Council leaders should be given thousands of pounds in "parachute payments" if they are voted out of office, according to a report.

Pay and perks for councillors should also be increased to encourage people to participate in local democracy.

The proposals are in an official study by the Councillors Commission presented to Communities Secretary Hazel Blears yesterday.

At present, councillors lose their entitlements - reaching up to £45,000 for the council leader - when they lose their seat, but the report calls for "parachute payments for elected mayors, leaders and executive portfolio-holders who lose office through the action of the electorate".

It suggests the windfalls should be similar to redundancy money, and based on the length of time in office.

Bradford Council leader Councillor Kris Hopkins (Con) is expected to receive about £45,000 this year and other councillors with special responsibilities, such as those on the decision-making executive, can take home up to £35,000.

The report also says councillors should be able to enter generous local government pension schemes, while centrally-imposed restrictions on pay for middle-ranking politicians should be removed.

And it indicates that some councillors should be able to claim the dole to top up their earnings.

However, town hall members would be barred from serving more than five terms in office ensuring more new councillors are brought into office, but also raising the prospect that many experienced councillors could be swept out.

The commission backs calls for electoral reform, proposing that councils could be given the option of introducing proportional representation and saying the voting age should be reduced to 16.

Shadow Communities Secretary Eric Pickles, a former Bradford Council leader, said: "Councillors have a valued role to play in holding town halls to account, and making sure that councils deliver good quality, responsive frontline services.

"But it is vital that councillors are fundamentally arms-length volunteers and do not become the bankrolled staff of the town hall, dependent on the municipal pay packet."

It is understood that ministers have already decided against endorsing the recommendations for parachute payments.

A Department for Communities and Local Government spokesman said: "This is a report from an independent commission and therefore does not represent Government policy or Government proposals.

"We will respond to the independent report when it is published."

Coun Hopkins told the Telegraph & Argus: "I am not in favour of any special treatment for councillors of any rank. Democracy can be a very brutal beast and that is how it should be. If you lose your position, you should lose the allowance you were previously entitled to."

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