What do the following have in common? Ballooning council pension deficits, nil RPI inflation, town hall job cuts, union pay demands. Answer: Lots of media coverage for local government – not entirely favourable – headaches for council HR and PR heads, and some explosive industrial relations during the next few months. Early in the year, SOLACE warned its members that chief executive salaries and pensions would become a media issue – and it was not wrong. Indeed, on Tuesday this week, the [Russian-owned] London Evening Standard filled its front page with a survey of London's council pension fund deficit, claiming it was heading for a £10bn shortfall. The newspaper also named 10 chief executives, their salaries and pensions, including SOLACE's own chairman, Derek Myers, from Kensington & Chelsea RLBC. Mayor Boris Johnson was quoted as calling for ‘serious pension reform' even as he was himself slashing more than 100 managerial jobs at City Hall. Council pension funds are in exactly the same state as private sector final schemes, ie, hit by falling share prices, actuarial forecasts and accountancy rule changes, and like them, they pay out depending on income. New pension fund regulations were introduced last year to reflect the above problems. Drastic alternatives, such as closing the scheme to new members or even capping pensions will not solve current funding problems. But, while the public sector is still growing employment, local government has been cutting staff, although the 6,000 drop for the last quarter of 2008 is almost certainly an under-estimate because of the time-lag in gathering data. To this sizzling cocktail of senior pay, generous public pensions and town hall job cuts among lower-paid staff is added the prospect of a looming pay round. The general view among local government employers is that pay should be frozen, and they have a very good case for so doing. But the unions will argue that their members are bearing the brunt of job cuts, that the average pension for them is £4,000, and that the Consumer Price Index is 3.2%. Tales of chief executive pay and pensions can only inflame the mix. It looks like a lively few months ahead. Michael Burton, Editor, The MJ
