The Government has said it will help councils settle their equal pay liabilities. Mark Conrad reports
Thirty-four councils breathed a large sigh of relief last week, when local government minister, John Healey, announced plans to help them settle even larger equal pay liabilities.
The Government’s interjection could, it seems, save councils more than just a longer wait for back-dated pay settlements for thousands of low-paid female staff.
From Hull to Hampshire, Blackpool to Brighton, the £455m of new capitalisation permissions – which allow councils to sell assets or borrow against them to settle back-dated claims – have been viewed as a broader rescue package.
Following a High Court ruling in 2004, all councils were warned that they must quickly implement local government’s single status regime, which was designed to put employees in traditionally ‘female’ roles, such as school dinner ladies, on a similar pay spine as those in traditionally ‘male’ roles, including waste collection.
Prior to the introduction of single status, male staff had earned up to 40% more for what were considered to be jobs of broadly-equivalent value. But ‘no-win, no-fee’ lawyers have since won significant court cases which determined that typical claims could be backdated for six years – raising costs to councils.
The problem was that councils faced equal pay claims totalling £2.5bn nationally from around 400,000 staff, because they had failed to implement legal requirements for equal pay which actually dated back to the early 1970s. As if a £2.5bn bill wasn’t serious enough, the long-overdue court ruling came at a time when town hall finances were tightening because of the slowdown in public spending following the 2004 Spending Review.
The credit crunch and soaring energy prices have, of course, simply made this tough fiscal environment even tougher. Amid declining revenues, councils are currently shedding jobs by the thousand, and Mr Healey’s generosity has probably saved even more local government posts and services from being axed.
Liverpool City Council, which has been told by Mr Healey that it can capitalise assets to the tune of £35m this year, separately announced it would axe 125 care posts in order to balance its books.
A senior political source at Liverpool told The MJ: ‘It’s quite possible that more jobs would have had to go to fund an equal pay settlement without the capitalisation permissions.’ Cllr Steve Hurst, Liverpool’s executive member for corporate performance, said the settlement was ‘extremely good news’ for up to 7,000 former and current staff involved in pay claims.
‘[It] means we can now move on to the next stage of starting to calculate individual offers for members of staff,’ he said.
Mr Healey’s interjection is the third tranche of capitalisation permissions in three years, with government assistance now topping £1.1bn.
The minister said he ‘wants to see councils go further and faster, working closely with trade unions to see fair pay for all’.
But not everybody is happy. The Taxpayers’ Alliance pressure group correctly point out that if councils borrow against their assets to fund equal pay settlements, current and future local residents will end up footing the bill for town hall inaction over women’s pay dating back 30 years.
Pointing to a potential recession in the UK, Matthew Elliott, Taxpayers’ Alliance chief executive, said: ‘This is a huge cost that we can ill afford, particularly at the moment.’
Meanwhile, Birmingham City Council faces a £160m equal pay claim – significantly more than the capitalisation permissions it received last week – and has previously criticised ministers for not using central government money to help authorities move into line with single status.
Cllr Alan Rudge, the authority’s executive member for HR, has claimed that he inherited the discriminatory pay system from his Labour predecessors – inferring that the problem was not of his party’s making.
But let’s face it, equal pay settlements must follow, and ministers were not going to let the cost fall on to all UK taxpayers when the problem was created by local government’s inaction 30 years ago. Politically, it seems that getting local residents to fund the settlements – or councils to sell their assets – was the most palatable option, however harsh.
Sir Steve Bullock, chairman of Local Government Employers, appeared to recognise this when he said that Mr Healey’s announcement was ‘a major step’.
‘Providing a fair settlement on equal pay remains an urgent issue for local councils which must act in the best interests of local taxpayers as well as all staff,’ he added.
Which brings us to the vexed issue of those no-win, no-fee lawyers. They have made their name – and fortune – by insisting that councils and trade unions have not acted in the best interests of workers when negotiating settlements. What will the courts make of Mr Straw’s attempt to limit their feast following Mr Healey’s generosity?
The Government’s interjection could, it seems, save councils more than just a longer wait for back-dated pay settlements for thousands of low-paid female staff.
From Hull to Hampshire, Blackpool to Brighton, the £455m of new capitalisation permissions – which allow councils to sell assets or borrow against them to settle back-dated claims – have been viewed as a broader rescue package.
Following a High Court ruling in 2004, all councils were warned that they must quickly implement local government’s single status regime, which was designed to put employees in traditionally ‘female’ roles, such as school dinner ladies, on a similar pay spine as those in traditionally ‘male’ roles, including waste collection.
Prior to the introduction of single status, male staff had earned up to 40% more for what were considered to be jobs of broadly-equivalent value. But ‘no-win, no-fee’ lawyers have since won significant court cases which determined that typical claims could be backdated for six years – raising costs to councils.
The problem was that councils faced equal pay claims totalling £2.5bn nationally from around 400,000 staff, because they had failed to implement legal requirements for equal pay which actually dated back to the early 1970s. As if a £2.5bn bill wasn’t serious enough, the long-overdue court ruling came at a time when town hall finances were tightening because of the slowdown in public spending following the 2004 Spending Review.
The credit crunch and soaring energy prices have, of course, simply made this tough fiscal environment even tougher. Amid declining revenues, councils are currently shedding jobs by the thousand, and Mr Healey’s generosity has probably saved even more local government posts and services from being axed.
Liverpool City Council, which has been told by Mr Healey that it can capitalise assets to the tune of £35m this year, separately announced it would axe 125 care posts in order to balance its books.
A senior political source at Liverpool told The MJ: ‘It’s quite possible that more jobs would have had to go to fund an equal pay settlement without the capitalisation permissions.’ Cllr Steve Hurst, Liverpool’s executive member for corporate performance, said the settlement was ‘extremely good news’ for up to 7,000 former and current staff involved in pay claims.
‘[It] means we can now move on to the next stage of starting to calculate individual offers for members of staff,’ he said.
Mr Healey’s interjection is the third tranche of capitalisation permissions in three years, with government assistance now topping £1.1bn.
The minister said he ‘wants to see councils go further and faster, working closely with trade unions to see fair pay for all’.
But not everybody is happy. The Taxpayers’ Alliance pressure group correctly point out that if councils borrow against their assets to fund equal pay settlements, current and future local residents will end up footing the bill for town hall inaction over women’s pay dating back 30 years.
Pointing to a potential recession in the UK, Matthew Elliott, Taxpayers’ Alliance chief executive, said: ‘This is a huge cost that we can ill afford, particularly at the moment.’
Meanwhile, Birmingham City Council faces a £160m equal pay claim – significantly more than the capitalisation permissions it received last week – and has previously criticised ministers for not using central government money to help authorities move into line with single status.
Cllr Alan Rudge, the authority’s executive member for HR, has claimed that he inherited the discriminatory pay system from his Labour predecessors – inferring that the problem was not of his party’s making.
But let’s face it, equal pay settlements must follow, and ministers were not going to let the cost fall on to all UK taxpayers when the problem was created by local government’s inaction 30 years ago. Politically, it seems that getting local residents to fund the settlements – or councils to sell their assets – was the most palatable option, however harsh.
Sir Steve Bullock, chairman of Local Government Employers, appeared to recognise this when he said that Mr Healey’s announcement was ‘a major step’.
‘Providing a fair settlement on equal pay remains an urgent issue for local councils which must act in the best interests of local taxpayers as well as all staff,’ he added.
Which brings us to the vexed issue of those no-win, no-fee lawyers. They have made their name – and fortune – by insisting that councils and trade unions have not acted in the best interests of workers when negotiating settlements. What will the courts make of Mr Straw’s attempt to limit their feast following Mr Healey’s generosity?
