Announcement

Capitalisation guidance published to help councils deliver equal pay

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Government will allow councils to apply to borrow and sell against their assets to help councils tackle historic pay inequalities while …

The Government will allow councils to apply to borrow and sell against their assets to help councils tackle historic pay inequalities while protecting frontline services, Local Government Minister Bob Neill has announced.

Thousands of local government employees - mostly women on low pay - are legally entitled to backdated pay following years of being paid less for doing equally valued jobs. Equal pay directions give local authorities the financial flexibility to settle their equal pay commitments over an affordable period of time by raising money on their assets.

Without this, compensation costs would have to be met within the financial year and could disrupt frontline services.

Guidance for how councils should apply has been issued. The deadline for applications is 16 September 2011. Last October the Government announced  21 councils had the go-ahead to borrow against or sell assets up to £250 million to meet and manage one-off costs of equal pay compensation.

Mr Neill said:

We are again giving councils this financial flexibility to tackle the unfair pay inequalities of the past, which saw thousands of hard working council staff, mainly women underpaid for doing the same work as their colleagues.

As councils work hard to manage their budgets in the current financial climate, it is all the more important they have this flexibility to settle their equal pay commitments while still protecting frontline services and keeping council tax low.

Guidance for councils on how to apply to raise money on their assets has been published and the deadline for applications is September 16 2011.

Notes to editors

  1. The Equalities Act (2010) which has replaced the Equal Pay Act (1970), sets out in legislation that all employees are entitled to be paid equally for ‘work of equal value’. Once historical gender pay inequalities are exposed, employees are legally entitled to claim up to six years of arrears of remuneration or damages.

  2. Since 2006 central government has given councils permission to raise over £1.89 billion for equal pay costs under a process known as capitalisation. Capitalisation directions give permission to local authorities to meet revenue costs out of capital resources, either through borrowing or capital receipts.

  3. The guidance for applicants to the 2011-12 equal pay capitalisation round can be found here: www.communities.gov.uk/publications/localgovernment/equalpaycapdirections201112.

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