Shetland Islands Council had 131 staff members earning over £50,000 last year – more than the councils in Orkney (59) and the Western Isles (63) combined.
The disparity is largely accounted for by the fact that nearly half (61) of the SIC’s highest-paid employees were marine staff working as pilots or on the tugs and ferries. In stark contrast, nobody in the tug and ferry crews in Orkney earned more than £50,000, according to its council, while in the Western Isles the council has no large port or ferries to run.
The difference between the island groups is greater still when those on even higher pay rungs are compared. The SIC had 30 people earning over £70,000 plus pension injections in 2010/11 while Orkney Islands Council had just seven. The Western Isles, which, like the SIC, was having its own management restructuring with early retirements and redundancies, had 17.
At the very top of the SIC wage bill last year were five employees, some believed to be pilots, who pocketed over £100,000 during the first wave of golden handshakes which were agreed to cut the number of senior managers and other high earners in the local authority. They also benefited from generous final salary pension schemes. Two among that top five were paid over £130,000 while one made over £140,000.
Nobody in Orkney Islands Council earned over £100,000 last year although a consultant, Albert Tait, was hired to stand in for chief executive Alistair Buchan after he was seconded to be chief executive in Shetland and charged £103,790 for his nine months.
Two employees in the Western Isles Council earned over £100,000, both due to enhancements given for early retirement or voluntary redundancy.
The SIC did not disclose in its accounts how many of those earning over £50k did so as a one-off because they were leaving. In the Western Isles that accounted for 22 of the 63 employees in the over-£50k bracket.
The down-sizing of top management and other expensive employees in the SIC has gathered momentum in this financial year. According to the latest figures 24 of the 131 over-£50k earners from last year have since left voluntarily.
Mr Buchan said: “The fact is we are well on the way to delivering our £1million [savings] target in that area as we aim to create a much more efficient organisation.”
The SIC is now about to turn its attention to cutting a further £2 million a year from its spending from 2013/14 by renegotiating the single status pay and conditions deal which added an extra £4.5 million to the annual wage bill.
The 131 employees in the over-£50k bracket in Shetland included 22 teachers, head teachers and principal teachers who were needed to run the 33 schools which were still open in Shetland during the last financial year – one less than in the Western Isles but 10 more than in Orkney.
Mr Buchan said it meant that, between teaching and marine jobs, over 60 per cent of the best-paid jobs in the local authority were in “frontline services” rather than office jobs.
However, the upper echelons of the SIC would have been more bloated still if it was not for the helping hand provided by Shetland Charitable Trust in paying for some services. Unlike the two other island authorities, the SIC does not have to fund a number of top managers in charge of sport and recreation, culture, heritage and the arts in Shetland. Their costs were farmed out to the trust which provides most of the money to operate the Shetland Recreational Trust, Shetland Amenity Trust and Shetland Arts.
Inside the council’s 11-strong corporate management team the biggest beneficiary last year was the head of finance himself, Graham Johnston, who left on 31st March with £175,938, comprising his £74,535 salary and expenses, a £27,075 “compensation” lump sum for retiring early and entitlement to a pension lump sum of £74,328 from his pension scheme. His departure was described as an “efficiency retirement”.
Mr Buchan was unusually expensive for an SIC chief executive at £137,101 because councillors had to pay extra for taking him on loan from Orkney. He only took up his post on 5th July last year, three months into the financial year, so earned £118,279 of what would have been a full-year salary of £141,803. He also got £18,822 towards his accommodation, car and family trips. However, at his own instigation there is no pensionable element to his contract, so there will be no additional draw on the SIC pension fund.
Executive director of education and social care Hazel Sutherland earned £94,348 plus employers’ pension payments. Her salary was particularly high because it included an enhancement for acting as chief executive during the David Clark fiasco, including three months’ back pay for fulfilling that role during 2009/10.
Ms Sutherland is due to take voluntary redundancy at the end of March when she will be in line for some form of pay-off. The details of that may only be revealed when this year’s accounts are published in the summer.
The salaries and allowances paid to the eight other members of the top team ranged from £57,280 to £78,279 – well short of the £84,031 that was the norm in Orkney’s top team last year.
Until now senior managers’ remuneration has not been made publicly available. But the Accounts Commission forced local authorities to declare their earnings in last year’s accounts for the first time. In the past only the number of those earning £50,000 or more was disclosed, split into bands rising by £10,000.
Those incomes do not include payments into their final salary pension pot by the councils which, in Shetland’s case, can be worth £17,000-£30,000 a year for top managers.
Mr Buchan said the information had been available to view since September. “As a council, we want to be entirely open about earnings levels.”
The remuneration of senior employees has been disclosed publicly for the first time in the council’s annual accounts – as required under the latest accounting procedures. In addition to those mentioned above the assistant chief executive, four more heads of service and a service manager have all their pay details listed too. They formed the top management team of 10 which cost the public purse almost £1.17 million in 2010/11 before Mr Buchan began his management restructuring to slash costs.
Full details of the salaries and pensions can be seen on pages 26-33 of the Statement of Accounts 2010/11. The document is on the council’s website at www.shetland.gov.uk/council/documents/2010-11DraftAccounts.pdf