Newcastle City Council finance boss got redundancy payout worth more than £400,000

A senior council finance boss in Newcastle was given a payout worth more than £400,000 when his role was axed.

Tony Kirkham was made redundant in a shakeup of Newcastle City Council’s top brass in summer 2022. The local authority’s former director of resources has now been named among the highest remunerated council officials in the country.

According to the TaxPayers’ Alliance annual Town Hall Rich List, Mr Kirkham was awarded £496,403 during 2022/23 in salary, compensation, and pension benefits – the third most of any council employee in the UK. That is mostly made up of a £419,184 compensation package when his £148,000-a-year post was deleted in July 2022, the biggest pay-off for loss of office recorded by any council that year.

In the months prior, Mr Kirkham had been due to depart his role of his own accord after accepting a similar job in his home city of Nottingham. But that offer was later withdrawn and he was ultimately made redundant instead, at what was a time of major upheaval at the civic centre following the departure of previous chief executive Pat Ritchie, council leader Nick Forbes, and a number of other senior figures.

Current chief exec Pam Smith said at the time that the restructure was needed to “make significant ongoing savings” that totalled £320,000 per year. But Colin Ferguson, leader of the council’s Lib Dem opposition, called the payout “beyond shocking” on Monday and questioned whether it was “good value for money” at a time when the council is facing tens of millions of pounds worth of budget cuts.

He added: “When the director of resources role was made redundant, it was claimed that this would contribute to £320,000 a year in staffing savings (alongside the deletion of another role). The payout, over and above standard salary, comfortably exceeds this sum. We want to know: how long will it take for this move to break even?

“Put into context, the payout is larger than roughly two thirds of the individual savings proposals put forward by Labour in their budget in March. It’s larger than either the slashing of the supporting independence scheme or the axing of the discretionary crisis support scheme, both of which the Lib Dems opposed. It can’t be dismissed as trivial.”

The city council indicated that the cost of the compensation was so high because, on top of a lump sum amounting to four months of his salary as severance pay, the figure also includes additional pension benefits that Mr Kirkham was entitled early access to upon being made redundant to as he was aged over 55.

A council spokesperson said: “Constitutional Committee agreed a number of senior management changes including the deletion of the director of resources post in June 2022 as part of wider changes to realign the senior management team and to cut costs. The director of resources was made redundant and left the council on July 31, 2022.

“The £496,403 listed in the accounts was the normal employment costs 1st April – 31st July 2022 and the total cost to the council of making the redundancy – not the sum received by the director which was significantly less. They received their contractual entitlements such as a redundancy payment, notice and access to pension benefits.

“The director’s responsibilities were split between three other members of corporate leadership team / senior staff resulting in an ongoing saving of £320k. All redundancy costs were recovered well within two years in line with the council’s policy to ensure strict financial management.”

Fifth on the TaxPayers’ Alliance’s highest-paid list is former Northumberland County Council chief executive Daljit Lally. Her total of £448,006 includes £359,000 of listed compensation – but the council told the Local Democracy Reporting Service on Monday that was not actually the lump sum Mrs Lally was paid when she left her post at the end of July 2022, following a protracted saga surrounding a damning review of the council’s governance and “unlawful” payments.

Her exit agreement included a £209,000 pay-off, while the council also agreed to write off £100,000 of a total £179,000 worth of ‘international allowance’ payments which Mrs Lally had already been awarded since 2017 and were allegedly made without the proper authorisation. The council confirmed that a further £50,000 in legal fees were paid to her solicitor in February 2023.

Northumberland County Council had 22 employees who received remuneration in excess of £100,000 in 2022/23, the highest of any authority in the North East.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Local authorities provide crucial services and residents will want to make sure they are getting bang for their buck with their ever-increasing bills. Residents can use these figures to ask whether precious funds are really going towards frontline services, or whether town hall bosses can get better value for money.”