Communities Secretary axes “independent person” role in chief executive dismissals

The requirement to appoint an independent person to review dismissal and disciplinary cases for chief executives is to be scrapped, the Communities Secretary Eric Pickles has announced.

The need to appoint an independent person, a role usually performed by a senior external lawyer, is blamed by the government for pressurising councils into making compromise agreements to avoid the expense of the process. This is estimated by the Department for Communities and Local Government (DCLG) to cost between £100,000 and £250,000 in legal fees as well as independent investigation costs and salary for the suspended officer.

The government said that as the post of Chief Executive is not set in statute, it believed that the decision to dismiss a chief executive for misconduct or poor performance can be taken by full Council, without the need for a centrally dictated process. The statutory Head of Paid Service role, it said, could be undertaken by another senior officer.

The changes will be introduced by removing all references to the independent person process from The Local Authorities (Standing Orders) (England) Regulations 2001, following a short consultation period of no more than four weeks. The regulations currently state that "the authority must appoint a designated independent person" to investigate proposals for disciplinary action against the Chief Executive, Monitoring Officer or Chief Finance Officer because of misconduct, disciplinary issues or poor performance and that "no steps… are to be taken before a report is made" by that independent person".

Eric Pickles said: "A Town Hall chief executive costs a lot of money, but if they are simply not up to the job, councillors must be able to get rid of them quick smart without having to throw away thousands in parachute pay-offs.

"It is ridiculous that councils feel forced to give bumper pay-offs to dismiss inadequate chief executives simply to avoid these unnecessary golden goodbye reviews from expensive lawyers. Scrapping this bizarre bureaucratic ritual will save taxpayers money and put the decision firmly back in democratically elected hands."

The DCLG also said that it would publish revised “toughened up” guidance to the pay policy measures contained in the Localism Act before councils publish their pay policies for next year.

Suggested changes to the guidance include smaller councils setting a lower threshold for member approval of executive pay if they do not pay any staff above the present minimum of £100,000. It also states that councils should also publicly justify any big bonuses; above inflation pay rises; hiring staff already in receipt of public sector retirement or severance money; and avoid any perceptions of minimising tax payments. Ministers will reserve the right to regulate should councils not act on the guidance.

Nicholas Dobson, Communications Officer for the Association of Council Secretaries and Solicitors and a consultant at Pannone, said: “In the view of ACSeS, this proposal is misconceived and would do nothing to promote sound corporate governance.

“The purpose of the independent person arrangement concerning proposed disciplinary action for the three key officers with responsibility for effective local authority corporate governance is to ensure that these officers can give the necessary advice to the authority in the public interest – in other words to speak truth unto power – without undue fear of summary removal from office for so doing.”

Dobson added that to the extent that the Government believes that the appointment of independent persons is the cause of enhanced executive severance packages, ACSeS would consider this to be misconceived.

“Severance packages are of course a creature of individual contractual arrangements and statutory rules governing relevant council officers,” he said. “The independent person is engaged to be just that – independent. However, officers subject to disciplinary action may well of course choose to obtain legal representation to ensure that their interests are properly catered for.”

Dobson acknowledged that the arrangements for disciplining these key corporate governance officers might benefit from review, but suggested that this should be properly conducted in the light of all material considerations.

“The tone of CLG’s news release would unfortunately seem to indicate an approach of careless political swashbuckling rather than one of the rational objectivity that might reasonably be expected of a government pronouncement,” he said.

Joanna Killian, chair of SOLACE (the Society of Local Authority Chief Executives), said: “Local government has demonstrated its ability to manage public resources effectively and efficiently in what are very challenging times, not just for the sector but also for citizens. This successful track record is not accidental; it is the result of the excellent leadership and stewardship of the vast majority of chief executives who serve their communities prudently and with integrity.”

She added: “It is SOLACE’s firm belief that successful councils require both strong political and managerial leadership. Where either fails, to the detriment of the council, there should be fair and proportionate means of addressing that failure.”