The decision to award directors at East Riding Council up to £12,000, backdated to last November, has sparked outrage.

Yesterday it was the turn of Goole businessman Peter Finch to express the feelings of many taxpayers when he asked councillors gathered in Beverley why when low-paid workers were suffering pay restraints, senior managers were getting huge increases.

The extra cash which directors will see in next month's pay packets will see chief executive Nigel Pearson getting £9,000 on top of his £153,000 salary, while four other directors will get rises of almost £12,000, taking salaries up from £111,000.

Another director and 21 heads of service will get £5,000 to £6,000, costing the taxpayer £190,000.

Councillor Stephen Sloan, one of two members of a staff terms and conditions committee to vote against the rises, said he was not convinced by arguments that they had to keep up with other authorities to recruit and retain the best candidates.

The council's recent top rating by the Audit Commission was as down as much to the workforce – stuck on 2.5 per cent – as the managers getting 11 per cent.

Coun Sloan contrasted reports suggesting as many as 175,000 people were expected to lose their jobs in Yorkshire and the Humber over the next year with the rises.

He said: "An issue of this nature is always going to arouse public interest. Had the review taken place two or three years ago it wouldn't have aroused the same furore. The timing is as subtle as a train crash."

Councillor Bob Tress said in his 30 years of public service he'd never come across "so many angry people".

However council leader Stephen Parnaby insisted that the salaries were the going rate.

Average salaries of chief executives stands at £158,000; Hull pays its chief executive in the region of £190,000, Cornwall's top officer was on £200,000.

The nine new unitary authorities would need hundreds of senior staff.

He said: "Do we say 'well, we are going to buck the trend'? We want senior managers to come and work in the East Riding, we pay 25 per cent less.

"Let's get real – we have to attract the right sort of people; we have to retain the right sort of people. You can't expect people to be paid less than the market rate."

Coun Sloan moved an amendment to the minutes of the meeting which made the changes to say they were accepted "with regret" – but he and other Lib Dem and Labour members were outvoted by Tory councillors.

Members of local watchdog East Yorkshire Eye who had demonstrated outside County Hall were left far from satisfied.

Martin Layton said the decision to backdate the claims was an insult to those who paid council tax. "All the arguments that Stephen Parnaby put forward could be put forward by every single organisation in the country but they have to manage within their budgets."

And protester Richard Bryon said: "In one breath they are going to freeze council tax – then they are giving these above-inflation rises".