Local pay accountability guidance published

Local authority pay policies must be open to public scrutiny with senior pay packets put to a full council vote, Local Government Minister Bob Neill said.

The Localism Act requires local authority pay policies to be openly approved by democratically elected councillors. The Act was formally enshrined in law this week when granted Royal Assent.

The associated guidance published on 'Openness and accountability in Local Pay' sets out the requirement for councils to publish their remuneration arrangements, including for chief officers and approve large salary packages in an open session of full council.

Ministers explicitly say in the guidance that the pay vote ceiling should be set at £100,000. This includes publicly justifying any big bonuses, and above inflation annual pay rises, or hiring a person already in receipt of retirement or severance money. Authorities should have an explicit policy in their pay statement on whether or not they permit such practices.

At a time when the public are tightening their belts and all parts of the public sector are looking to make savings Ministers think taxpayers should have the opportunity to see whether value for money has been considered when setting pay policies.

The guidance states: "Taxpayers should rightly expect that their interests are being protected including when senior staff move posts within the public sector, particularly when those moves could be seen to have the effect of driving up average pay levels across the sector."

The measures will come into force in two months' time and pay policy statements must be in place by 31 March 2012. Ministers are calling on councils to schedule their full council meeting as soon as possible so pay policy is ready in time for the law change.

Bob Neill said: "The Localism Act opens up council pay rules so that salaries for senior posts get 'democracy proofed'. Local authorities will now publicly vote on these practices at full council.

"Taxpayers have the right to expect that their interests are being protected including when senior staff move from post to post. Any responsible locally elected councillor will want to use their pay vote to secure value for money."

The Localism Act is one of the most radical pieces of legislation to be voted through Parliament - it fundamentally shifts the balance of power to communities and reinforces the importance of strong local democratic rights.

The pay bill for top managers in local government was estimated at £626.9 million in 2008 by the Local Government Association group, the Local Government Employers.

Last year the Secretary of State Eric Pickles called for council chief executives earning over £200,000 to take a ten per cent pay cut and those earning £150,000 - which is more than the Prime Minister's current salary of £142,000 - to take a five per cent pay cut.