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£250m aid for equal pay bills

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Local authorities struggling to finance equal pay settlements have been told that they can use £250m worth of assets to fund back-pay

The Department for Communities & Local Government has given 21 councils permission to sell or borrow against millions of pounds worth of assets in order to meet the bills.

Known as capitalisation, the grant allows local authorities to break public financing rules and use capital receipts for revenue spending and spread the cost over several years.

Local government minister Bob Neill said: “For years thousands of hard working council staff, many of them women, were under paid for doing the same work as their colleagues.

“This coalition government promised to fight for equal pay and work to end discrimination in the workplace. I’m very pleased today to give the green light for more councils to right historic pay wrongs by raising money on their assets.”

Mr Neill said the grants meant local authorities could meet their commitments without placing an additional burden on the taxpayer.

In recent years, capitalisation grants have been used for a wide range of high-cost items including payments to make up pension deficits and redundancy compensation - see table below.

In this month’s spending review, the Treasury announced that £240m would be made available to councils who undertook “restructuring”. A spokesman for DCLG later said a decision on whether there would be grant allowances for other costs, such as equal pay, in 2011/12 had not been made yet.

The councils eligible for capitalisation grants for equal pay in 2010/11 are:

  • Bolton MBC
  • Cumbria CC
  • Doncaster MBC
  • Hertfordshire CC
  • Kingston upon Hull City Council
  • Knowsley MBC
  • Leeds City Council
  • Liverpool City Council
  • Newcastle City Council
  • North Tyneside Council
  • Nottingham City Council
  • Portsmouth City Council
  • Sefton MBC
  • Sheffield City Council
  • South Tyneside MBC
  • Sunderland City Council
  • Swindon BC
  • Tameside MBC
  • Thurrock Council
  • Walsall MBC
  • Wolverhampton City Council

 

Capitalisation: 2008/09 to 2011/12

£m2011/1220010/112009/102008/09
Commutationundecidednot available0.050.5
Pensionsundecidednot available4638.5
Redundancyundecidednot available44.636
Exceptionalundecidednot available72.512
Contaminated landundecidednot available0“TBC”
Equal payundecided250506.5375.1
Restructuring240000
Total240250669.65462.1

Source: http://www.communities.gov.uk/localgovernment/localgovernmentfinance/capitalfinance/capitalisation/

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