A council has been rated as one of the best in the country - on the day it is saying goodbye to its chief executive.

The Audit Commission announced today it has awarded four stars - the top grade - to Brighton and Hove City Council as Alan McCarthy prepares to quit the local authority.

Mr McCarthy is to hold a leaving party this evening, after taking early retirement from the top job with a £500,000 payout.

Controversy has surrounded the move and his golden goodbye, with some claiming he was squeezed out because of disagreements with the ruling Conservative party.

He will officially step down as a council employee at the end of the month.

The government watchdog has delivered mixed marks on the services provided by Sussex’s councils.

Brighton and Hove and East Sussex County Council have been moved from three to four stars, according to the commission’s comprehensive performance assessment, while West Sussex County Council has been downgraded from four to three.

Brighton and Hove council leader Mary Mears said: “I’m delighted that the Audit Commission has recognised the excellent work being undertaken.

“They have seen that we have successfully targeted high cost services and provide value for money in the majority of our services.

“We have more to do, however, to continue to provide high quality and lower cost services that the city needs.”

Gill Mitchell, leader of the Labour opposition, said: “This assessment makes it even more absurd that the chief executive is being made to leave after delivering such a fantastic result for the authority.”

East Sussex council leader Peter Jones said: “We have now been given official confirmation that the county council is one of the best performing local authorities in the UK.

“This is a stunning result and proof that we are delivering on our promise to residents.”

East Sussex’s children’s services were rated the best in the South East and scored the highest of any county council in the country But West Sussex lost its four star rating in part because of problems with its children social service department, which has recently been branded “inadequate”.

West Sussex council leader Henry Smith said the inspections were a drain on time and money.

He said: “The report shows that West Sussex is a well run local authority and we are achieving well in most priority areas.

“However, I have always been concerned at the time and money the inspection process involves, and how it looks like being even worse next year when comprehensive performance assessment is replaced by a new system.

“I would like to see much more freedom for councils that have shown they are performing well to get on with the job instead of constantly ticking expensive boxes.”

Despite the downgrading, the commission said West Sussex was in the top 5% of all councils for improvement to services.