Pickles targets top council pay deals

By Jim Pickard, Political Correspondent

Published: February 16 2011 12:07 | Last updated: February 16 2011 12:07

Councillors are to be given the power to block town hall salaries of more than £100,000 under government reforms designed to save money.

Eric Pickles, communities secretary, said he wanted to “democracy-proof’’ the award of “mega” deals for council executives. The move, as part of the localism bill, is the latest of a series of attempts by Mr Pickles to increase transparency and reduce costs in local government.

Mr Pickles has already called on chief executives earning more than David Cameron – who is on £142,000 a year – to take a voluntary pay cut of 5 or 10 per cent.

Yet the amount of money that councils could save through the new policy is likely to be dwarfed by the £5.5bn of cuts to their annual formula grant by 2014-15. The grant is being cut by 28 per cent over four years with the heaviest cuts in the first 12 months.

Council leaders have warned that cuts to frontline services are inevitable, despite ministers’ insistence that they can be achieved through an array of efficiency savings.

Council chiefs at the top 300 councils in England and Wales earned an average of £147,934 last year, according to Income Data Services.

If all were to take a £48,000 pay cut – bringing their salaries under £100,000 – it would save the exchequer £14.4m a year. This is equivalent to just £1 in every £400 of expenditure that councils will need to cut in the next four years.

Mr Pickles, speaking on the Today programme, rejected the claim that the cuts were minor compared to cuts overall. Pay for council leaders had soared in recent years and they should set an example to more junior colleagues, the secretary of state said.

“I think you’ve got to bear in mind this: certainly talking about chief officers’ salaries it’s also a question of leadership. If they take a cut in pay it’s a demonstration that they are giving priority to frontline services … chief officers’ salaries over a period of five years, if you include performance related pay and bonuses, had increased by a staggering 75 per cent.”

He later corrected that figure to 34 per cent. The higher figure was for chief executives of FTSE 250 companies.

The new legislation will force councils to publish a statement on the pay of chief officers, possibly including bonuses and annual rises, which will be put before the elected chamber for approval.

Mr Pickles said: “Councils need to make sure they don’t sully their reputation by taking decisions behind closed doors to reward chief executives when they should be focusing resources on protecting frontline services.”

The highest chief executive pay last year was in the London Borough of Wandsworth, according to IDS, where remuneration totalled £299,925 and included a bonus of £54,702 covering an 18-month performance period. Gerald Jones, chief executive of Wandsworth for 24 years, retired last October.

The highest paid female chief executive was Joanna Killian at Essex County Council, who received total pay of £237,000.