25 June 2004
Ministers have given cautious approval to the Local Government Association's proposal to take over the Employers Organisation as a way of improving the handling of pay negotiations.
The LGA is keen to exert greater control over the body, which represents local authorities as employers, and is considering whether it should take the EO's functions in-house.
As Public Finance went to press, a meeting of the LGA executive on June 24 was due to discuss the issue and consider its next steps.
The EO has come in for criticism in recent months for what many see as its inept handling of pay disputes with firefighters and council workers.
There is widespread recognition that the organisation needs radical surgery, and the idea of its being swallowed up by the LGA is gaining ground.
But there is acknowledgement, too, that this would raise difficult issues. One local government source told PF: 'Integration would bring with it interesting questions about the independence of the LGA, its future relationship with government and how to fund such activities as staff development.'
Discussions on the implications of a takeover have recently been held between local government leaders and the Office of the Deputy Prime Minister.
The department has not ruled out such a move in principle, but the key obstacle remains the EO's funding through top-sliced grant.
In order to be financed in that way the EO has to be politically impartial, but the LGA is not. As a result, if it were to assume control of the EO it is likely that funding arrangements would have to change.
ODPM permanent secretary Mavis McDonald has now written to the LGA setting out local government minister Nick Raynsford's formal position.
'While he agrees that there is a strong case for reform of the EO and for the LGA to be able to exercise greater influence over its operation, he is not in favour of the suggestion that the LGA should receive top slice for this,' the letter says.
The LGA executive was also due to discuss plans for closer relationships between the LGA and the other central bodies, such as the Improvement and Development Agency and the 4Ps.
PFjun2004
