The allegations against Mr Cunliffe were: "Failure to properly advise elected members on the general purposes committee, and to possibly mislead them, over the potential financial impact of the implementation of the new pay and grading structure which has resulted in the costs of implementation exceeding the financial costs advised by approximately £1 million per year."

"Failure to adequately oversee the management of the project covering the pay and modelling process undertaken by the human resources manager."

Mr Brooke's report stated how Mr Cunliffe, because of the importance of the project and "stung, perhaps by the accusation of weak leadership in the comprehensive performance assessment" had taken overall charge.

However, he later said that, given the importance of the project, it was "very proper" that the chief executive should assume overall leadership.

When advising the general purposes committee, Mr Cunliffe communicated the urgency of the pay and grading scheme. However, Mr Brooke said he had no evidence that he was "unbalanced or unduly threatening" in what he said.

Mr Brooke said he believed that the chief executive advised the cabinet and the general purposes committee properly, except in relation to the costs of the scheme.

However, he did say that the mistakes that had been uncovered by the member of staff compiling the spreadsheets should have raised alarm bells, and they were the "tip of the iceberg".

He said that Mr Cunliffe relied too heavily on Andrew Taylor and Taylor West. However, he was critical of Taylor West's competence.

In failing to ensure the figures were checked, Mr Cunliffe's conduct fell a long way short of gross misconduct and, while culpable, also fell short of misconduct, according to Mr Brooke.

Mr Brooke said: "However, there is no doubt that this episode has severely damaged the confidence of the council in Mr Cunliffe as chief executive.

"It would, therefore, be undesirable, if not impossible, for him to resume his former office as chief executive."

Mr Brooke was aware that negotiations for Mr Cunliffe's early retirement had been in train but were interrupted by the disciplinary process, and Mr Brooke recommended that early retirement be explored.

l Mr Cunliffe told The Westmorland Gazette this week: "I do not think it would be appropriate for me to make any comment under the present circumstances while the option of early retirement is under exploration."