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Chris Smith examines what minister John Healey meant about top salaries when he said ‘this can't go on'. The words ‘chief executive' and ‘pay' right now are guaranteed to send the public's blood pressure soaring. The national media, tuning itself in with the public anger at ‘fat cats', has turned on senior corporate figures from the City to MPs. Allegations of sleaze and carpet-bagging were a key factor in the downfall of the Major Government in 1997, but Fleet Street then stayed away from attacking the public sector. The recent turmoil in financial markets has now made bankers an easy target, and the criticism is extending to other figures. Pressure is mounting to reduce the public sector pension pot and pay for senior public sector managers is also in the firing line. When local government minister, John Healey, delivered a broadside comparing council chief executives with Premier League football managers, it was clear something was wrong in Whitehall. The issue has been brewing for more than 12 months, prompted partly by the right-wing campaign group Taxpayers' Alliance. Run by former Conservative Central Office researchers, the group has made use of the Freedom of Information Act to reveal top salaries across the public sector. One report revealed how a raft of council chief executives now earned more than the prime minister. Adding to the clamour was a report by the Audit Commission last year, which showed salaries for council chiefs had increased by more than one-third in four years. The message from Mr Healey was blunt: ‘This can't go on.' The Taxpayers' Alliance would have warmed to his attack of ‘big pay-offs for failure'. His exact plans will be set out in a consultation, due ‘within weeks', but the minister, while sounding a conciliatory note, said he wanted more transparency. Mr Healey said: ‘Councils are big organisations which need the best-calibre people to run them. So, it is right they take their own decisions on pay, but I want to see them do so openly, and I want the public to have the full picture. The level of disclosure we require from councils is a good deal lower than we now require, rightly, from civil servants and ministers. It's time we brought council top earners up to the same standard.' His outline proposals are for legislation that would make clear to the public what top earners get in pay, bonuses, pensions and any special perks. Residents, through the new petition powers currently being debated in Parliament, would also ‘give local people the right to challenge their council, if they didn't agree with it'. The potential for paralysis at the top could be enormous, but Mr Healey was unrepentant. The minister said: ‘This will put a big brake on the spiral of pay and perks. It will make councils think harder about the top pay decisions they take. Councils have a tough job, so they need to recruit the best people. So, I am also looking at ways to widen the talent pool, and help potential recruits see local government as a good and challenging place to work.' Officials working on the proposals say the plan for widening the pool of talent is to include not only big-hitters from the private sector but also those from more junior local government ranks. And, by putting pay scales on the same terms as Whitehall civil servants, they aim to encourage greater movement between the centre and local government. It would, in the eyes of ministers, be a small but significant shift in the tectonic plates. But the minister's threat to literally lay the law down by introducing legislation was not met with resounding applause. Highlighting a pool of 20 people has not only made people nervous but suspicious of the motivation behind the announcement. One senior local government insider told The MJ that the minister's stand was ‘a political gimmick to distract people from bank bonuses and pensions, and MPs' expenses and allowances'. Most in local government welcome the opportunity of comparison with the private sector – there are a rapidly diminishing number of private firms which employ people on the same scale as councils, and few deal with the breadth of transactions. Only firms reliant on local authority business cover civil defence, elderly care and benefits. Research by the Society of Local Authority Chief Executives, put out in rebuttal of the minister matched chief executives at each council level with a private sector firm – with huge differences in pay in favour of the private sector. ‘These are big, complex organisations and, at a time of economic downturn, one wants the most competent people,' said SOLACE director general David Clark. Blame for the increases in pay was placed on councillors for chasing a small pool of talent in a bid to improve ratings. The Local Government Association has found itself caught in the middle. Chief executive, John Ransford, defended the need for the best talent to run complex organisations but backed the transparency demand. He said: ‘It is right that chief executive pay is subject to public scrutiny. Councils need talented people in top positions and in deciding salary levels they have to balance this with other policy objectives, including the need, in a tight financial situation, for all salaries to be reasonable.' But there is also an element of smoke and mirrors. Mr Healey's consultation is unlikely to finish and translate into legislation before the next general election. One senior local government figure pointed out to The MJ: ‘We are in the teeth of a recession and demand for council services is rocketing. Yet the Government and others pick this time to point the finger at the top earners in local government.'

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WHITEHALL

The cost of leadership

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