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.