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2016: Decline in chief executive pay continues to slow

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Average salaries paid to newly appointed chief executives have declined for the seventh consecutive year, LGC research reveals.

Analysis of 35 appointments in England and Wales over the 12 months to August 2016 found a 2.1% fall in the amount new appointees were paid in comparison with their predecessors.

It is the smallest average decrease since 2010, when LGC began monitoring pay levels.

Last year LGC research found a 3.3% average decrease following a 6% fall in 2014. The most dramatic drops, according to our tracker, came in the first halves of 2011 and 2012 when the average salaries of new appointees compared with their predecessors were 19% and 11% less respectively.

Gill Steward

Gill Steward

Gill Steward of Bexley is one of 13 female appointments

About a third (31%) of those newly appointed over the past year accepted are receiving the same salary as their predecessor.

Mark Rogers, president of the Society of Local Authority Chief Executives & Senior Managers, said he believed this year’s 2.1% average drop showed the sector was “getting its confidence back”.

Mr Rogers, who joined Birmingham City Council as chief executive in 2014 on a reduced salary than his predecessor, told LGC: “It was always counter-intuitive [for former communities secretary Sir Eric Pickles] to take on council senior pay in the way he was when everybody knows you want your very best people on the most difficult jobs.

“I think local government has reasserted itself.”

However, Association of Local Authority Chief Executives deputy vice chairman Tracey Lee expressed concern about the impact of a “continued squeeze” on senior pay and the resulting closing of the gap between top officers and the senior managers below them.

In March it was agreed council chief executives would get a 1% pay rise in each of the next two years.

The biggest pay drop was recorded at Stoke-on-Trent City Council which scrapped the £195,000 a year chief executive post in favour of a new position, city director – which pays £35,000 less.

Cheshire West & Chester Council slashed the salary of its chief executive post by £30,000 to £150,000 a year.

However, the tracker revealed pay increases, too.

Salary tracker 2016

Salary tracker 2016

Remuneration for Tower Hamlets’ highest paid staff member soared by about £29,000 as it changed the designation of the top role from head of paid service to chief executive following government intervention.

A Tower Hamlets spokesman said: “Appointing permanently to the chief executive position was necessary to meet the council’s best value directives from government.”

Isle of Wight Council also increased the salary of its top officer, by nearly £27,000, as it reinstated the chief executive role after the departure of its managing director, who had taken a voluntary £24,000 pay cut from a salary of £123,500.

Of the 35 appointments analysed, 71% were awarded to candidates taking on the top role for the first time which is broadly in line with results from the previous three years.

Internal candidates made up 43% of the overall appointments which Ms Lee thought represented a “quite healthy balance”.

In addition to the 35 appointments there were four instances of councils merging chief executive roles for the first time – Peterborough City Council and Cambridgeshire CC, North Norfolk DC and Great Yarmouth BC, Lewes DC and Eastbourne BC, while Suffolk CC chief executive Deborah Cadman recently took on the role of overseeing Babergh and Mid Suffolk DCs on an interim basis.

Meanwhile, Stratford-on-Avon DC scrapped its chief executive post and shared the responsibilities between service directors. Rochford DC is doing the same, on an interim basis.

Ms Lee, who is chief executive of Plymouth City Council, said local government needed to “take a hard look” at the changing role of chief executives “to make sure we’ve got the right talent being recruited and retained in the sector”.

For the first time, LGC’s salary tracker also recorded the gender of the outgoing and incoming chief executives.

Of the 35 appointments, 13 went to female candidates which was a net rise of five.

LGC’s research used figures supplied by councils or took them from statement of accounts. Where a salary band was given, the median figure within the range was used. The research omitted posts where no final decision had been made on filling a vacancy.

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