Localism Bill

Lord Taylor of Holbeach Excerpts

Tuesday 28th June 2011 Lords Chamber

Moved by

[Lord Taylor of Holbeach]

99: Clause 22, page 25, line 32, leave out “senior”

[Lord Taylor of Holbeach]

My Lords, this is a substantial group of amendments that includes several government amendments. Perhaps I can put our amendments into some context and address the issues raised by the other amendments in this group.

Our amendments set out the requirement for relevant authorities to approve and publish a pay policy statement which, in addition to the measures already in the Bill, must set out an authority’s policies on remuneration of its lowest-paid employees and the relationship between the remuneration of its chief officers and the rest of its workforce. As Will Hutton set out in his report on fair pay in the public sector, published on 15 March, there is value in ensuring that decisions about senior pay are taken in the context of similar decisions on lower-paid staff. Such an approach broadens the debate beyond discussion about salary amounts of top earners and into whether the pay of those individuals is justified.

These measures, therefore, further increase local democratic accountability and transparency over how decisions on pay are made, and embody the commitment given by Ministers to reflect on the measures in the light of Hutton’s report. The measures seek to minimise the potential burden on authorities and ensure that decisions on pay remain ones for individual employers to take locally.

The opposition amendments would take those measures beyond the scope of pay accountability. Our intention, through the provisions in the Bill and our amendments, is to bring greater accountability and transparency to an authority’s approach to remuneration of its own employees. We do not seek to prescribe what the approach should be by requiring authorities to publish a list of numbers, or by roaming about on other matters such as local decisions around recruitment or engagement with providers—which would be the effect of the opposition amendments. Our Amendment 101, in its requirements relating to the remuneration of the lowest-paid employees, is broader than the Opposition’s proposal and will lead to the publication of policies in a rounder way than by focusing on policies relating to total salary costs and numbers of staff, which is what Amendment 101A would achieve.

Amendment 101 would require authorities to disclose their policies on the relationship between remuneration of their chief officers and the rest of their employees, including the lowest paid. We do not feel it necessary to require authorities to break down their policies in this regard in the way proposed in Amendment 101A. Indeed, Will Hutton, in his report on fair pay in the public sector, highlights that, in seeking to measure pay dispersion using a pay multiple, comparison between top and lowest pay is not the most effective approach. As we have made clear, charities, voluntary organisations and businesses—particularly small businesses—have repeatedly called for the amount of regulation and red tape surrounding local government contracts to be reduced. I am sure that noble Lords opposite agree with that general principle. In this context, it is not appropriate to use this Bill to impose further duties on authorities to have policies relating to the pay of those who work for an organisation with which it contracts.

Nothing in the Bill limits the extent of information that an authority may include in its pay policy statement. Authorities may take the local view to include any other policies as they think fit. This could include policies on contracting staff where they have developed them locally. We will undertake to make this clear in guidance rather than set it out in the Bill.

I am grateful to my noble friend Lord True for his work in submitting Amendment 105. Perhaps I can reassure him and other noble Lords that local authorities must always abide by relevant employment legislation when carrying out their duties as employers. This obligation extends to the formation of their policies on pay. Pay policy statements are intended to be an articulation of such policies. The measures that we are introducing do not take precedence over employment law. A pay policy statement could not be lawfully used by relevant authorities to sanction matters that are not in line with their existing legal duties and obligations. Similarly, any changes to policies included in a published pay policy statement, which must be approved by a full council, must also adhere to requirements placed on authorities as employers under employment legislation. We can undertake to reinforce this position in guidance, to which authorities must have regard. We believe that this will achieve the aims of the amendment without it being necessary to remind authorities of their duties as employers as set out in the Bill. I hope that I have assisted the Committee in its consideration of this matter. I beg to move Amendment 99.

[Lord McKenzie of Luton]

My Lords, first, I thank the noble Lord for introducing the government amendments. Indeed, I thank the Government for bringing forward the proposals, which build on the debate in the other place. I see that he has taken the opportunity to get his retaliation in first on our amendments. I will speak to Amendments 101A, 101B, 102A and 108B.

When these matters were addressed on Report in another place, the Minister, Andrew Stunell, said that Will Hutton’s report,

“made some clear recommendations, particularly about the benefit of setting decisions on senior pay in the context of the pay of the rest of a body’s work force”—

meaning the median earnings, and I accept that point. He continued:

“We are sympathetic to that idea, particularly the potential for linking lower pay with senior pay”—

so the Minister in the other place focused on low pay as well. He went on to say that he did,

“not think it would be helpful to use the Bill to address the pay of contracting bodies”,

which is consistent with what the noble Lord just said. However, he then went on to state,

“That does not prevent a local authority from developing a local policy to ensure that bodies with which it contracts are open about their rates of pay as a matter of contract”.—[Official Report, Commons, 17/5/11; cols. 210-11.]

Although significant growth in executive pay is largely a private sector phenomenon, we support the thrust of greater transparency. We also support the Government’s approach to tackling this in the manner provided, rather than as in the other two options set out in the impact assessment. As the fair pay report also concludes, evaluating these by benchmarking off the salary of the Prime Minister is a nonsense, particularly if you add in the benefits that the Prime Minister gets, which include a central London flat with access to rather a large garden, not to mention the odd country estate. A more realistic figure of his remuneration might be in excess of £0.5 million a year. However, the report also concludes that putting in limits of fixed multiples of lowest pay would, in a sense, be unfair as well.

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[Lord Beecham]

My Lords, I understand the noble Lord’s point, but I have to say that it would be a huge infraction on the responsibilities and rights of elected members of councils to indicate what might go on a council agenda and what might not. That is going much too far. Although I expect members to behave responsibly, if they are irresponsible, it would be the task of those answering such a resolution to make the case. We ought to have the self-confidence to do that, so I do not think, with all respect to the noble Lord, that his amendment should progress.

I seek some assurances from the Minister, to see whether I have understood him correctly, apart from anything else. Later—many, many hours later—we will come to the question of the community infrastructure levy and whether or not it should be a material consideration in determining planning matters. There will, I think, be quite strong views about that. I wonder, having heard the Minister, whether it will be permissible for councils to take into account the factors referred to in my noble friend’s amendment as a material consideration in the awarding of contracts. If I understood him correctly, the noble Lord indicated that that would be permissible, although it should not be prescribed, and I can understand that position. Perhaps he will confirm or disabuse me of that notion.

I also ask the noble Lord whether he has a view on the living wage, which has been espoused—I think before an election but certainly after an election, to revert to the point of the noble Lord, Lord True—by no less a person than the Mayor of London, who has adopted the concept initiated by his predecessor of promoting the living wage. Does he accept that it is right for councils, if they choose, to adopt such a policy in respect of their own authorities and to seek to reflect that in the conditions upon which they let contracts?

[Lord Taylor of Holbeach]

My Lords, this has been a short but very useful debate on a very important aspect of local government policy. I assure noble Lords that the guidance which will be issued will take note of issues raised in this debate. While we may not agree on all aspects, there appears to be a good deal of consensus that the Government’s approach on senior pay is to be welcomed as, indeed, are the requirements of our amendments for a pay policy statement. I am grateful to the noble Lord for lending his support to that concept.

Our amendments build on that approach and will increase accountability for local decisions about the lowest paid in the local government workforce. I say local decisions deliberately. The Government are quite clear that these decisions on pay and reward must remain ones for local determination. I hope that noble Lords opposite will acknowledge that the Government have fulfilled our commitment to reflect on discussions around low pay in the other place and brought forward appropriate amendments, as, indeed, we do today.

The Government did not undertake at that time to consider measures to increase duties on local authorities with regard to their relationship with bodies with whom they can contract. We believe such proposals would be burdensome. Charities, the voluntary sector and business have called for regulation around contracting to be reduced. There is general consensus that in order to achieve greater participation of the voluntary sector and small businesses in local government contracting, we need to make the process of contracting as simple as possible.

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[Lord McKenzie of Luton]

Before we conclude, I thank the Minister for what he said. We accept that from the Government’s perspective, they have fulfilled the obligation they made in the other place. As I said in speaking to my amendments, I do not think they have fulfilled it as fully as we would have liked, but when can we expect to see the guidance in this area? That would help our deliberations and could potentially preclude a return visit to this matter on Report.

In respect of the contribution by the noble Lord, Lord True, who is no longer in his place—I understand he has to be elsewhere—competitive resolutions are not quite the environment I would have expected. It is certainly not how we conduct politics in Luton, but it raises all sorts of interesting questions, not for debate now, about people addressing those resolutions on a predetermined basis.

[Lord Taylor of Holbeach]

I understand exactly what the noble Lord is referring to, but I hope it has expedited this debate to the advantage of the Committee. I cannot give an answer on when the guidance will be available. If I am able to get that information, I will write to the noble Lord.

Amendment 99 agreed.

Moved by

[Lord Taylor of Holbeach]

100: Clause 22, page 25, line 34, leave out “senior”

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Moved by

[Lord Taylor of Holbeach]

101: Clause 22, page 25, line 35, at end insert “,
(b) the remuneration of its lowest-paid employees, and(c) the relationship between—(i) the remuneration of its chief officers, and(ii) the remuneration of its employees who are not chief officers.(2A) The statement must state—
(a) the definition of “lowest-paid employees” adopted by the authority for the purposes of the statement, and(b) the authority’s reasons for adopting that definition.”

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Moved by

[Lord Taylor of Holbeach]

102: Clause 22, page 26, line 5, leave out “senior”

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Moved by

[Lord Taylor of Holbeach]

103: Clause 23, page 26, line 9, leave out “senior”

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Moved by

[Lord Taylor of Holbeach]

106: Clause 23, page 26, line 17, leave out “senior”

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Moved by

[Lord Taylor of Holbeach]

108A: Clause 27, page 27, line 28, leave out from “following” to end of line 32

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Moved by

[Lord Taylor of Holbeach]

109: Clause 27, page 28, line 20, at end insert—
“(5A) In this Chapter “remuneration”, in relation to a relevant authority and an employee of its who is not a chief officer, means—
(a) the employee’s salary,(b) any bonuses payable by the authority to the employee,(c) any allowances payable by the authority to the employee,(d) any benefits in kind to which the employee is entitled as a result of the employee’s employment,(e) any increase in or enhancement of the employee’s pension entitlement where the increase or enhancement is as a result of a resolution of the authority, and(f) any amounts payable by the authority to the employee on the employee ceasing to be employed by the authority, other than any amounts that may be payable by virtue of any enactment.(5B) References in this Chapter to the remuneration of an employee who is not a chief officer include—
(a) the remuneration that may be provided to that employee in the future, and(b) the remuneration that is to be provided to employees of the same kind that the authority may employ in the future.”