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Localism Bill to hand pay power to full council with £100,000 vote

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

Locally elected councillors should all have to vote on decisions about whether they want to pay staff salaries over £100,000, Local Government…

Locally elected councillors should all have to vote on decisions about whether they want to pay staff salaries over £100,000, Local Government Secretary Eric Pickles suggested today.

Ministers today signalled their intention to issue new guidance on a salary ceiling at which remuneration decisions should be always brought before a full council vote. Ministers believe that threshold should be set at £100,000.

The changes we are introducing will mean that local government jobs will now have to be ‘democracy proofed’ before mega salaries are paid out. I think the democratically elected members of any council should make sure they have their say on pay and that £100,000 is the place to start that.

The Localism Bill includes provisions to require councils to prepare and publish a statement setting out the authority’s policy on the remuneration arrangements of its chief officers which must be approved by full council. Big bonuses and above inflation annual pay rises might also have to be included.

This will ensure decisions on senior pay are taken by all the democratically elected councillors in the council at an open meeting, instead of behind closed doors.

The new measures are designed to improve transparency and local democratic accountability in how senior pay is set within local government. Councils must have regard for any guidance issued by the Secretary of State when they carry out their responsibilities on these measures.

The pay bill for top managers in local government was estimated at £626.9m in 2008 by the Local Government Association group, the Local Government Employers.

Last year Mr Pickles called for council chief executives earning over £200,000 to take a ten per cent pay cut and those earning £150,000 - which is more than the Prime Minister’s current salary of £142,000 - to take a 5 per cent pay cut.

Eric Pickles said:

Councils need to make sure they don’t sully their reputation by taking decision behind closed doors to reward chief executives when they should be focusing resources on protecting frontline services.

The changes we are introducing will mean that local government jobs will now have to be ‘democracy proofed’ before mega salaries are paid out. I think the democratically elected members of any council should make sure they have their say on pay and that £100,000 is the place to start that.

The Localism Bill is one of the most radical pieces of legislation to be debated in Parliament for decades. It prizes democracy over bureaucracy, and our intention is that it should fundamentally shake up the balance of power in this country.

Background

  1. Provisions are included in the bill that will require local authorities and fire and rescue authorities to approve and publish annually at Full Council (for Fire and Rescue Authorities, a meeting of members), a senior pay policy statement which authorities will be required to follow when setting senior pay. Where councils want to depart from the pay policy, these would need to be referred back to Full Council (or a meeting of members for Fire and Rescue Authorities) to vote on.

  2. The statement must include the authority’s policies relating to.

(a) the level and elements of remuneration for each chief officer (b) remuneration of chief officers on recruitment
(c) increases and additions to remuneration for each chief officer
(d) the use of performance related pay for chief officers
(e) the use of bonuses for chief officers
(f) the approach to the payment of chief officers on their ceasing to hold
office under or to be employed by the authority, and
(g) the publication of and access to information relating to remuneration of
chief officers.

  1. The term ‘remuneration’ covers:

(a) the chief officer’s salary or, in the case of a chief officer engaged by the authority under a contract for services, payments made by the authority to the chief officer for those services, (b) any bonuses payable by the authority to the chief officer,
(c) any charges, fees or allowances payable by the authority to the chief officer,
(d) any benefits in kind to which the chief officer is entitled as a result of the chief officer’s office or employment,
(e) any increase in or enhancement of the chief officer’s pension entitlement where the increase or enhancement is as a result of a resolution of the authority, and
(f) any amounts payable by the authority to the chief officer on the chief officer ceasing to hold office under or be employed by the authority, other than amounts that may be payable by virtue of any enactment.

  1. The Bill also includes provision for the Secretary of State to issue guidance on the content and application of senior pay statements. The intention was for this guidance to be used to provide practical support on the practical operation of these measures. Relevant authorities must have regard to this guidance in the exercise of their functions under the pay accountability provisions. However, this guidance cannot impose any absolute requirements on local authorities or fire and rescue authorities, the functions regarding the setting of policies remain theirs to exercise.

  2. Evidence shows that senior pay levels have spiralled recently. An Audit Commission report (Tougher at the Top? 2008) found that basic salary levels for single tier and county chief executives increased by 34 per cent between 2003/04 and 2007/08. If performance related pay is included, total pay for private sector chief executives increased by 78 per cent from 2002/03 to 2006/07.

  3. According to the Local Government Employers data from the Joint Negotiating Committee’s Salaries and Numbers survey 2008 and Setting Rewards for Top Managers in Local Government, the chief officers pay bill is £576.5m and Chief Executives is £50.4m.

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