Town hall bosses at the centre of a £500,000 financial scandal have refused to reveal details of pay-offs given to two directors.

Hastings Borough Council, which was widely criticised for overspending by £546,000 on recycling, has laid off the pair as it restructures its top-level management.

The authority took four days to respond to a request from The Argus for details of the directors' golden handshakes and has ruled taxpayers are not entitled to know.

Virginia Gilbert and Mike Marsh were removed after the Conservative Cabinet agreed four corporate directors should replace the existing six, to cut costs.

Laying off the officials and their assistants will save the council about £250,000 a year from 2008.

Neil Dart, Richard Homewood, Simon Hubbard and Richard Peters were appointed as directors to work alongside chief executive Roy Mawford. A council spokesman said: "I know it is public money but we are still not going to give that information.

"We cannot discuss the personal contractual details of individual members of staff but staff will be treated in accordance with our agreed terms and conditions."

The council, which had a £16 million budget, has been trying to save money since overspending last year on its recycling contract.

More pay-offs will follow during the second stage of the authority's restructuring plans.

The Cabinet has approved the chief executive's proposal to alter the middle management structure.

This could see up to 15 officers made redundant as 31 functional managers are replaced by about 16 principal managers.

The council hopes that by devolving more authority from directors to local managers it will utilise resources as effectively as possible and improve services. Consultation on the second stage ends on April 16.

Jeremy Birch, leader of the Labour opposition, said an external review of the council's structure would have been better because plans had been rushed through.

Councillor Birch said: "I'm not against reorganisation as a matter of principal and it is quite acceptable for councils to review their structure.

"However, this is one of the worst I have ever come across.

"The Cabinet has agreed with the chief executive and does not know what roles the directors will fulfil."

Conservative Cabinet member Keith Bing defended the plans and said the chief executive knew what roles the new directors would take.

He said: "I'm sure the chief executive had very strong grounds to go down the route he went."