The district auditor has stepped in after claims by the Lib Dem opposition that Southwark Labour’s ‘golden goodbye’ payments for outgoing council cabinet members are ‘unlawful’.
It is believed a decision may be reached before Christmas – but it is unclear whether the Lib Dems and the council would seek a court challenge to settle the legal argument once and for all.
Southwark Council amended its constitution two years ago to allow payments for cabinet members stepping down either by resignation or reshuffle – with a total of £24,186 paid out so far. The council says these types of payments are lawful, but the News can exclusively reveal this position is not backed up by legal interpretations from the House of Commons Library, and the Ministry of Housing, Communities and Local Government.
In light of this, the Liberal Democrats have now asked the district auditor to reach their own conclusion.
Councillor Anood Al-Samerai, Lib Dem opposition leader in Southwark, told the paper: ‘It is disgusting that the Labour party is using public money to pay off their own councillors. Why should local taxpayers pay thousands to councillors who decide to resign months in advance or are replaced in a reshuffle? No other council in the country does this and we think it is unlawful. £24,000 this year is a huge amount of money for the average Southwark resident and could be far better spent on paying for an extra police officer.
“All money should be returned, all future payments should be withheld and an inquiry should investigate why these payments were allowed in the first place.”
The total amount of ‘golden goodbyes’ paid out so far is £24,186, with ex-cabinet members Fiona Colley netting £8,062, Maisie Anderson; £4,031, Barrie Hargrove; £8,062 and Ian Wingfield; £4,031 after the May 3 local election.
Cabinet members are entitled to the equivalent of four weeks of their special allowance salary as a parting payment, on top of another week for every year they have served in cabinet – up to a total of thirteen weeks. In documents seen by the News, Lord Bourne, a minister from the previously named department of Local Government, responding to a question on redundancy pay to councillors on November 17, 2016, said: “The rules are clear that allowances are paid on a pro rata basis should a councillor lose office or, is no longer required to undertake a specific duty, during the course of a year. The rules make no provision for allowances to be paid as a result of loss of office or no longer performing specific duties.”
An analyst from the House of Common’s library backed up Lord Bourne’s stance – confirming: “I think that this provision rules out any form of severance payment’.
Southwark Council has defended the payments, citing the Localism Act 2011, and its caveat that ‘a local authority has power to do anything that individuals may do’. But the News can reveal that this explanation appears to hold no truck with the ministry of housing, communities and local government, with an official stating in May of this year that although it cannot comment on the legality of this individual case, ‘which would ultimately be for the courts’, it confirmed that hypothetical exit payments would be ‘unlawful’ and ‘Government has no plans to change its position on this issue’.
The allegation of the payments being ‘unlawful’ depends on interpretations of the 2011 Localism Act and 2003 Local Authorities (Members’ Allowances) (England) Regulations Act. The Lib Dems believe they have a strong case – but having the finance and will to take it all the way to court is another matter entirely.
The scheme has been controversial since it was introduced in 2016, when Labour council leader Peter John described it as a ‘small payment’, but the Lib Dem councillor Damian O’Brien said it was ‘the sort of self-indulgent nonsense you’d expect at Goldman Sachs – not in public service.’
Labour have maintained the payments – which for the financial year 2017/18 used a weekly rate of £671.87 before tax – are to help attract and retain diverse cabinet members. In a response to the News questioning whether Southwark Council was aware its position was being assessed by the auditor, Doreen Forrester-Brown, director of law and democracy, said: “We have not been made aware of any such investigation or disputes from any other government departments regarding these payments.
“The decision to support these payments was taken and approved by council assembly in March 2016 and legal implications and regulations were fully considered at the time, and included in the report that went to assembly, as was the reasoning behind the decision which was the desire for the cabinet and council to reflect the borough and all its diversity and to remove those disincentives that disproportionately affect those without alternative financial means.”