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Potential pay sting is no minor irritation

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Commentary on the decision to defer chief executives’ pay request

The deferral of a decision by the National Employers on the 2% pay claim by the Association of Local Government Chief Executives may appear to be a somewhat peripheral concern considering the scale of the complex financal challenges facing councils. But the development, or lack thereof, should be seen in the context of broader questions over workforce pay that are much more than a minor irritation.

The National Employers negotiating body was also yesterday due to consider a claim by officers represented by the Unison and GMB unions, who have requested a parity rise with other local government employees, and craft workers.

These claims are reliant on whether a deal can be struck with unions through the National Joint Committee on a 2% pay claim for most staff which, tied in with the new national living wage, places a significant burden on councils considering the scope of their service offer next year and beyond.

The LGA has said the offer, as things stand, will result in an increase to the national pay bill of 5.6% over two years.

David Simmonds, chair of the Local Government Association’s Conservative group and not a man prone to overstatement for political impact, previously warned that the 2% offer could result in job losses and service cuts.

As LGC research last year found, half of top-tier councils had not factored the proposed 2% pay increase into their budgets for next year, with many reporting implementation of a new wage structure will place significant pressure on their finances.

At the time, Peterborough City Council said it could only consider a 2% increase if it was government funded.

But, as Sevenoaks DC leader Peter Fleming (Con) has pointed out, the government is highly unlikely to foot the bill for a decision made within local government, despite the demands of Labour councillors who forced it through.

The decision by Unite and Unison, who requested a 5% pay rise in June last year, to recommend members reject the offer compounds the uncertainty and increases concerns over the impending hit on funding.

There was a degree of surprise within local government over Unison’s decision.

LGC has since been told by a senior Labour official that the vote probably would have gone the other way if all the members of the relevant committee had turned up to the decisive meeting on time.

Whether this is the case or not, the unions’ positions are not now expected to become clear until early to mid-April, with the possibility of protracted negotiations well into the new financial year.

There is said to be little appetite among local government representatives of all political persuations to go beyond the 2% on the table, but ongoing uncertainty will impact already fraught financial planning.

An evidence session for the Commons community and local government committee inquiry into business rates retention on Monday laid bare the difficulties facing councils trying to plan in the medium-term in order to deal with what is expected to be a 63% decrease in core funding by the end of the decade.

London Councils’ director of finance, performance and procurement Guy Ware told the committee councils were facing a “cliff-edge”, with clarity over arrangements for business rates retention, the fair funding review and possible changes to social care in the green paper not likely until late 2019, despite planned implementation in 2020 – not forgeting a new spending review.

The ongoing uncertainty over the pay bill may be clearly secondary to these grand scheme issues, but it nonetheless feeds in to the general precarious nature of local government finances.

Jon Bunn, senior reporter

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