Latest Public Sector News

17.11.17

‘Long overdue’ council pay rise to cost Treasury just half of original estimate

Higher council employee wages would save the Treasury money, Unison has claimed.

New research published by the major union has argued that the government would save half of the cost of the pay rise called for in the 2018 pay claim put to the LGA in May this year.

The union has repeatedly called for a 5% pay rise and the real living wage for the lowest paid council workers (£8.75 an hour, or £10.50 in London).

Its research says that a decent pay raise for council workers would mean them paying more in taxes and national insurance, spending more and paying more VAT, and claiming less tax credits and other benefits.

Consequently, Unison argued that half of the cost of the £623m council wage bill – the amount estimated in the 2018 pay claim from May – would actually be offset by tax gains and benefits savings of £242m a year.

Broken down, a 5% pay rise for staff would allegedly see the government receive an additional £71m in higher employer national insurance contributions, £128m in tax revenues, and would save £43m through paying out less benefits and tax credits.

An additional £68m is thought to be retrieved through VAT on increased spending.

The research has suggested that this reduces the cost of the union’s pay demands from £623m to £381m, half as much as original calculations.

Heather Wakefield, Unison’s head of local government, who argued local government workers are the lowest paid in the public sector, said: “This pay rise is affordable and long overdue. With inflation and interest rates on the rise, all council employees want is to be able to pay their bills, feed their families and live without constant financial worries.

“As council budgets are slashed and pay continues to be held down, councils are finding it hard to retain and recruit, as staff leave for better paid jobs elsewhere.

“In next week’s Budget, the Chancellor has the opportunity to put an end to poverty pay in local government and ensure staff are given a fair pay rise.”

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