One cheer for John Denham

Mark Wallace of The TaxPayers' Alliance welcomes the investigation into Council Chief Executive pay offs - but says he should go further and be out in the open.

One cheer for John Denham! The Communities and Local Government Secretary appears to be the only Cabinet Minister who is actually putting forward some new proposals which could improve the lot of taxpayers at the moment.

His latest announcement is that the Audit Commission are to carry out a full investigation into so-called “Boomerang Bosses”, the highly paid council chief executives who pockets staggering golden parachutes when they are dismissed from one local authority, and then walk straight into a job at another Town
Hall.

The issue of executive pay in local government certainly needs close attention. Our annual Town Hall Rich List this year revealed that 1,022 local government officials enjoyed total remuneration of £100,000 a year or more. That’s an increase in the number of highly paid officials of 27% in one year. Many of those are
buoyed up by exorbitant redundancy payments, and it is certain that the majority of those currently in position have similarly generous agreements in place should they be dismissed.

Such leaving payments are – like many public sector employment practices – a bizarre version of what one would find in the private sector. By combining the eagerness of councils to act as though they are large businesses with their lack of actual private sector experience and in-built dislike of the uncomfortably tough working conditions in the real world, they have produced a fairground mirror distortion of a normal executive contract.

It is frankly absurd that some people who fail to do the job required of them are being paid a fortune just to go away, and then re-employed by other councils apparently regardless of their previous failure.

That is why John Denham’s announcement this week is welcome, but he only gets one cheer for a number of reasons:

1. This decision is long overdue. This issue has been evident for some years, and yet it has taken the combined pressures of a recession and an approaching election for the Government to acknowledge it.
2. The issue should not be restricted to the redundancy or dismissal payments received by these executives, it must include their basic salary levels, too. Even leaving aside such lump sum payments, it is surely absurd that a sector which is raising its prices and reducing its quality of service can continue to increase the rewards handed to its struggling executives. The investigation should look at the whole picture, not just part of it.
3. The problem can never be solved behind closed doors without the participation of the taxpaying public, but there is a chance this investigation’s findings may be kept secret. A lack of transparency has allowed the problem to flourish in the first place. Many councils still refuse to publish details of executive redundancy packages even in response to Freedom of Information requests, on the grounds of
   personal privacy. This investigation must pledge to publish all details of its findings including full details of those deals that it studies, and Mr Denham must force councils to be fully transparent in their executive remuneration if he is to make a real difference.
4. The DCLG still listens far too much to taxpayer-funded insider bodies with vested interests, particularly the Local Government Association and the Society Of Local Authority Chief Executives (SOLACE). These groups, and particularly SOLACE whose members are the very people cashing in at the moment, must not be allowed to knobble the investigation.

With council tax having doubled in a decade, such a sharp increase in council executives’ pay and perks is inevitably controversial. That controversy has only been heightened by the recession, which has hit the private sector hard but has barely registered on most public sector payrolls. It is good news that John Denham is listening to the public’s concerns and acting on them, but he needs to be bold, wide-ranging and radical if he is to truly deliver the change that taxpayers need.