Jo Moore was right – councillors’ pensions finally are bad news

Chris Game

There’s an album track by the heavy metal band, Skyclad, inspired by the most infamous civil service email ever – the ‘good day to bury bad news’ message by Jo Moore, special adviser to Local Government Minister, Stephen Byers, at 2.55 p.m. on September 11th 2001, an hour after al-Qaeda terrorists crashed their hijacked jets into the twin towers of New York’s World Trade Center. I’m no metalhead anyway, but there are two things about the track that especially grate.

First, the title, which, presumably in the interests of scansion, is mangled into ‘A good day for to bury bad news’. Oh dear! Even more distressingly, it’s all stuff about the West waking up to a terror attack, but having the muscle to give it all back. Not one mention of councillors’ pensions – which was, of course, the toxic news on Jo’s mind when she actually typed: “It is now a very good day to get out anything we want to bury. Councillors’ pensions?”

You must admit, it’s intriguing. Not just that anyone should think that the most embarrassing thing New Labour was up to was contemplating pensions for councillors, but that at the time Ministers themselves intended it to be, if anything, good news. Following some unenthusiastic reports of the early months of executive-based local government, they were looking for ways of making council service seem a more attractive prospect to existing and, even more, to potential members.

In the consultation paper published the next day, there were proposals for councils to determine their own travel and subsistence allowances and, if their independent remuneration panels recommended, to pay pensions to those councillors – executive members and chairs of overview and scrutiny committees – whose special responsibility allowances would be likely to qualify them to join the council employees’ Local Government Pension Scheme (LGPS).

To repeat, it was definitely not Labour’s initial intention to extend the acknowledgedly generous and secure LGPS to all councillors, for most of whom, the consultation paper suggested, the Government’s recently introduced employer-sponsored Stakeholder pension scheme would be more appropriate. The consultation, however, changed all that.

The Local Government Association (LGA) and its Pensions Committee were opposed in principle to any differentiation of councillors based on work patterns and remuneration levels, seeing it as untenable, discriminatory and unhelpful to the cause of attracting and retaining councillors. They wanted the LGPS open to all councillors.

Somewhat to their surprise, however, they were also advised by OPRA – no, not Lance Armstrong’s chosen inquisitor, but the Occupational Pensions Regulatory Authority – that, for pension law purposes, all councillors should indeed be treated as employees, and therefore entitled to join the LGPS. Which meant that if, as proposed, most councillors were ruled ineligible for the LGPS, they would also lose access to Stakeholder pensions, and could take legal action against Ministers for introducing discriminatory legislation.

It was only at that later point that Ministers must have realised that their strictly limited-scale sweetener was turning into something approaching Cadbury World – too late, politically, to turn back, so they didn’t.  When the snappily titled Local Government Pension Scheme and Discretionary Compensation Regulations (Local Authority Members in England) Regulations came into operation in May 2003, the discretion exercised by councils’ remuneration panels applied to all members. A review promised in 2008, when the rest of the LGPS was significantly revised, never happened, and so that’s essentially where we are today.

Whether you describe the LGPS as ‘gold-plated’ depends probably on the newspaper you read, but it’s undeniably attractive, and popular. It’s a tax-approved, career-average scheme – in contrast to the final salary scheme for full-time employees – with benefits based, for councillors, on years in the scheme and average pay over those years, in basic and special responsibility allowances. Contributions are 6% of allowances, and additional benefits include a tax-free lump sum on retirement at 70, optional earlier retirement and ill-health retirement at any age, ability to increase pension by paying Additional Voluntary Contributions, a death in service lump sum of two times career-average pay, index-linking of benefits, and, certainly not least, the security of all this being changeable only by Act of Parliament.

The TaxPayers’ Alliance (TPA) uses Freedom of Information requests to gather and publicise such data that the rest of us can’t be bothered to, and it found that in 2010/11 over 4,500 or one in five UK councillors were enrolled on the LGPS – at an estimated annual cost, now quoted authoritatively by Ministers, of £7 million .

The 4,500 were in fact drawn from only about 240 participating councils. The bulk of non-participating authorities, as would be expected, are smaller shire districts, but by no means all. There are county, unitary and London borough councils that have chosen, with plaudits from the TPA, not to extend their LGP schemes to councillors, including – taking our own region of the West Midlands as an example – Coventry and, almost completely, Worcestershire. By contrast, nearly 90% of Warwickshire members were signed up, 54 in Birmingham, 28 in Sandwell, 22 in Solihull, 19 in Dudley, and 12 each in Walsall and Wolverhampton.

Not, however, for much longer. In a kick’em-while-they’re-down footnote to December’s finance settlement, Local Government Minister, Brandon Lewis, announced that from April 2014 councillors would no longer be eligible to join or accrue further benefits from the LGPS – though provocatively the bar does not cover London Assembly Members, Police and Crime Commissioners, and, to the particular irritation of full-time council leaders, elected mayors.

It’s a ministerial, not party, policy. Conservative councillors and leaders have been as vocal in their protests as their Labour counterparts, although it is the latter who reportedly are contemplating judicial review. Lewis, however, insisted that Ministers in this Government “take a fundamentally different view to the last Administration. We do not believe taxpayer-funded pensions are justified.” Rather, they are “a corrosive influence on local democracy and independent thought, blurring the distinction between council staff and councillors. Councillors are volunteers undertaking public service; they are not professional, full-time politicians, nor should they be encouraged to become so”.

In other words, don’t tell me that senior councillors are, in practice, full-time; that the National Census of Councillors shows one in five working over 36 hours a week. That’s their choice, as it is for other, though unpaid, volunteers – like scout troop leaders, the comparison used by Conservative Chairman, Grant Shapps, on Thursday’s BBC Today programme. So, just in case it crossed their avaricious little minds, don’t even think of it: there’s “absolutely no case for increasing councillor allowances to compensate”.

As it happened, it was allowances that prompted Shapps’ remark. He was facing Clive Betts, Chair of the Commons Communities and Local Government Committee, who have just produced a report on the role of the modern councillor, Councillors on the Front Line.  There’s an important section of the report on Support and Training directly relevant to some of the Institute’s work with councillors, but it was allowances that the Today programme wanted to know about.

The Committee identifies three key barriers to people becoming and remaining councillors: the time involved, the unsupportive view taken by many employers of their staff becoming councillors, and the levels of allowances: “high enough to offend the public, but not high enough to encourage any sane person to give up their career and earning capacity to take it on” (para.76).

Because of the public controversy involved, “few councillors will vote themselves higher allowances, even if there is a legitimate reason for doing so”, such as attracting more and a greater diversity of people to stand for election. Councils therefore, recommended the Committee, should be given the power to transfer decisions about allowances to independent bodies, with councillors themselves no longer having the final say, as they do at present with the recommendations of remuneration panels.

There must have been select committee proposals with even less prospect of being swiftly implemented than this one, but just at present I can’t think of many.


Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political  leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

An Arsène Wenger perspective on West Somerset

Chris Game

In her recent blog on financially distressed councils in general and West Somerset DC in particular, Catherine Staite suggested that we should be talking more about “streamlining the machinery of local government … merging smaller councils”, and in effect institutionalising some of the multiplying numbers of apparently cost-saving shared service and shared staffing arrangements

Hardly had Catherine’s blog hit the page, however, than things had moved on – certainly for hapless West Somerset. Despite its being a key recommended solution of both the LGA and the former Local Government Minister, Bob Neill, it seems West Somerset may not after all be one of the smaller councils destined for oblivion by merger. Instead, Neill’s successor, Brandon Lewis, has come up with a cunning plan to – as it’s put in the report going to the full council this Wednesday – “retain the ‘sovereignty’ of the Council as the local democratic accountable body in West Somerset” (p.34).

It’s good that ‘sovereignty’ word is encased securely in the kind of quotation marks used for unfamiliar or ironic usage – because it’s not one generally considered applicable to any UK local authority, and there certainly doesn’t seem a whole lot of it in the plan for West Somerset. Rather, it takes on almost the exact opposite of its usual meaning: namely, following to the letter the Minister’s lengthy list of demands and conditions, in exchange for which it has the unique ‘opportunity’ (my quotes, this time) to create a new model of operation by becoming a ‘Commissioning Authority’.

No, sorry, a solely Commissioning Authority, for in this case the Council would commission other service providers, mainly neighbouring councils, to provide all the services it decides West Somerset residents require, retaining only a skeleton staff to manage the arrangements and monitor performance. Yes – the minimalist council, once merely a gleam in the mind’s eye of Thatcherite Environment Secretary, Nicholas Ridley, has finally arrived. Remember the punchline to his vision of a council meeting just once a year, to hand out contracts for its various services: “I wouldn’t mind paying those councillors attendance allowances”.  How we laughed.  I wonder if West Somerset members will see the joke, as they learn the details of – to use a term that seems not to feature in Wednesday’s council report – their ‘virtual authority’: not physically existing as such, but made to appear to do so by software, or in this instance Ministerial soft-soap.

I want to return, though, to Catherine’s blog and her exhortation to talk about these things, and mergers in particular, before they reach the stage of Ministerial intervention. Here at the uni we’re all for more talk and critical inquiry – can’t get enough of them. So, in the interests of helping things along, I thought I’d perform an Arsène Wenger role and add a bit of perspective to the discussions.

The French-born Wenger, for those unfamiliar with Planet Football, is the longest serving and most successful manager of the English Premier League side, Arsenal. Despite his outstanding record, he is currently getting flak from both the media and club supporters after, by Arsenal’s recent standards, a poor start to the season. Wenger’s understandable response is to call for less emotion and more perspective, claiming that the club is in fact “in fantastic shape”.

No, I’m not about to claim that West Somerset, or indeed any other authority in these stressful times, is in fantastic shape. I do wonder, though, what it says about our system of LOCAL government that it apparently cannot accommodate a principal council of the size and with the potential resources of West Somerset, and when its own representative Association declares it “not viable as a unit of local democracy and governance over the longer term”. Why are we – a modest 80th among the territorially largest countries in the world – so desperately keen to have its largest-scale and least-local local government?

First, a few stats. The currently 28-member West Somerset DC was created in 1974 from a merger of two urban and two rural district councils (95 councillors in all), at least one of which – Minehead, a largely self-contained historic coastal town of just over 10,000 – would undoubtedly still be a principal council in its own right in many European countries.  West Somerset’s population is 35,000, with the oldest average age in the UK and spread across an area of 740 km² (290 mls²), including much of Exmoor, and the Quantock and Brendon hills. The result is a population density or sparsity of 48 people per km², compared to the UK average of nearly 400. Unfortunately, such extremes count for little when arguing grant settlement figures with London-based civil servants inclined to dismiss all such ‘special case’ bids as ‘that’s what they all say’.

Media reports of West Somerset invariably attribute its alleged unviability to its – meaning presumably its 35,000 population – being so ‘small’ or even ‘tiny’.  Which it is – but only by the UK’s extraordinary, Brobdingnagian standards.  Among EU countries, as shown in the table below, it is more than six times the average size of the lower-tier authorities in what are mostly two- or three-tier systems (Wilson and Game 2011, p.275). If, notwithstanding this being a Wengerian perspective, we take out the distorting influence of the Lilliputian-scale French communes, it’s still well over four times the average size. Try putting the figures on a graph, and the UK not only goes off the end of the horizontal axis; it would require a whole second page for itself

Image 1 Wilson and Game, Local Government in the United Kingdom, 2011, p.275(Source: Wilson and Game 2011: 275).

Dexia CEMR Image 2

(Source: Dexia-CEMR, page 6)

Most of these other EU countries’ municipalities, though generally much smaller than English districts, also have a constitutional power of general competence, and, even more relevantly in the present context, access to a number of different local taxes and tax bases – as can be seen in another graph from the same Dexia/CEMR publication (p.15). On average among the EU 27, the proportions of local revenue coming from central government grants/subsidies and from local/shared taxation are roughly equal; the UK ratio is 6 to 1. Across the EU, local taxes account for between 35 and 40% of local government revenue and between a fifth and a quarter of total tax revenues. Corresponding UK figures in 2011 were 12.7% and 6.2%  (Source: CCRE).

Dexia CEMR Image 3(Source: Dexia-CEMR, page 15)

West Somerset is simply an extreme example of UK local government’s general financial weakness and central dependency. It currently has, if I read the figures correctly, the lowest council tax base of any English district, minimal reserves on which to draw, and is facing a reduction in its revenue support grant both more savage and more immediate even than that for which it was already budgeting. Its alleged unviability is not, as the LGA described it, as a unit of local democracy and governance, but purely financial.  It is the victim of a rigidly centralist funding system being screwed down so tightly that the representative body of a sizable local area and population can no longer do the job for which it was elected.

One final point. Catherine Staite referred in her blog to Denmark’s recent municipality merger programme as one that might have lessons for this country: “councils joined together voluntarily with their neighbours until they achieved the best possible combination of size and geography to deliver economies of scale and locally accessible services”. As it happens, other Nordic countries and/or their citizens have resisted the Danish/British ‘bigger must always be better’ thesis – Norway and Sweden almost completely, Finland and Iceland considerably – but that is not my concern here.

The Danish structural reforms, if not the mergers themselves, were strongly centrally driven, incentivised, and extensive. The number of municipalities was cut by nearly two-thirds, from 271 to 98, the number of councillors by 45%, and the average population size increased from under 20,000 to 56,000 (see table above). However, there still remain 7 municipalities with populations of under 15,000 – the ‘special cases’ that our system seems unable, or unwilling, to accommodate.

It was actually suggested a couple of years ago that this should be the Government’s approach to West Somerset’s exceptional and increasingly dire situation: focus on the nature and needs of relatively small councils, rather than insisting on their adoption of a model designed for much larger councils. They could be allowed ‘flexibilities’, like lighter regulation, and not having to produce separate corporate, improvement and service plans. Above all, though, the Government might consider increasing, rather than cutting, their grant funding and allowing a council tax increase in excess of the then 3% cap.

And which hare-brained, ivory tower academic came up with that notion? None, actually – it was Bill Roots, ex-Westminster Chief Executive, and author of one of the first independent reports on West Somerset. A pity no one listened.


Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political  leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.