The Audit Commission is calling for greater openness about pay-off deals for council chief executives. In a report today it says 37 outgoing executives received more than nine million pounds and it is making recommendations designed to protect public money and the rights of those concerned.

The report, ‘By mutual agreement’, says that 30 per cent of departing council chief executives received pay-offs between January 2007, when new rules came into effect, and September last year. In all there were 37 agreed severance packages for chief executives worth a total of 9.5 million pounds. Forty per cent of this was paid to pension funds rather than as cash.

Of those getting the pay-offs only six took up other senior council jobs within a year but one in seven single tier or county councils has made a pay-off and the rate seems to be growing. The average cost of each severance package was almost double the annual basic salary and in four cases it was more than three times the executives’ yearly pay.

The Commission says in some cases competent chief executives have lost their jobs needlessly while less effective individuals have been paid-off rather than dismissed. It also warns that controversial pay-offs can damage the reputation of an authority and it wants all deals to be more transparent.

The Commission says settlements should be reviewed by scrutiny or remuneration committees and that details should be published shortly after they are agreed. Councils should also consider whether to include so-called ‘pre-nuptial’ clauses in contracts, setting out the grounds and payments for severance. The report criticises the management of chief executives’ performance and says officers and councillors should deal with difficulties at an early stage, perhaps using outside mediators, and avoid a ‘knee jerk’ inclination to severance.