or
increased pension years;
• Decisions by members to pay off the chief executive often
following a change in leadership are not always justified. Between
60-70 per cent of councils cite relationship breakdowns as a factor;
• In a earlier report the Commission found that councils that
replaced their chief executive with one from another council paid
a 42 per cent wage increase on average;
• There could be a delay of 18 months between a severance
payment and its publication, too long for adequate accountability
to the public. Only 46 per cent of dismissals included agreed
press statements;
• Poorly performing chief executives, or those with poor
conduct records are paid off rather than disciplined or dismissed.
15 per cent of all mutually agreed departures were performance related;
• Chief Executives work for the whole council and have a
right to fair treatment and protection from political interference.
Mr Denham has today written to Margaret Eaton, Chairman of the
Local Government Association, inviting her to agree these
proposals as key actions that Government and councils need to take
forward to reassure the public that taxpayers’ money is being used properly.
He has also asked Cllr Eaton to set out how the LGA intend to
take forward the recommendations, including meeting immediately
with Government to discuss how to change to the existing framework
for pay-off claw back.
In addition, the minister made clear councils should publish
‘accessible’ statements justifying to taxpayers any senior
employees. This builds on ground breaking pay transparency rules
that require from 31 March all posts over £50,000 to be set out in
annual accounts including the pay and perks of all ‘senior posts’
and naming individuals paid over £150,000.
John Denham said:
"The Audit Commission report shows that too many Chief
Executives are being dismissed because they have fallen out with
council leaders - this can cost as much as £500,000 in some cases
and is all too often seen as a quick fix solution. 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. Councils should also make publicly available what they
waste in pay-offs and set up remuneration committees to decide
appropriate pay awards and senior structures.
"Local Government, like the rest of the public sector,
needs to show that it can take the tough choices to make sure
public money is used in a way that protects the frontline services
which matter to people most."
Notes to Editors
1. The Audit Commission’s full report, entitled ‘By Mutual
Agreement’ can be found at: http://www.audit-commission.gov.uk/nationalstudies/localgov/mutualagreement/Pages/default.aspx.
Media Enquiries: 0303 44 41136 Out of hours: 0303 444
1201
Email: press.office@communities.gsi.gov.uk
News Releases: www.communities.gov.uk/newsroom
Contacts:
Communities and Local Government Out of hours
Phone: 0303 444 1201
press.office@communities.gsi.gov.uk