The perfect pay storm? By Heather Wakefield

Over 1.5 million workers employed by councils in England, Wales and Northern Ireland face a pay cut from April 1, after the Local Government Employers informed Unison and the other unions at a meeting last Wednesday that there would be no pay offer this year. Everyone from the cleaner to the chief executive will suffer – though clearly not equally.

In a letter to local authority chief executives, LGE’s managing director Jan Parkinson attributed the wholly sick-making and unjustifiable decision to ‘a perfect storm of falling revenues and increasing demand for services’, adding that ‘up and down the country, councils have already been forced to cut thousands of jobs to balance the books’.

That’s 13,000 jobs already lost in England alone over the last year by the way, not to mention more in Wales and Northern Ireland and the thousands of posts now covered by agency and temporary staff. It’s our members in councils who have continued to meet the increased demand for local services through the recession, floods and snow, covering those lost and frozen posts as they go.

Traipsing miles through snow blizzards to visit the elderly, rowing to rescue the flood-bound, housing the homeless or just getting on with being a besieged social worker count for nothing in this hard-nosed world of Cameron’s councils it seems. Not that the Tories were alone in agreeing to the pay cut for our hard pressed members. There have been no dissenting noises from the Brown, Clegg or NOC council leaders.

With CPI inflation standing at 2.9% now and predicted to rise up to 5% at some point later this year, what’s on ‘offer’ is a pay cut by any standards. Forget the ‘freeze’ word. The 2010 RPI forecast of 2.4% also falls far behind the Bank of England’s top-end inflation predictions. And before anyone says it, last year’s pay freezes – largely negotiated rather than imposed, and confined to manufacturing industry – are due to be ‘defrosted’ in many companies over 2010, with average earnings forecast to rise by 2.2%.

Do I sound angry? Yes I am. But before you rush to say that a Unison maid would resist a sensible pay cut on principle, let’s take a close look at the local government workforce and their earnings. The first thing you should know is that it’s a predominantly female domain, so this is a head-on attack on women’s pay. Seventy-five per cent of 1.4 million employees in the National Joint Committee for Local Government Services are women.

The gender profile of the workforce is not surprising given the nature of the work – caring, cleaning, cooking, educating, greeting the public, administering and sorting out tough family situations. Sixty-two per cent of all jobs are part-time and women occupy over 90% of them. Well over a quarter of a million employees are on the bottom three pay points, earning less that £12,500 a year for a full-time worker. A staggering 61% earn below £18,000 – those who were once deemed to be safe from Boy George Osborne’s threatened public sector pay freeze in 2011.

Such poverty pay is translated into poverty pensions too, with many low-paid staff unable to afford membership of the Local Government Pension Scheme at all. Unison’s 2009 ‘Time For A Change’ survey of 10,000 local government members showed a direct correlation between LGPS membership and pay, with almost 30% of part-time workers earning below £500 a month not in the scheme. Most said they weren’t in it because they couldn’t afford it.

This year’s official LGPS stats show that employee contributions rose by 15% between 2007/08 and 2008/09, compared to an 8% rise for employers. The average LGPS pension for women is just over £2,000 and around £3,800 for men. No goose feathers or gold plate there then.

Unison’s local government members are right at the bottom of the whole public sector pay league. In 2008/09, the average lowest pay point across all the largest public sector bargaining groups was £13,481. For the largest local government group covering 1.4 million workers within the NJC for Local Government Services, it was £11,995 – just 89% of the average bottom rate across public services.

And let’s not forget, these shameful statistics don’t include those working on privatised contracts providing services for councils. That’s 84% of all home care workers – many of whom earn the national minimum wage (or less for those increasingly on ‘piece work’, forced to work unpaid overtime to meet their client numbers). That’s huge swathes of refuse, cleaning, catering and front-line staff, currently being joined by growing numbers of so-called ‘back-office’ workers being parcelled up and handed over to IBM, Capita and their ilk. It’s grim and getting grimmer out there.

In these days of Total Place and joined-up everything, the difference between NJC pay and earnings in the NHS, police, civil service, probation and education matters. Working next to someone doing the same job but treated considerably better was never a recipe for high motivation levels. An NHS cleaner earns a basic rate of £13,758, compared with £12,145 for her local government counterpart. That’s a 9% difference. An NHS senior social worker’s pay is £40, 308 – over 16% more than a local government equivalent on £34,590. The difference in earnings rises to 23% for nursery nurses. The bottom rate of £12,145 for almost 100,000 NJC workers compares badly with £13,236 for police support staff, £12,837 for those in HE and £14,049 in probation.

So here they are – the poor relations of the public sector, about to get considerably poorer alongside rises of over 2% for most other public sector bargaining groups this year.

Perhaps it’s time to examine the LGE chief executive’s other statement in her letter to council chiefs: ‘Town halls have been swept by the cold winds of recession for more than a year and that means difficult choices have to be made’. Just how much the pay cut is down to the recession and how much is down to political choice and poor financial management is a question well worth examining.

First of all, the LGE itself says that the gross pay bill fell by over 2% in real terms between 2007 /08 and that there was a decrease of 2.6% full-time equivalent posts between 2008 and 2009. Add to the mix the fact that councils in England made record savings of £1.76bn in the same period together with above-inflation local government settlements of 3.4% in England and 3.2% in Wales this year and you might begin to wonder. Councils in England will have £2.83bn more to spend in 2010. They have enjoyed above-inflation increases in government grant every year since 1997 and low borrowing rates now, so why the empty purses?

Let’s set aside the odd imprudent investment in dodgy banks and large sums spent on consultants for a moment and recognise that some councils have lost income and investment returns are down (although borrowing is cheaper). However, the Conservatives have made clear their desire for a ‘small state’ and new Tory leaders in the likes of Nottinghamshire and Lancashire are busy slashing and privatising everything that moves.

What’s more, it’s election year and both Labour and the Conservatives have nailed their colours to the mast of council tax freezes and cuts, despite the fact that they mean very small gains for individual citizens but very large holes in councils’ budgets, hitting services and now, pay. David Cameron had even promised to reimburse councils who ‘contract’ to keep council tax at 2.5% or less in the first two years of a Conservative government, but it looks like his municipal storm troopers have beaten him to it.

It’s even stranger when you consider that Welsh and English councils’ medium term financial plans in 2009/10 all included budgets for pay this year of over 2%, so the money’s been allocated. The local government finance settlement contains an element for pay, so where’s that gone? Last, but by no means least, non-school reserves in local authorities in England rose from £5.5bn in 2002 to £12.75bn in 2009, despite councils submitting budgets saying that they would need to draw on reserves, rather than increase them. There is money, but there is no desire to spend it on staff.

Something strange is going on and it’s becoming increasingly clear what it is: Tory councils are hiding behind the recession to pursue their ideological desire to shrink the local state and put money into the hands of their private sector buddies. We are told that there was outrage at last year’s 1% settlement, with an extra 0.25% for the lower paid and seemingly the rancour carries on.

What’s more, Labour and Tory councils have both opted for the populist, but meaningless, squeeze  on council tax in the bid for votes in the forthcoming elections. Money stashed away in reserves is not for hard-pressed staff who are most local council services, but for expensive outsourcing exercises and PwC ‘efficiency’ consultants. At the same time our members are being cajoled into helping councils make cuts in ‘front line first’ exercises.

Like most other employees, our members are keen to keep their jobs and preserve local services. But there’s a limit to sheer exploitation and my in-box suggests that this year it’s close to being reached. The perfect storm may well be on its way.

Heather Wakefield is head of Unison’s local government service group

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Tags: Central government, Economy, Local government, Pay and pensions