Magazine article Public Finance

Councils Need Help to Fund Equal Pay

Magazine article Public Finance

Councils Need Help to Fund Equal Pay

Article excerpt

Town halls and trade unions are demanding that the Department for Communities and Local Government expands a one-off capitalisation of revenues to help councils meet £3bn in equal pay claims across England.

Senior officials at the Local Government Employers this week told Public Finance that they want local government minister John Healey to offer a second and third tranche of capitalisation directions' for 2007/08. If not, they said, councils would be forced to delay major projects or cut services to fund their equal pay obligations under the Single Status agreement.

Healey announced on September 28 that 46 of the English authorities with large equal pay liabilities would receive £500m in capitalisation directions that would free cash to meet their equal pay obligations.

Under the plan, backdated equal pay costs will be treated as capital expenditure, allowing the authorities to borrow more cash or sell capital assets to finance the claims. Healey told PFthai the deal meant councils could spread equal pay costs over years rather than take a one-off hit under Single Status, which required councils to make significant progress by July 2007.

'We recognise that the financial position for many councils is tough. But the capital directions for 2007/08 are substantially higher than the [£200m] approvals last year, showing that we are giving councils the flexibility to help themselves," he said.

Healey s decision was praised by the Local Government Association and trade unions representing thousands of affected staff. …

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