Careful cutting the fat cats: Local governments' problems go much deeper than eye-watering salaries

1 April 2025, 11:38

It is fair to say that the annual TaxPayers’ Alliance (TPA) ‘Town Hall Rich List’ is feared and loathed by council leaders as a yearly punishment beating ordeal.

Council tax bills are annually hiked to the full 5 per cent extent or even more in places like Birmingham and Croydon as punishment for the financial failure of previous local administrations. This adds insult to injury.

Helped no doubt by the fact that more councils have got their act together in filing their financial audits, the stark TPA figures show that in 2023/24 a record 3,906 council officials received more than £100,000, with 1,092 receiving over £150,000.

With the experience of many council taxpayers being higher charges by direct debit each year in exchange for, in many cases, fewer services, it’s hard to justify what seem like instances of municipal largesse.  Why, for instance, does Bromley Council have eight directors on its books on more than £200,000 a year including pensions and other benefits – each earning more than the prime minister’s salary?

Let me seek to explain this in context.  Most council jobs are low-paid, and employees are in many cases local residents themselves working as binmen, lollipop ladies, librarians and social workers. Since 2010, local government – which directly employs 1.16 million staff and funds half a million teachers and 1.2 million social care staff - has shed more jobs than the rest of the public sector.  Indeed, it has reduced its staff levels by one fifth or 207,000 jobs in the last decade alone.

Compare and contrast to Whitehall, which, after a taste of austerity, has successfully regrown its headcount to Blair-era levels of 514,395 full-time staff on the back of Brexit and Covid.  Also note that with fewer than half the number of direct employees, some 2,915 civil servants earn over £100,000.

Councils are directly involved in providing a wide array of frontline services for people and places and control individually multi-million-pound budgets.  They also have a legal duty to balance their books each year and provide statutory adult and children’s social care services.

And there’s the rub.  As the number of people who live well into their eighties expands, and as well documented pressure from children with special educational needs also rises, we see the bulk of council spending going to a minority of vulnerable residents. In one case we know of a council where 85p of every £1 is going to social services.  This leaves the cupboard bare for other visible neighbourhood services and civic amenities, libraries, parks and the like.

However, this government, like its predecessors has kicked social care funding into the long grass.

If the answer to the outrage sparked each year by TPA’s survey is to cut numbers of senior council directors or reduce 'town hall fat cat' salaries we have a few options.

All parts of the country could follow the devolution journey in establishing larger and fewer local authorities.

The salaries would at least stay the same at least, but there would be fewer chief executives, finance and other directors on top scale.  We could reduce council tax pressure by reducing the amount of money councils have to pay into their fully funded pension scheme.

Alternatively, we could have limits to senior level pay set centrally by Whitehall and see how this impacts quality of local service delivery and leadership. Or just carry on paying senior talent the market rate for the job and endure the same conversation year in year out. Which may be the safest and least worst option.

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Jonathan Werran is chief executive of Localis.

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