Chief executive of beleaguered council resigns before hearing

heraldscotland staff

Published on 14 May 2008

The chief executive of crisis-hit Aberdeen City Council announced his intention to quit minutes before the start of a hearing by the Accounts Commission into the local authority�s �precarious� finances.

GRAEME SMITH and DOUGLAS FRASER

Douglas Paterson, 59, has asked the council for early retirement from the £120,000 post he has held for the past 12 years.

The hearing, only the second held by the commission, comes during a period of unprecedented community hostility at £27m of budget cuts which particularly affect the vulnerable and infirm and the revelation that the council lost as much as £5m by selling off land cheaply.

Kate Dean, leader of the Liberal Democrat-SNP coalition administration, said she would recommend approval for Mr Paterson's early retirement application with regret.

Len Ironside, leader of the Labour group on the council, said: "I regret his going. I think he may be viewed as a scapegoat but I think the problems are down to weak political leadership as has been exposed at the hearing and it is they who should have resigned."

Conservative group leader Alan Milne, who only joined the council in May, said the scale of the financial crisis had come as a surprise to him. "I think it is a shared responsibility between officers and the administration," he said.

Mr Paterson insisted that the timing of his departure was not a case of him falling on his sword. "The timing was a result of me considering, along with my wife and family, where we had got to."

He said there was due to be a review of the council's structural and operational arrangements, adding: "It would seem logical that whoever is going to take the council forward over the coming years is the person who takes the council through that review process, has the power to influence it and be part of deciding what the council's future shape will be."

Aberdeen's case raises questions about the political management over the past decade, and why neither Labour nor LibDem leaders got a grip of the drift toward losses.

Cathie Wylie, the council's external auditor who was part of the Controller of Audit's team, told the inquiry that the main reason for the council's precarious position was that for the past three years there had been a budgeted expenditure in excess of the income.

"In addition, there has also been overspending against the budget so that in total, over the last three years, the amount that has come from reserves to support the revenue spending has been almost £70m."' Ms Wylie was asked by John Baillie, the chairman of the Accounts Commission: "What happens if the budget in 2008-9 is not achieved? When does even more precarious become a disaster?" Ms Wylie replied: "At the point when all the reserves have been used up."

Last night Aberdeen City Council explained that only £12m, not £70m, had been used from reserves to support day-to-day spending and £59m of the £70m referred to by Ms Wylie had come from "other funds" - money raised from land and property sales.

The hearing continues.