Row over how Chief Executive Richard Harbord is paid by Boston Borough Council

The way in which Boston’s Chief Executive, Richard Harbord, is paid,  has entered the spotlight -  at a time when public sector pay deals are under  a broader  and highly controversial review.
Reports and interviews on BBC Radio Lincolnshire  on Friday said that Mr Harbord, whose contract with Boston Borough Council runs until May next year, is not directly employed by Boston Borough Council – but as a consultant via a private company, which means that he isn’t charged tax or national insurance as an ordinary council employee would be.
Mr Harbord’s contract is worth around £108,000 a year for 15 days a month at £600 a day.
A Lincoln accountant told BBC Radio Lincolnshire that when someone is paid as an employee, national insurance and income tax  are charged at 20% up to the basic tax threshold of £34,370 and 40% thereafter up to £150,000.
But if a company is paid instead, tax is charged at only 20% - up to £300,000.
The BBC news reports reminded us that senior public sector pay hit the headlines earlier this month when it was revealed that the Chief Executive of Student Loan Company was paid via a private service company, and the Chief Secretary to the Treasury, Danny Alexander, ordered an immediate review into the appropriateness of allowing senior public sector staff to be paid this way.
Boston Borough Council Leader, Conservative Councillor Peter Bedford, said that Mr Harbord was not employed by a private service company and that care should be taken comparing the  Boston arrangements with those recently publicised.
He said: “Our Chief Executive is only a part-time position. He is perfectly at liberty to work for other clients … The council’s contract with the company means that the council has no liability for holiday pay, sick pay, national insurance or pension contributions. There is also no question of employment rights and the cost arising from that.”
Asked about a possible perception by other workers that he doesn’t have to pay National Insurance and income tax, the Leader replied:
“Well he does as well, I am sure. Our Chief Executive would also say there is  (sic) no tax benefits to him in these arrangements as far as he is concerned. The company that employs him pays Corporation Tax and is registered for PAYE, so that any payments to him personally attract full income tax and national insurance deductions.”
Informed that the government had ordered an inquiry into these kinds of arrangements in the civil service and public sector, and asked the arrangement would now be reviewed, Councillor Bedford replied: “No. Not until May 2013.”
Challenged that “some people are disputing the manner of his employment,” he responded: “There is one person who I had a complaint from. So it’s like everything else, there will be winners and there will be losers. Mr Harbord, this year, on his new contract which we extended, we reduced it through negotiations by three per-cent. So how many people have taken a three per-cent pay deduction this year in the civil service?”
Labour Councillor Paul Gleeson said he found the affair “concerning.”
“Richard Harbord, who is a good officer, was employed initially on short term contracts, but last November he was given a permanent employment for a limited time, and when I learned in January that he was still being paid in this way, I did raise it with our Section 151 officer (the officer responsible for finance) who said this was all right.
"But I think what you’ve got to do as a councillor, you’ve go to ask yourself what would somebody looking in, not with all the knowledge or information, think about a council that is paying a member of their staff in a way when you have government ministers saying that they’re not happy with that method.
“And I think Peter Bedford does have to ask himself - and maybe ask some of his senior colleagues   -is this the right way to do it?"
Asked whether this was the politics of envy, Councillor Gleeson responded: “He can earn in 23 days what the average family in Boston have to live on for a year. He earns a lot of money.
"You have a council that is focussing a lot of the cuts that the government are forcing on to them on to the disabled people of Boston. And so you can see why people looking in think ‘why are the council paying this man in a rather peculiar way’ – a way that Andrew Lansley took time out on Thursday from privatising the NHS to apologise for, and say he’s going to look into. And yet we seem to be happy that we’re going on down this path.”
Was it a price worth paying for a well-run authority: “I don’t know. I’m certain there were people of equal ability who would do the job for less. But it’s not so much how much Richard Harbord’s been paid, it’s the way he’s being paid. He’s not being paid in the way that normally a council pay its staff.
“I’ve raised it with the Section 151 officer, and he says it’s all right, so we’ll raise it in council.
"We will raise it with the ruling group in the council and see if they can review it. I admit he’s now in a contract, and most likely they are in a situation that we are stuck in.
"But you have ministers promising to change it in their departments, so I don’t think it can be impossible for the borough to readdress the issue.”
Boston Eye says: One thing that hasn’t been made quite clear is when the decision to make the Chief Executive post part-time was taken.
The final extension to Mr Harbord’s contract was taken by the full council on 26th September - and included the announcement by Councillor Bedford that “within six months the council would start to look for a new chief executive.”
Almost five of those six months have elapsed with no hint of a start to the search.
The borough press release continued: “He (Bedford) said it was clear the council could no longer sustain a full-time chief executive, and talks would be held with neighbouring authorities to possibly share a chief executive, as one of the options for the future.”
Again, this implies a full-time status at that time – when it was clearly not the case.
So what appears to have happened is  - that on the departure of former Chief Executive Mick Gallagher, and the appointment of Richard Harbord, the post seamlessly moved from full to part-time status.
That’s fine as far as it goes – but bear in mind that Mr Harbord’s payment of £108,000 a year is the full time equivalent of £216,000.
On top of that, Mr Harbord receives travelling expenses and the cost of overnight stays - apparently around £1,500 a month .
Boston is one of the smallest local authorities  – ranked 331st of 354 English local authorities.
But the full-time equivalent payment to the current Chief Executive is still higher than the 2010 salary and allowances of the head of the  London Borough of Brent, which at 35th on the list is almost 300 places higher.
When Mick Gallagher left Boston Borough Council in mid 2009, his full-time pay was calculated at £91,932.
Mr Harbord’s appointment more than doubled the rate for the job by making it -  at half-time - an even higher sum.
What will Boston Borough Council do when the time comes to replace Mr Harbord?
It would be ridiculous to continue to offer the current going rate – our neighbouring authorities  currently pay their full-time Chief Executives a rate rate similar to that of Mr Harbord.
But how will they explain to applicants for a part-time job that once paid £108,000,  that the "new" rate will be around £50,000?
Meanwhile, as Councillor Bedford told the BBC,  our Chief Executive is "perfectly at liberty to work for other clients"  –  and Mr Harbord is apparently keeping busy during his time away from Boston.
According to the website Openly Local ,  Mr Harbord’s company MRF UK LTD – which was  once, it seems, previously named Modular Raised Floors (UK) Ltd - is located at Gooserye, Cooper Road, Updown Hill, Windlesham, Surrey – a street of two-storey houses which sell for around £400,000 a time.
A visit to the website Directorcheck,  finds Mr Harbord listed as holding 32 company director or secretary appointments – including those of a plumbing and an amusement company.
Also listed at the same address is on the site is Ms Jenny Harbord,  who has six company director or secretary appointments – including that of bookkeeper to MRF UK.

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