A discussion paper published today (22 July) by the Audit Commission examines a number of factors influencing the jobs market for local authority chief executives.

The findings from Tougher at the top? identify an increasing tendency for local authorities to recruit existing chief executives from other authorities. Over a three-year period, the number of vacancies at single tier authorities and county councils filled by a chief executive from another authority more than doubled: from nine in 1999-2001 to 21 in 2005-2007. Read the full discussion paper here.

The research found that reliance on recruiting existing chief executives to an increasingly demanding and insecure role creates a domino effect across the sector. This results in several local authorities incurring the costs of recruitment when a single vacancy occurs. Compounded by a general lack of succession planning, this leads to salary increases as authorities compete to recruit or retain the chief executives of the most successful councils.

However, the report found that councils that appointed a chief executive from another authority were not necessarily any more effective at achieving higher Comprehensive Performance Assessment (CPA) scores in the medium term than those that recruited candidates without chief executive backgrounds. While CPA is only one measure of success, it is the most visible upon which performance can be assessed.

Steve Bundred, Chief Executive of the Audit Commission said:
'There has been a lot of debate about chief executive salaries and turnover rates, but little real information until now. Our research found that the talent pool that authorities use is shrinking, while the demands of the role are increasing. The current trend towards recruiting existing chief executives, particularly by poorer performing authorities, has meant that recruitment costs and wages have risen. However, recruiting the tried and tested doesn't automatically produce a boost in performance or encourage innovation. While an experienced pair of hands can be seen as a safe option for individual councils there are risks if this continues across all local authorities. Unintentionally they will discourage ambitious and able in-house and external talent, who may well be more representative of the communities they serve.'

Notes to editors

1. The research for Tougher at the top? Changes in the labour market for single tier and county council chief executives used recruitment and retention information from 146 of the 150 single tier authorities and county councils and analysis of over 190 appointments made between 1999 and 2007.
2. A comparison of chief executive salaries in the public and private sector shows that in 2007/08 chief executives of single tier and county councils received a median basic salary of £150,000, while the basic salary of those in the private sector in 2006/07 is approximately £400,000 before benefits (based on the FTSE 250 companies). Figures for other bodies for 2006/07 are provided in Table 1 on page 39 of the report.
3. The proportion of female chief executives has increased from almost none in 1991, to around 20 per cent in 2007. Fewer than 1 per cent of chief executives are from BME groups.
4. Single tier authorities include unitary authorities, London borough councils and metropolitan district councils. They are responsible for a substantially broader range of services than those covered by district councils and have correspondingly larger expenditure levels. Single tier and county councils in England accounted for 91 per cent of local authority revenue expenditure in 2006/07, with district councils accounting for the balance.
5. Comprehensive Performance Assessment (CPA) pulls together the results of a range of different assessments carried out by the Audit Commission and other inspectorates (Ofsted and the Commission for Social Care Inspection) to provide a picture of how well an individual council is performing. It encourages councils to focus on continuous improvement and provides a robust independent challenge to stimulate positive change. Ultimately it is about working to improve the quality of services councils provide to local people. Under CPA – The Harder Test, introduced in 2005, councils receive an overall performance category ranging from 0 to 4 star, with 4 star being the highest. The system also assesses the direction of each council's overall improvement using the following direction of travel labels: improving strongly; improving well; improving adequately; and not improving adequately (or not improving).
6. The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone.
7. Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers, covering £180 billion spent by 11,000 local public bodies.
8. As a force for improvement, we work in partnership to assess local public services and make practical recommendations for promoting a better quality of life for people.
9. Further details about the role of the Audit Commission can be obtained from www.audit-commission.gov.uk.