How much should a council chief executive be paid?

by Stephen Tall on May 5, 2009

This story in the Express caught my eye – Council boss paid as much as PM:

THE BOSS of a newly formed local council is to be paid nearly as much as the Prime Minister, it emerged yesterday. In a move branded “unacceptable” by critics, Central Bedfordshire Council is advertising its chief executive’s post at £185,000 a year. Gordon Brown’s annual pay is less than £10,000 more ¬ at £194,250. …

Peter Blaine, leader of the council’s Liberal Democrats, said he was surprised the salary was so large, “particularly in view of the fact that the council has not kept its promise to reduce the council tax”.

This brought back memories of Vince Cable’s speech to the party conference last September, when he announced that if shadow chancellor he would “require every non-front line public sector employee on £100,000 or more to reapply for their jobs. Those allowed back would take a cut in pay and public sector pension entitlement.”

As I noted at the time,

There was a distinct intake of breath in the conference hall when Vince uttered this, part surprise, part bafflement. It’s a self-evidently unworkable proposal; and even if it were workable it would be undesirable. I’ve no doubt that many of us, many in the electorate, resent the idea of (for instance) Council chief executives on six-figure salaries. The reality is, however, that councils pay a market rate commensurate with the responsibility of employing someone who controls a multi-million pound budget of taxpayers’ money and manages hundreds, sometimes thousands, of staff. Councils which are doing their jobs properly will want to appoint the best person possible, and that sometimes means paying unpopularly high salaries. It’s populist nonsense to suggest they should do otherwise.

(It seems, by the way, that Vince may have dropped this pledge – recently his comments on top public sector pay have been a little more muted, with the low-key suggestion instead that “Anyone paid over, say, £100,000, should have their remuneration made public.”)

Clearly there is something intuitively odd about a council chief executive being paid almost as much as the Prime Minister. And yet most of us are paid a salary according to the simple law of supply and demand: the higher the demand and the fewer the candidates, the higher the remuneration.

As a councillor I was tangentially involved in the appointments of three council chief executives. From those experiences – which were both good and bad – I can say with absolute certainty that it is always good value for council taxpayers to pay an extra £50,000 a year and get a top-notch candidate than scrimp on the salary and get an also-ran.

The real trouble, of course, comes when you end up paying top salaries to also-ran candidates – and that’s as true of Prime Ministers as it is of council bosses.

No comments

How much should it got to get rid of one? My Freedom of Information requests have revealed that in Wiltshire local taxpayers are footing a £5,000,000+ bill to make just 30 of them redundant on as much as two years’ full salary. What’s more it was entirely avoidable if only senior Conservative councillors hadn’t been so easily led by the officers.

by Duncan Hames on May 5, 2009 at 7:14 pm. Reply #

It’s disingenuous to compare the PM and the Chief Exec anyway. The correct comparisons are the PM and the Leader, or the Chief Exec and the Cabinet Secretary.

It did lead to this amusing conversation in the office today.

“I see Central Bedfordshire are getting bad headlines about paying their chief exec more than the prime minister”
“Yeah, but I imagine they want someone who’s not completely incompetent”.

by thelocalgovernmentofficer on May 5, 2009 at 8:33 pm. Reply #

Personally I think £100,000 is a very handsome reward for any job, and noone deserves to be paid more than that.
I know the politics of that are completely impractical, it is simply what I happen to think.

by Geoffrey Payne on May 5, 2009 at 9:00 pm. Reply #

I find it hard to believe it is necessary to pay so much.

We paid a lot for bankers and it did not deliver quality.

I suspect the same kind of thing is happening here – candidates getting the job because of appearances not talent.

We need to get back to holding people to account.

This is a problem with our system of democracy itself. We elect people to councils and expect them to be experts in hiring when in fact they are not

by Voter on May 5, 2009 at 10:44 pm. Reply #

Public sector jobs should be benchmarked against the private sector and they should be paid no more and no less than is required to attract the right candidates. Salaries should also reflect security of employment, generous holidays, and pensions which are expensive to the taxpayer and the offered salary reduced accordingly,

by Kevin on May 6, 2009 at 8:58 am. Reply #

Re. Kevin: Reminds me of the Yes, Prime Minister episode when Dorothy Wainwright suggests that top civil servants should choose between their pension index-linking and getting honours. “What do you think of that, Sir Humphrey? Or would you be Mr Appleby?”


by Niklas Smith on May 6, 2009 at 11:08 am. Reply #

Over the last 20 years or more, directors and others in the top 5% of earners have managed to increase their salaries by more than twice as much as that of most of the rest of society, ostensibly on the basis that improvements in profitability were down to them alone and not their workers. Largely this was achieved through remuneration committees filled with other directors, and remuneration consultants who knew that if they wanted to get work in future they would have to produce reports that their employers (the directors) wanted.

The end result? The economy in its biggest crisis since the 1930s, a massive increase in division in society, a record balance of payments deficit, spiralling public sector debt, and politicians who are generally despised more than ever before.

Sorry Steven, to my mind the “extra £50,000 a year” is a cause of the problem, not a solution.

by David Evans on May 6, 2009 at 11:38 am. Reply #

It seems to me that no council should be organized sufficiently poorly that a single “superstar” manager could make any reasonable difference. These are bodies of thousands of people, and yet it is considered without any hilarity at all that just one person right at the top can make the difference between success and failure? I would rather have a hopeless chief exec and superstar department heads than the other way around.

Secondly, it seems obvious that any chief exec, just like in most firms, should take most of their remuneration in the form of some sort of performance-related pay – not share options, obviously, but some sort of measure against meeting the objectives of the council.

Does anyone know if this is the case? I would hope for a roughly 1:3 split between salary and bonus. I don’t think anyone would mind paying out a base salary of £50k with an extra £150k coming only if they actually do their sodding job properly.

by sanbikinoraion on May 6, 2009 at 12:01 pm. Reply #

It seems to me that no council should be organized sufficiently poorly that a single “superstar” manager could make any reasonable difference. These are bodies of thousands of people, and yet it is considered without any hilarity at all that just one person right at the top can make the difference between success and failure?

This sort of assumption seems standard in the private sector. We are told by various executives and directors that their work alone is what “creates wealth” therefore they deserve their six or seven figure incomes.

by Matthew Huntbach on May 6, 2009 at 1:27 pm. Reply #

I am not, generally, in favour of performance-related pay in the public sector, because I think it would have undesirable consequences.

How would the Chief Executive’s peformance be judged? Would he get extra money for each green box? And would he have his salary docked for each red box (double docked, perhaps, for a red box with a downward arrow)?

If this happened, there would be a temptation on the part of the CE to massage the figures (something LAs are accused of doing in any event). And when the CE came to negotiate the LAA indicators (he/she generally sits on the LSP Executive) he/she would, in effect, be negotiating his/her own pay packet.

Besides, many more Council officers are responsible for performance than the CE. Are they to have performance related pay, too? If so, how are we to determine which bit of performance is attributable to which officer?

by Sesenco on May 6, 2009 at 1:56 pm. Reply #

We can judge these things in the private sector. If it can work there, then it can work in the public sector.

The criteria can be set at interview time. People can vote out councils that fail to set good criteria.

The problem seems to be that councils are not demanding value for money and are just going with the flow.

We need to get back to value-added rather than huge salaries no-matter-how-big-the-mess

by Voter on May 6, 2009 at 3:32 pm. Reply #

Also, we do not need “the best person” to do a job.

We need an adequate person.

He may not be as good as the best but if, overall, he is part of a situation whereby more money is paid on services then he is good enough.

By accepting second best (there is a prize for second place in the Olympics), we provide downward pressure on wages.

Now, if a high-flier can justify a high salary I do not have a problem with that. The problem is that we have people just “seeming” to have talent keeping their money come what may – we have lost the element of justification.

That destroys the market and inflates salaries

by Voter on May 6, 2009 at 3:52 pm. Reply #

Suffolk’s chief exec’s salary is far higher than either of those figures at £220,000, the same as the CEO of the world’s fifth biggest employer the NHS; she later spent at least £400,000 on some bafflingly new-age “psycho-babble” (quoting Lib Dem Andrew Cann):

How’s that for value-for-money and effectiveness?

by Robson on May 6, 2009 at 6:29 pm. Reply #

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