The £757 million equal pay bill faced by Birmingham City Council has made a mockery of the legal system, according to the former head of the authority’s human resources department.
Tory councillor Alan Rudge was responsible for overhauling Birmingham City Council’s pay structure in 2008 and 2010 to make it compliant with single status and equal pay legislation.
After eight years as cabinet member for human resources he was replaced in May by the incoming Labour administration. At the time the equal pay bill stood at about £500 million.
But the new figures, issued by the council’s district auditor the accountancy firm Grant Thornton this week, shows the cost of claims leapt by some £250 million in the last 12 months.
And in the light of a Supreme Court judgement last month allowing women workers who retired or left employment as much as six years earlier to claim, the costs could rise even higher.
Making his announcement earlier this week Labour leader Sir Albert Bore said that the Government has already agreed to lend the council £450 million for the payments, but warned that if the council is unable to borrow the rest it faces bankruptcy.
Even if the loan is forthcoming the repayments will suck £75 million a year from the council’s £1 billion revenue budget, at a time when it is already repaying £230 million on other debt.
Coun Rudge (Con, Sutton Vesey), who is a solicitor, believes that constant changes in the law, particularly surrounding the backdating is what has cost the city dear.
He said: “Single status was an ill-thought-out policy developed by Gordon Brown and the trade unions and what we now have is the result of unintended consequences.
“If we had been allowed to change the pay structure going forward we could have done that with little problem, but in allowing people to make claims going back, when at the time they had been happy to do the work for the rate agreed, is where the costs build up.”
He also criticised the policy for making ‘artificial’ comparisons between jobs.
“How can you compare a school cook to a dustman, whose work is of the most value,” he asked?
Finally he is baffled by the decision of the Supreme Court to take the issue out of the Employment Tribunal where there was the six-month limit on claims, and into the realm of civil contract law where the limit is six years.
“It was only a majority verdict. When the rules keep changing, particularly around claims going back, it is difficult to budget with any certainty, we set budgets on the pay scales as they were set at the time. This just makes a mockery of the law and the only big winners are the law firms making the claims.”
He has been criticised for being slow to implement the single status, with major salary structure overhauls in 2008 and 2010 – amid a series of industrial disputes and strikes – but says he would not have done anything differently.
Neighbouring Solihull was single status compliant in 2000, while other authorities have major services contracted out, thus avoiding public sector pay wrangles.
Sir Albert admitted in his press conference that his previous administration has begun looking at the issue in 2003, shortly before it was replaced. It was only when solicitor Stefan Cross and his Action4Equality firm starting making equal pay claims in 2006 that the efforts to bring the pay scales into line were stepped up.
Ravi Subramanian, regional secretary of the council’s largest trade union Unison, said: “We must not lose sight of the fact that these payments are for women workers who were systematically discriminated against by the city council over many years.
“Unison is firmly of the view that the blame for this lies with the previous Tory-Lib Dem administration who should have resolved this years ago. We have consistently raised the issue of equal pay over the last six years, through both collective negotiation and legal cases.”
Carolyn Miller of law firm Pinsent Masons believes the publicity surrounding the claims will only add to them.
She said: “Given the publicity I would anticipate individuals to have made enquiries to ascertain whether or not they too can claim. If so, we could easily see last month’s ruling costing the public sector billions of pounds.”