PLC Public Sector reports:
After the Government’s recent announcement that it was to crack down on boomerang bosses, the Audit Commission has started its inquiry into chief executive pay-offs in local government by publishing a call for evidence.
The Audit Commission has been asked to play an interesting role by the Government. The Commission itself states in its call for evidence that:
“Auditors appointed by the Commission to oversee local authority accounts already monitor individual cases.”
Therefore, we can assume that the Commission is unlikely to uncover specific instances of local authorities exceeding their powers in paying-off former chief executives. As a result, we assume that the investigation, which was prompted by:
“… a spate of cases where well-paid local authority executives have been dismissed with large severance payments – only to be appointed shortly afterwards to a senior position in another authority.”
to the extent that the Secretary of State:
“… wants to be reassured that taxpayers’ money is not being used inappropriately.”
will be a trial of the system that allows pay-offs to be made rather than a trial of those who have made pay-offs. However, even such a general investigation should prove interesting. The Commission states on its website:
“Our mission here at the Audit Commission is simple. To ensure public money is well spent.”
It would hardly be a ringing endorsement of the work the Commission has carried out in the years since it was established in 1982, if they now find, some 27 years later, that holes in the system they police have allowed significant amounts of public money to be misused.
While we await the results of the inquiry and any follow up action, any local authority considering entering a compromise agreement with a senior executive should:
- look at our materials on dismissing employees; and
- also pay close attention to the case of Gibb v Maidstone and Tunbridge Wells NHS Trust, where the Department of Health recently stepped in to block the payment of approximately £250,000 to the former chief executive of the PCT.