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Chief executives' salaries and pay-offs took another battering this week, during John Denham's speech to the Labour Party conference in Brighton. The communities and local government secretary said council pay was ‘out of hand', and that he would also cap rising pension costs. He also plans to tackle ‘boomerang bosses' who are paid off by one council before picking up another job elsewhere. It is not the first time Mr Denham has criticised pay-offs. In August, he called on local government watchdog, the Audit Commission, to look into the issue of chief executive pay-offs – the consultation for which closes this week. His comments come as the district auditor has hit out at Tower Hamlets LBC for the way it terminated the employment of former chief executive, Martin Smith. In an annual governance report to the council, district auditor, Jon Hayes, highlighted a number of weaknesses with regard to value for money in the way the council went about the termination which cost a reported £500,000. Mr Hayes said the council did not obtain legal and financial advice ‘on a timely basis' and options to mitigate potential costs were not initially considered. He criticised the way the termination was announced before proper processes had been completed, and said all these factors led to the council incurring costs which could have been avoided. ‘The council needs to ensure such weaknesses do not recur in any future chief officer terminations, in order to maintain proper governance and value for money and to protect the council's reputation,' he added. The report recommended the council should make sure it followed proper processes in the future. Council leader, Lutfur Rahman, insisted the authority had followed all established national procedures and was ‘mindful of the prudent use of taxpayers' money'. However, he added that the council would revisit its procedures to establish if any improvements could be made. Mr Denham had previously expressed concern about ‘unacceptable' deals where chief executives could walk away with big pay-offs following fall-outs with councils' political leaderships. The communities secretary told the party conference that the average annual pay of chief executives in local government – up by £40,000 in the past seven years – was ‘out of hand', and had to stop. He said he did not want to see the pay of local public servants ‘dragged down' by public anger at ‘the excess of a few' but the pension entitlements of the very highest earners had to be capped. ‘I will tackle the boomerang bosses who walk away with huge payouts, straight into their next job,' Mr Denham vowed.

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WHITEHALL

Auditor rules against boomerang payoffs

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