Council chief given 'unfit' payout then gets £200,000 role

Retired on health grounds with £50,000 a year pension – only to be hired by another authority

A highly paid council chief executive who was handed a payout on the grounds of "permanent ill health" has since been busily earning more than £200,000 a year in consultancy fees in addition to his £50,000 pension benefit.

An investigation has been launched by the government watchdog the Audit Commission into the consultancy fees paid to Nick Johnson, 57, who retired from the London Borough of Bexley in 2007.

Mr Johnson took early retirement from his job as chief executive of Bexley council in November 2007, having been assessed as being "permanently unfit" on health grounds. He had spent the previous six months on sick leave, yet within weeks of leaving his job began working as a consultant for Hammersmith and Fulham council.

By February 2008 he was appointed as interim chief executive of Hammersmith and Fulham Homes (H&F Homes), responsible for running its 17,000 properties.

His temporary role lasted for more than three years and ended only last month. He was paid £950 a day in his full-time role at H&F Homes, and is being kept on as a consultant.

H&F Homes was scrapped by Hammersmith and Fulham council last month, in a move it claims will save £400,000 a year.

But Mr Johnson has been paid £830,000 through his company since 2007. He is also believed to have received a £300,000 payout on leaving Bexley council.

He was able to continue to collect his annual £50,000 Bexley pension because he was paid by Hammersmith and Fulham through a company – Davies Johnson Ltd – which he set up with his partner, Kate Davies. Mr Johnson is its sole shareholder.

The Audit Commission refused to comment on individual cases. While there is no suggestion of wrongdoing, the matter has also been referred to HM Revenue & Customs.

Stephen Cowan, Hammersmith and Fulham council's Labour group leader, said: "Nick Johnson was billing Hammersmith and Fulham £270,000 a year, while also claiming about £50,000 in pension. He was able to do this because he is classified as a consultant."

Teresa Pearce MP, whose constituency includes Bexley and who was formerly a senior tax investigator at PricewaterhouseCoopers, said that, while the arrangement is legal, "it's not within the spirit of the law, definitely not". She added: "Within a year of him being judged to be in permanently ill health he was pictured in a hard hat, with a spade, digging, in a brochure for H&F Homes – this is just so barefaced that it's insulting. Whatever he is paid for holding that office should go through the payroll and it doesn't. HMRC should investigate this."

Labour's justice spokesman, Andy Slaughter MP, recently asked Eric Pickles, the Local Government Secretary, for a justification of Mr Johnson's salary in a parliamentary debate but received no reply. Mr Pickles has criticised councils that pay vast sums to consultants.

Mr Slaughter, MP for Hammersmith, said: "Everything about this is wrong. Employing someone who is already paid £50,000 a year because they are too ill to work. Paying them almost £1,000 a day as a consultant but carrying on paying for more than three years at a cost to the taxpayer approaching £1m. I have raised Mr Johnson's employment with those paying his pension, and HMRC and I'm told the auditor is also looking at it. But this is a loophole that needs to be closed."

The details of Mr Johnson's ill health are not known. After an assessment by an independent occupational health consultant, he was declared by Bexley council to be "permanently unfit for his own post or any comparable employment".

Grant Shapps, local government minister, said: "Town hall pensions cost every council tax-paying household over £300 a year. Hard-pressed taxpayers simply cannot afford to foot an ever-growing bill. It's not justifiable to have healthy employees working in local government and claiming an ill-health benefit at the same time. Councils have power to stop such payments and should use them."

While running H&F Homes, contracts for sheltered housing services were awarded to Notting Hill Housing, a London housing association run by Mr Johnson's partner, Ms Davies. There is no suggestion of impropriety or a conflict of interest.

A Hammersmith and Fulham council spokesman said: "Mr Johnson made the council formally aware of his relationship status and any potential conflict of interest. We put in place formal protocols to ensure there was no conflict of interest." He said Mr Johnson secured £200m to improve homes, saved taxpayers £6m a year and cut service charges.

Mr Johnson and Ms Davies declined to comment.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Weekend Factory Operatives

£9 per hour: Recruitment Genius: This high quality thread manufacturer is curr...

Recruitment Genius: FP&A Analyst

£40000 - £55000 per annum: Recruitment Genius: A market leading acquirer and m...

Recruitment Genius: Electricians

£35000 - £45000 per annum: Recruitment Genius: Fully qualified electricians re...

Recruitment Genius: Customer Service and Business Support Assistant

Negotiable: Recruitment Genius: By developing intimate relationships with inte...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific