Public sector fat cats come under fire

Thirty-seven council chief executives in England received average payoffs of more than £250,000 each in the 33 months to last September, a review by the Audit Commission has found.

Thirteen were given severence packages of more than £300,000 and three received payoffs of more than £500,000, totalling £9.5 million.

Both Labour and the Conservatives united to condemn the largesse, local government secretary John Denham calling for a way to be found “to change the rules so taxpayers’ money can be clawed back where the system has been exploited” and his shadow Bob Neil saying:

“Such payments are an outrageous waste of taxpayers’ money and an affront to families facing soaring council tax bills. There should be no rewards for failure, either in the public or private sector.“

In Scotland, meanwhile, Scottish Water has announced that its chief executive, Richard Ackroyd, is to donate  a quarter of his performance related bonus to the charity WaterAid; last year Mr Ackroyd, who earns a basic salary of £263,000, received a bonus worth £101,000 or 38 per cent of his basic salary.

In a statement, the boss of one of Scotland’s largest publicly owned businesses said:

“I have looked carefully at all the circumstances and at how people are being affected by the consequences of the downturn in the economy. My priority as chief executive is to ensure that Scottish Water continues to deliver increasing value for money for our customers and that objective is even more vital in the current circumstances.

“While all Scottish Water staff must be properly rewarded for delivering outstanding performance Scottish Water will divert 25 per cent of any incentive payment due to me for our performance in 2009/10 to go to charity. The value of this will depend on the levels of performance achieved by Scottish Water at the end of the financial year. This will be assessed by the board of Scottish Water and paid in June 2010.”

In response, a spokeswoman for the Scottish Government said:

“This is a welcome step by Mr Ackroyd. The finance secretary has made clear his desire that chief executives of public bodies should give up some or all of their bonus voluntarily. That request has already produced positive responses.”

In January, Left Foot Forward reported that half of all quango bosses in Scotland – including Mr Ackroyd - had failed to commit to a call by the finance secretary, John Swinney, to forgo their bonuses for the next year.

At the time, Labour’s finance spokesman David Whitton had said:

“Any chief executive who has taken a bonus in these particularly difficult times will have to answer in the court of public opinion.”

My Ackroyd’s moves seem likely to be a gesture towards the court of opinion referred to by Mr Whitton. However, he has made clear that he remains firmly committed to the principle of bonuses, telling the Herald:

“Our board is committed to the principle of performance-related pay. We think the system we operate in Scottish Water is an exemplar of how to do PRP successfully. There is no PRP unless all of the targets set for us by ministers and regulators are exceeded.”

The announcement by Scottish Water comes after the Convention of Scottish Local Authorities (COSLA) announced last week that chief executives across Scotland’s local authorities would forgo a planned 2.5 per cent pay rise in April. COSLA’s spokeman for human resources management, Cllr Michael Cook, said:

“The testing times both now and which lie ahead are such that leadership counts and Chief Executives have shown genuine leadership which we trust will set an example to others. It mirrors the decision of Council Leaders to agree to their pay being frozen in the coming year. It is significant that the political and executive leadership of councils have recognised the unprecedented challenges which lie ahead.” 

Last week, Gordon Brown announced all civil servants earning more than £58,200 will face a pay freeze over the next three years, saving an estimated £3 billion.