The full cost to taxpayers of the long-running pay scandal at Caerphilly County Borough Council is set to hit £2.5 million, the local authority has confirmed.
The disclosure comes after the revelation that the three council bosses at the centre of the saga – Chief Executive Anthony O’Sullivan, Deputy Chief Executive Nigel Barnett and Head of Legal Services Daniel Perkins – had their suspensions secretly lifted by the council back in March last year.
The row has been rumbling on for more than four years, and it is easy to forget the twists and turns it has taken. Richard Gurner takes a look back at how the scandal developed…
The Beginning
The seeds of the scandal were sown in June 2012 when councillors agreed to the establishment of a sub-committee to oversee the pay arrangements of the local authority’s chief executive, directors and its heads of service.
The change came about as a result of a requirement under the Localism Act 2011 for councils to publish their pay policies.
A report was drafted by Chief Executive Anthony O’Sullivan for the sub-committee to consider. In the document, which has never been published but has been seen by Caerphilly Observer, he argued that 20 of the council’s senior officers, including himself, were effectively being underpaid. This was because the senior management team had its responsibilities increased as a result of its downsizing from 31 to 20.
Mr O’Sullivan drew on information provided by management consultants the Hay Group to support his argument and recommended that his salary should increase to £158,360 – a rise of £35,000.
He also recommended that a chief officer on around £71,000 should have their salary increased to more than £99,000 – a rise of nearly 30%.
Mr O’Sullivan’s report said: “Chief officer pay has for some time been below the rates paid for comparable roles in other local authorities and public sector partners such as health. This makes retaining the best talent in this key group more difficult, particularly when set against the backdrop of having to achieve more with reduced resources as the organisation develops.”
Presented with the report at a meeting on September 5, 2012, the sub-committee of councillors agreed to the recommended pay rises.
The secret meeting, which was not publicised beforehand, did not have any detailed minutes and there is dispute over how councillors voted.
Cllr James Fussell, who represents St Martin’s ward for Plaid Cymru, was on the committee and has previously stated he did not vote in favour of the increases, but this has been disputed by the four Labour councillors also on the committee.
These were Christine Forehead, chair of the committee, and current Cabinet Member for Human Resources, then deputy council leaders Keith Reynolds and Gerald Jones, and David Poole.
Cllr Keith Reynolds has subsequently become the Leader of the Council, while Mr Jones was elected as the Member of Parliament for Merthyr Tydfil and Rhymney in 2015. Cllr David Poole is a current deputy leader of the council.
Plaid Cymru’s James Fussell was the subject of an investigation from the Public Services Ombudsman for Wales following a complaint by Head of Legal Services Daniel Perkins, who said Cllr Fussell did vote in favour.
The Ombudsman decided to take no further action against him.
Investigation
News of the secret pay agreement was leaked to the Western Mail in December 2012, resulting in a huge backlash from the public and trade unions representing council staff.
Plaid Cymru called for the pay rises to be scrapped, but employment law, it was argued, prohibited this.
In January 2013 a “compromise” deal was proposed by Labour’s Hefin David, who is now Caerphilly’s Assembly Member, which meant Mr O’Sullivan’s salary rise was capped at a lower £137,000.
The new pay structure was kept, but chief council officers were moved to the lowest increment level instead of the highest.
Meanwhile, the Wales Audit Office had launched its own investigation and in March 2013 published a report highly critical of the council.
In the report, Assistant Auditor General Mr Anthony Barrett said: “I have concluded that the decision by the Senior Remuneration Committee on September 5, 2012, to approve the pay structure set out in the report of the Chief Executive was unlawful on a number of grounds.
“The first is that the meeting of the Senior Remuneration Committee was not properly advertised in accordance with the Local Government Act and neither were agendas for the meeting made available for public inspection as they should have been.
“Certain officers, including the chief executive, who would have been (and indeed were) beneficiaries of the decision were present at the meeting to approve the salary increases. No declarations of interest were made and these officers did not leave the room while the decision was made. Consequently they participated in the decision making process when they had a disqualifiying financial interest.”
Suspension
After the WAO report was published, Mr O’Sullivan was suspended on full pay with deputy chief executive Nigel Barnett taking over at the top.
However, Mr Barnett was also suspended when he and Mr O’Sullivan were arrested by police, which had decided to investigate following the WAO report.
The pair were charged in February 2014 alongside Mr Perkins, who was also suspended from the local authority.
Disciplinary proceedings against them by Caerphilly County Borough Council were put to one-side while the criminal investigation was carried out by Avon and Somerset Police.
The trio faced charges of Misconduct in a Public Office and first appeared in court in April 2014.
They spent the next 18 months on bail while the prosecution prepared its case.
However, in October 2015 a judge threw out the case citing a lack of evidence against the three.
As a result of the case being thrown out, Caerphilly County Borough Council was able to begin disciplinary proceedings against the three.
More than a year later, the council’s disciplinary committee is still working through what to do.
Paid Leave
Last month it was revealed their suspensions were secretly lifted by the council in March last year with the three men going on “Special Paid Leave”.
Caerphilly County Borough Council admitted the move, which was not publicised at the time, after a letter from solicitors acting on behalf of Mr O’Sullivan was made public.
In the letter, addressed to council leader Keith Reynolds, solicitor David Lewis, of firm Richard and Lewis Solicitors, said the council had requested Mr O’Sullivan agree to a period of “special paid leave”.
Mr Lewis wrote: “Mr O’Sullivan has become increasingly concerned at inappropriate and inaccurate reporting in the press in respect of his current status. The press continue to report as a matter of course that Mr O’Sullivan has been suspended since 2013. This, as you are aware, is not the case.
“As you will recall we brought to your attention in February this year [2016] the fact that Mr. O’Sullivan’s continued suspension was both ’unlawful’ and ‘unconstitutional’. You conceded that this was the case and requested that Mr. O’Sullivan agree to a period of ’Special Paid Leave’ until the disciplinary proceedings were concluded. This period of ‘Special Paid Leave’ began in March 2016.
“Mr O’Sullivan agreed to this period of ‘Special Paid Leave’ as he was hopeful of a swift resolution of the disciplinary process. This was based upon the manner in which HHJ Hart had roundly dismissed criminal charges against him at Bristol Crown Court and the comprehensive response that had been prepared to the council’s ‘Schedule of Allegations’ against him. These allegations appeared to have little substance. He was also hopeful of a prompt return to his substantive post to which he remains fully committed.
“At the time you also requested that Mr O’Sullivan did not publicise this change of status and Mr O‘Sullivan has for almost a year honourably observed your request. However, given the length of time matters have dragged and your failure to correct the repeated inaccurate reporting in the press this matter must be revisited.”
The letter, which was sent to the council on December 5, also included a draft press release and threatened its publication if the council failed to circulate it.
It concluded: “As it was the council which originally publicised Mr O’Sullivan’s suspension we believe it appropriate that it is the council which now publicises his change of status. Please find attached a draft press release. We request that you issue this press release, or an agreed amended version, as soon as possible. Should it not be released by Tuesday, December 6, 2016, then we will make it available, together with this letter, to all the usual media outlets.”
Costs to hit £2.5m
The cost of the pay scandal will rise above £2.5m in March 2017, the council itself has confirmed.
Details of the projected cost of the scandal up to the end of the 2016/17 financial year in March 2017 were released to Independent councillor Nigel Dix by the authority’s interim chief executive Chris Burns, who is in post while Mr O’Sullivan is on leave.
The total salary costs of Mr O’Sullivan since he was suspended will amount to £741,867.56; those of Mr Barnett, £658,701.66 and those of Mr Perkins, £360,776.73.
In addition, legal costs will amount to £515,058, while the cost of two public interest reports from the Wales Audit Office were £33,239.34 and £17,276.30 respectively.
A governance review of the council carried out by the Wales Audit Office cost £132,700 and governance support cost £54,359.27.
The total cost will therefore be £2,513,979.19.
Ex-Labour councillor Dix, who represents Blackwood, said: “This scandal just gets worse and worse. The original decision to award the pay rises was taken in secret and the decision to lift their suspensions has also been taken in secret.
“The council’s handling of this has been appalling, and the public has been badly let down.”
What next?
To a certain extent, the council has its hands tied.
There had been rumours that councillors were considering a pay-off to the three senior officers, however the letter from Mr O’Sullivan’s solicitor would indicate the Chief Executive wants to come back to his job. The letter could also be seen as a move to put pressure on the council to bring the matter to a close.
A pay-off however may also be an unpalatable move for many – especially with more public money likely to be spent.
There is also a question of how council staff would feel if the three came back, given the strength of feeling shown with protests at the time the secret pay agreement was made public.
Caerphilly County Borough Council is keen to stress there is a statutory process to follow.
This has led to frustration from some councillors and the public at the pace of the disciplinary investigation.
A spokesman for Caerphilly county Borough Council, said: “We fully recognise the concern about the length of time these proceedings have taken to date, but it is important to stress that this is a complex situation which needs to be dealt with in a proper and thorough manner.
“It is also important to note that the matter was subject to a police investigation which took almost two years to complete.
During this time we were advised that the council should not undertake its own internal proceedings.
“Our internal investigations into the three senior officers are now ongoing and these must be conducted fairly and thoroughly in accordance with an agreed statutory process.
“We would like to assure residents that appropriate steps are being taken to progress this matter as quickly as possible. It would not be appropriate to add anything further at this stage.”
A pretty accurate report by Caerphilly Observer of this debacle. I would dispute the published costs as these do not take into account non wage remuneration, such as pensions, but the waste of money revealed is scandalous anyway.
An unamed, they are always unamed it seems, spokesman for the council says of the investigation,”but it is important to stress that this is a complex situation.” Complex? Not really, it is just the council tying themselves in knots because of their love of secrecy is causing them to make the wrong decisions time after time.
If we go back to the beginning the correct response of the then leader would have been to ignore the report urging vast pay rises. The secret remuneration committee should have never been set up. Even after this the council could have acted, the people involved clearly did not follow procedure, including non declaration of interest and participating in a meeting in which they had a clear personal financial interest. At this stage, in my view, they should have been dismissed. The people involved were not low grade council workers who, it could be argued, did not know the rules. On the contrary they were the ‘top’ legal and administrative brains who are employed to ensure the council is run accoding to the laws and regulations applicable to it. To my mind there is no clearer case of gross misconduct for which the usual sanction, in the real world, is dismissal.
Sadly unlike private business local authorities do not operate within the realms of the real world, it seems in most cases those who are on the payroll of the public sector can get away with murder, the higher up the food chain they are the more they can get away with and so it becomes virtually impossible to dismiss the corrupt and downright despicable without having to pay them off with a huge golden handshake, which I dare say is what is going to happen with these three, and the pay off is likely to be more money than you or me can only dream of.
Two and a half million pounds and growing, of the peoples’ money; our taxes whether we can afford to pay them or not. Our people who go to jail for being unable to pay Council Tax.