The Government has been warned it must relax rules on council borrowing to help local authorities meet the growing equal pay bill. Local Government Employers (LGE) managing director, Jan Parkinson, has warned Whitehall must relax the current capitalisation limit, which means councils can only borrow £200m against their assets to fund equal pay deals. A new report, Unblocking the route to equal pay settlements, by the LGE estimates that councils face a national bill of around £3bn. ‘Councils want equal pay within their workforce, and are working hard to achieve it,' said Ms Parkinson. ‘The Government has issued a letter stating that bids to capitalise back-pay settlements will be subject to an overall cap of approximately £200m. This will affect the ability of some authorities to fund back-pay costs, especially as the figure covers all items permissible for capitalisation. ‘With one council's equal pay liability standing at £250m alone, this is clearly insufficient, and will significantly affect the ability of some councils to fund back-pay costs, especially as the figure covers all items permissible for capitalisation,' she added. The report also calls for councils and trade unions to reach pay settlements via independent arbitration to prevent deals later being overturned by industrial tribunals. This follows a landmark ruling by a tribunal in June against the GMB union, when 100 Middlesbrough Council workers won a sex discrimination case. The tribunal ruled, in a case brought by solicitor Stefan Cross, that the union had poorly represented them in a dispute over equal pay. Staffordshire CC revealed last month that one-quarter of all staff salaries could be cut as part of a new equal pay structure. ‘This is far from a done deal,' said a council spokesman. ‘There are 70% of employees either going up in salary or remaining as they are.' The report was welcomed by Unison's national secretary, Heather Wakefield, who said: ‘The Equal Pay Act has been in place since 1975 and successive governments have failed to recognise the under-valuing of women's work in local government.' No-one from the Department for Communities and Local Government was available for comment.
