The Accounts Commission has raised concern with the nation’s 32 councils that problems with restructuring deals had surfaced previously and called for a full-scale examination of how they act.
Five senior members of Glasgow City Council received more than £1m in early retirement and redundancy pay-outs from restructuring proposals and the Accounts Commission said the proposals appeared to have been approved by some of the individuals who directly benefited.
The five senior staff who left the council between 2021 and 2024 included the former chief executive.
The regulator said the actions of the senior staff “fell short of the values and principles every public sector worker and councillor are expected to follow”.
Now it has emerged that the public spending watchdog has written to all councils in Scotland saying they needed to take action “to recognise the important learnings” over concerns over the scrutiny, governance and transparency of decision making over severance deals.
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The public spending watchdogs had powers available to conduct a public inquiry into what happened and even give an official censure in the light of what it called “concerning issues”.
But in a letter that has been sent to all of Scotland’s 32 councils, the commission said that it had been decided on this occasion that it was “vital” that all councils act on what was discovered and told them that they “expect” that steps will be taken to review how decisions are made.
The Glasgow pay-outs were signed off as the council struggled with deep budget cuts. In 2021, then chief executive and other senior figures approved a management “restructure” drawn up by Robert Anderson, the council’s then head of human resources.
Annemarie O’Donnell(Image: )
Among the restructuring plans were financial terms for the departures of five officials at a total cost of £1,035,000, including £268,000 in redundancy payments and £770,000 in pension costs.
The officials included Ms O’Donnell and Mr Anderson, along with Carole Forrest, solicitor to the council and director of governance; Anne Connolly, principal adviser to the chief executive; and Elaine Galletly, head of legal and administration.
Crucially, councillors were never shown the plans or the report behind them.
Legal firm Brodies conducted an investigation into the payments and found no evidence of officials having acted “improperly” but concluded that Ms O’Donnell’s exit was not “lawfully approved” in line with council rules.
The Accounts Commission stated that there had been a lack of appropriate scrutiny, transparency and accountability in the process, and that possible conflicts of interest should have been obvious to the senior officers.
It said this displayed a “lack of judgement” as independent scrutiny should have been applied.
The auditors expressed “concern” that it was not the first time that issues over how restructuring packages were dealt with had been examined and said there should be a widespread review.
In 1997, the commission warned that in “many” councils, councillors are not consulted about early retirement decisions and said that they should be given adequate information to enable them to take informed decisions, and to monitor the impact of decisions they have delegated to officers.
Councils had then been asked to weigh up the full cost of early retirements against potential savings. By 2003, it found that while there were improvements there were four councils that had no early retirement policies at all.
In their letter to councils, the commission said there were a series of recommendations for action by councils which they say remain relevant, including that elected members should be involved in approving early retirement and redundancy decisions for senior staff, “providing the independent scrutiny that is essential to issues and decisions where there are potential conflicts of interest”.
It also lays down that councillors should receive a report at least annually that details the number of early retirals, and redundancy decisions made in the year, along with the associated costs and savings attached to these decisions.
Glasgow City Chambers(Image: Glasgow City Chambers)
And the commission states that policies over exit packages of senior officers “should be approved by councillors and reviewed regularly”.
In their letter, the commission said that it “recognised that as councils continue to face financial challenges, service redesign and restructuring are key tools available to councils to respond to these challenges.
“However, transparency and good governance around decision-making is essential.
“The decisions of elected members and officers should uphold the nine key principles of public life in Scotland – selflessness, integrity, objectivity, accountability, openness, honesty, leadership, public services, respect. ”
The commission says that the way in which the restructuring packages were dealt with in the Glasgow case did not.
And they told councils: “Where decisions around restructuring and exit packages are being taken, councils must ensure there is clear evidence of effective governance, independent scrutiny, and value for money, as well as robust and transparent record keeping.”
The auditors state that it would “urge all councils to take action now to ensure that all officers and members are familiar with the key principles of public life and that you can evidence that your organisational culture respects and supports them fully. ”
Ms O’Donnell’s early retirement at the age of 59, under the restructure was justified on the grounds of “efficiency.”
But the Accounts Commission said her exit, after a decade in the role, was “particularly difficult” to defend on cost-saving or succession grounds, given the chief executive post remained. It concluded that the claim her departure delivered efficiencies was “at best, unclear.”
Glasgow City Council said in the wake of auditor concerns that action had already been taken to improve scrutiny.
They said the initial observations of the auditors “reflects” the findings of their independent investigation.
The council said the findings “will support the action the council is already taking to improve oversight and transparency and to rebuild trust; both within the organisation and with the public”.
