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How would your council cope if you handed over £20m from the coffers with no visible gain? How about £50m? And you must do it with the same finance settlement and capping restrictions, with no cash handouts from the Government – while still providing a decent service for local people. It is a tall order – but a reality for some local authorities which have had to come to terms with giving away money for their equal pay deal. The latest estimates for some authorities are creeping higher and higher, with Cumbria CC facing a bill of ‘up to £50m', and now Wakefield MDC looking at costs of up to £20m. Estimates of the cost for local government run as high as £1bn. As difficulty with equal pay spreads, the common myth that this is a problem for the North East is also beginning to fade. It has been a huge issue in the North East, where no-win, no-fee lawyer Stefan Cross set up shop, bringing equal pay claims on behalf of local women public sector workers. Although it has been a tough job, 11 of the 12 largest authorities in the area have now negotiated a pay deal, with compensation costs of around £100m for those 11 alone. And even they are not out of the woods. They are repeatedly being thrown curve-balls, from different legal actions and even by ministers. While the Government has come up with the cash to bail out the NHS on the same issue under its Agenda for change programme, it has refused to do the same for local government. The MJ requested an interview with local government minister Phil Woolas, or Ruth Kelly – who is responsible for both local government and equality issues. The request was refused, but a statement from Mr Woolas – himself a former union employee – said: ‘We recognise this is a difficult and costly process for local government, but this is not a new pressure. ‘The onus is on local government to resolve the issue of equal pay for equal value in an affordable manner. Local government agreed a timetable with the unions for introducing pay and grading reviews. This was not imposed by central government but allowed them to take account of affordability constraints. ‘The situation is not comparable with the NHS, as central government is not represented in negotiations covering local government pay and conditions.' To make matters worse, the Treasury has done a U-turn on its original pledge that councils would not have to pay tax and national insurance on compensation payments. In addition, councils will face the extra costs incurred by a pay review which, in some cases, is set to add an estimated 4% or 6% on the pay bill. Set against a backdrop of efficiency savings, tight settlements and capping – before taking account of staff costs and the impact on staff moral – we could be looking at a cash crisis for many local authorities. While it has been illegal to pay men and women different wages since the Equal Pay Act of 1970, unequal reward continued as different jobs – which were largely divided by gender – were paid at different rates. To make matters worse, male-dominated jobs – such as binmen and gardeners – often benefited from bonus schemes which were unavailable for female-dominated roles. Single status was introduced in 1997, but the difficulty of introducing an affordable and effective pay and grading structure meant many local authorities failed to do it. Within the 2004 pay negotiations, councils were given a deadline of 1 April 2007 to sort out their pay and grading. In the meantime, some HR departments have been hit by legal actions over their unequal pay. The result of the review will finally mean equal pay for women, but its not all good news. To remain affordable, the same staff will inevitably see their pay go up, in addition to those whose wages will go down. Director of the North East Regional Employers' Organisation, Michael Brodie, says ‘There will be a large number of winners and losers. It has a huge impact of the morale of an organisation – sometimes even the winners are unhappy with the outcome.'And for many councils involved, it could also lead to redundancies. In an attempt to cushion the blow for workers who are facing pay cuts, councils are attempting to put pay-protection schemes in place. But since Mr Cross has started to challenge pay protection in the courts, councils now have to beware of how much of a cushion they offer their workers. ‘The Equal Opportunity Commission has suggested an amnesty for equal pay claims for organisations carrying out meaningful pay reviews,' says Mr Brodie. ‘Tribunals could "park" claims until after the review was complete.' The move would allow local authorities some breathing space to get on with their pay reviews, without the interruption of constant legal battles. As it is, the unions have started to refuse to sign up for compensation deals until job evaluation is complete. For most authorities which believe they are close to a deal with their local union representatives, there could be another shock around the corner, as local offices will have to run all deals past their national office for approval. For the North East, the worst of the problems seem to have passed – although the authorities are waiting anxiously to see what new cases are brought. As yet, Mr Cross is just about the only no-win, no-fee lawyer taking on these cases – and no-one seems to know why others have not followed in his path. Councils in other parts of the country are far further behind. As time goes on, compensation claims are getting higher. While the first compensation cost councils around £3,000 per employee, one of the latest – Aberdeen city council – is looking to settle at around £15,000. And more test cases are coming up, finding new ways to challenge councils at tribunals. As Mr Brodie says: ‘The way Mr Cross is going, it feels like there is no end to this.'

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FINANCE

The real cost of equal pay…

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