A third of town hall chiefs walk away with a golden goodbye worth hundreds of thousands of pounds, according to a survey by the local government spending watchdog.

The Audit Commission found that some council chief executives had received severance payments of more than £500,000. Since 2007, 37 have been paid a total of £9.5 million. The watchdog called for much greater transparency about the deals.

And it said many were unjustified. Today Shropshire Council, which was formed last year, said in a brief statement that it had not paid out for any “golden goodbyes”.

However, the switch to unitary status did cost £11.5 million in one-off redundancy payments, involving an estimated 182 staff across the county.

And top Shropshire officials have been involved in big pay-offs.

For example it was reported that Sheila Healy, who became interim chief executive in Shropshire last year, left her former job in Cornwall with a £500,000 pay-off in a secret deal.

It was claimed that Mrs Healy, who once worked as director of environment and economy at Telford & Wrekin Borough Council, would get about £300,000 as a one-off payment in Cornwall along with an extra £200,000 in pension benefits.

She remained in Shropshire until last summer when new chief executive Kim Ryley was appointed.

Mr Ryley had been one of the biggest earners in local government when with his previous employers in Hull. His job in Shropshire is worth about £180,000 a year.

Today’s report said that competent chief executives were being shown the door needlessly, often because of a personality clash with elected leaders, while those that were not up to the job were being paid off when they should simply be fired.

The Audit Commission demanded that paid-off chief executives who quickly find a job elsewhere be required to hand back at least some of the cash and consideration be given to advance “pre-nuptial” agreements setting out grounds and terms for severance of contract.

Communities and Local Government Secretary John Denham backed the recommendations and is urging their rapid adoption.

Audit Commission chairman Michael O’Higgins said that the Audit Commission “is laying out the facts and making recommendations aimed at protecting the public purse, as well as the rights of chief executives and council leaders”.

By Dave Morris