Conclusions and recommendations
Has senior council officers' pay been rising?
1. It
is unacceptable for senior figures to be handed significant increases
simply for doing their jobs, particularly when council budgets
are squeezed and other employees are subject to pay freezes. However,
whilst data bears out the headlines highlighting steep rises in
senior council remuneration in the first decade of this century,
for the past four years there has been pay restraint by councils
of all types and in most places. Those few councils bucking this
trend stand out all the more. We welcome the restraint now being
exhibited by the vast majority of councils and by the national
negotiators. (Paragraph 10)
2. This restraint
indicates that locally democratically elected representatives
are being sensitive to the public mood. Where this has not happened,
there has been swift, strong and effective challenge from local
taxpayers. It is encouraging that, in isolated cases where excessive
rises have been proposed, local communities such as Rochdale have
acted through the arrangements in place to stop them. However,
councils and decision-takers at local and national level, including
the Joint Negotiating Committees, must be vigilant that changing
economic conditions do not stoke pressure for increases in future
whilst ensuring that remuneration remains sufficiently competitive
to attract and retain high quality senior managers. Furthermore,
councils must ensure that they obtain good value when recruiting
interim managers or consultants to cover hard-to-fill posts temporarily,
and that the public purse is not adversely affected by the use
of payment methods designed to reduce the tax paid by the officer.
We make recommendations below on the framework of checks and balances
to give local communities the necessary assurances on this. (Paragraph
11)
Setting locally appropriate remuneration
3. We
are concerned that in some cases job evaluation schemes have produced
remuneration decisions which are not sensitive enough to local
circumstances and need. We therefore conclude that, whilst consistent
use of such schemes by a sufficiently large number of councils
is valuable in providing an objective measurement of job size
which enables councils to benchmark against each other, councils
must ensure that they use this information with greater regard
to local circumstances, needs and priorities. Councils must ensure
that they critically assess advice from job evaluation schemes
and recruitment consultants within the context of such local considerations,
including an analysis of whether local market conditions might
secure as good an officer at a lower rate. (Paragraph 17)
4. If councils are
to make locally appropriate decisions they need accurate data
about what they need to pay in their local area so that they neither
over-pay their senior officers nor fail to attract the best candidates
by offering lower rewards that are out of kilter with the market.
We recommend that the Local Government Association works with
regional employer organisations to provide a regular analysis
of regional pay trends and help to inform the national and local
debate on appropriate remuneration levels and changes. The LGA
should seek feedback from its council members as to whether there
is a gap in the data about councils' ability to recruit and retain
suitable candidates and, if necessary, commission regular surveys.
However, we recognise that there is no 'one size fits all' formula
to determine the right remuneration levels for every circumstance,
since different councils have different local contexts and priorities.
(Paragraph 20)
5. We welcome the fact that most councils
have a relatively low ratio between the pay of the highest paid
officers and staff on lower pay grades since this indicates a
broad fairness within council pay approaches, in contrast to the
significant gap between those in high paid and low paid jobs in
parts of the private sector. However more can be done to raise
the floor for pay and we commend those councils which have introduced
a living wage policy for all their staff. (Paragraph 22)
Assessment of performance
6. If
councils are to award their senior staff additional rewards such
as bonuses these must be sensitive to local circumstances and
be based on clear evidence of personal, additional contribution.
However, many councils have only weakly developed and articulated
mechanisms for assessing their Chief Officers' performance and
bonuses may appear to be paid to those simply undertaking their
normal responsibilities. It is essential that there are robust
appraisal systems for Chief Officers. We recommend that the Local
Government Association updates and publicises guidance on how
to appraise senior officers. In addition, whilst the individual
appraisals of an officer are not normally published, nor should
they be, the Department for Communities and Local Government should
require councils to publish the method so that local residents
can see how robustly senior staff performance is assessed, and
if linked to remuneration, how the performance-reward link is
determined. (Paragraph 25)
Under-performance
7. Many
councils do not have robust approaches to identify and tackle
under-performance by senior staff which means some find it easier
to pay them off inappropriately rather than address the underlying
failure. The blurring of processes and the opaque manner in which
some of these payments have been made has meant that local taxpayers
may often not be aware when redundancy or discretionary payments
have been mis-used. This does not deliver best value for local
taxpayers. Councils must publish the rationale for, and amount
of, any financial payment to a departing Chief Officer within
a month of the decision to make the award so that the public can
understand why such a payment has been made. Furthermore the public
must be assured that effective appraisal processes are being followed
and, as we recommend above, the Department for Communities and
Local Government should require councils to publish information
on the method used to appraise senior staff so that local residents
can clearly see how any problems with performance will be addressed.
(Paragraph 28)
8. We welcome government
moves to prevent the 'revolving door' where senior staff in receipt
of large redundancy payments immediately take on another highly-paid
job in the same sector, or even undertake the same work for the
same council as a consultant. This does not deliver best value
for the taxpayer and in cases where an individual's performance
has been inadequate represents a mis-use of public money. But
we caution that the proposals must not penalise those made redundant
through no fault of their own and who may naturally look to secure
quickly another similar level job in the same sector. Close attention
must be paid in developing the detailed proposals to protect such
staff whilst ensuring abuses of redundancy arrangements (such
as re-hiring staff immediately as consultants) are prevented.
We await the details of the Government's proposals and subject
to time constraints, we will wish to return to this issue later
in this year. (Paragraph 30)
Are Chief Executives essential?
9. We
recognise that innovative approaches such as removing or sharing
the post of Chief Executive can reduce overall salary bills and
it is right that each council considers whether such approaches
will deliver best value for their communities. However, councils
can be deterred by adverse local public comment where, despite
net savings on salaries, this approach leads to higher salaries
for some individuals whose jobs expand. We therefore recommend
that the Local Government Association researches the impact on
overall salary budgets of those councils which have taken such
approaches so as to provide an objective evidence base. We also
recommend that the LGA undertakes an assessment as to the wider
impact of sharing or abolishing senior posts on the efficiency
and effectiveness of the council's leadership and management and
strategic development, in order to help inform other councils'
decisions. This analysis could usefully assess the cost savings
delivered in reduced senior management remuneration costs where
communities have decided to create unitary councils. (Paragraph
33)
10. We do not support
the merging of the role of Leader and Chief Executive since this
has the potential to blur the distinction between two quite separate
functions. The posts are distinct: the Leader sets the political
direction of the council; and the Chief Officer implements these
policy decisions operationally. This provides a robust framework
for, on the one hand, professional advice and challenge over how
political objectives are implemented, and, on the other, oversight
and scrutiny of the effectiveness of the council service. While
there is clearly an overlap in many aspects of the two roles,
such as articulating corporate strategy, the different focus of
each provides clarity which would be lost by merger. (Paragraph
35)
Transparency and scrutiny
11. We
consider well-informed local action to be a more effective means
of moderating pay levels than centrally imposed approaches. The
regulatory regime introduced since 2010 requiring publication
and scrutiny by councillors of pay decisions has made it easier
for communities to influence pay decisions but more can be done
to ensure that full and transparent data are available. Whilst
it is clear that data are being published as required by regulations,
councils do so in different ways, making it difficult for local
taxpayers to make comparisons with other local authorities or
over time. We recommend that the Local Government Association
collates and presents data in a format which allows local people
to compare approaches in their areas within a framework of easy
to understand benchmarks. Individual councils should also assess
with their local residents whether the way in which they present
data is easily understandable. Councils must also set out, and
fully report the matter to council, when an officer is paid other
than by means of a salary subject to income tax, such as via a
limited company, to provide clarity on the level of tax payable
under any non-standard arrangements. (Paragraph 39)
12. To enable effective
scrutiny, frontline as well as Executive councillors must be involved.
Current guidance requires decisions on remuneration packages worth
over £100,000 and decisions on severance payments to be approved
by the full council. The Department for Communities and Local
Government (DCLG) should monitor how far councils are abiding
by this. In addition, we recommend that DCLG strengthens guidance
to require a council's policy on appraising and monitoring senior
officer performance, together with procedures for addressing poor
performance, to be approved by a full council meeting and published.
(Paragraph 40)
13. Whilst there has
been pay restraint during the period of austerity, the challenge
for councils in future will be to maintain this against changing
economic conditions. The changes set out in this report will help
to strengthen local control, helping to ensure there will not
be a return to excessive salary inflation, while at the same time
ensuring that pay is adequate to recruit and retain high quality
managers in local government. (Paragraph 41)
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