08 February 2008
Local government minister John Healey has announced that councils will again be allowed to use capitalisation to help meet their equal pay obligations.
Councils are struggling to meet these extra costs following the 1997 Single Status Agreement between unions and employers, designed to give women and men equal pay for work of equal value.
Local Government Employers estimates that it will cost councils £2.8bn to implement new pay structures, with another £1.5bn in ongoing costs and £400m for pay protection where staff face wage cuts.
But there is also an estimated £1bn bill for back pay owed to women.
In September 2007, the government allocated £500m of capitalisation directions — giving councils permission to meet equal pay costs through borrowing or capital receipts — to 46 English authorities, supporting one-off back payments to about 100,000, mainly female, staff.
The move followed £160.5m of capitalisation applications approved in 2006/07.
Healey has now confirmed that there will be a further equal pay capitalisation round in 2008/09.
'Councils are making real progress on implementing equal pay,' he said. But progress varied around the country. 'The further round of capitalisation will allow councils the financial flexibility to spread the cost over future years.'