Brent Council's bold move to substantially increase councillor allowances has attracted publicity, although not as much as I expected. As I see it the central problem here is how to differentiate between councillors who are extremely active, and those do very little.
The old fashioned solution to this was to link allowances to attending meetings, but became less widely used after the 2000 Local Government Act. The problem was that it tended to emphasize the Town Hall aspects of being a councillor at the expense of the more community based parts. It also doesn't take into account the difference between some one who simply sits through a meeting and some one who is actively engaged. You can imagine a councillor turning up for a meeting without reading the papers, nodding through whatever is on the agenda and going home.
The emphasis since 2000 has also been increasingly on seeing councillors as social entrepreneuers and ambassadors. It is hard to see how that can be actively monitored and rewarded.