Councillors' allowances - the supporting 'evidence' is debatable

The 'evidence' cited by the Independent Remuneration Panel in their report recommending a massive increase in councillors' allowances is open to debate.

Councillors currently enjoy a basic allowance of £7,812 and the panel has recommended this should rise to £10,451, a massive 34% increase that has caused public outrage.

Rochdale Online has been asked by a number of readers to look at how the panel arrived at this figure.

The 'formula' used by the panel is the average earnings for full time employees resident in the borough of Rochdale, multiplied by the average number of weekly hours councillors spend on council business, minus a number of hours deducted as a 'public service discount' (the rationale being that not all the time put in by councillors should be remunerated as there is an element of public service or pro bono publico in being a councillor).

Using this formula the panel published the following table - to arrive at the £10,451 figure being proposed.

 

Variable	Amount	Evidence provided
Time/Hours	1133.6 hours per year	Based on the LGA Councillor Census 2013 figure of 21.8 hours per week multiplied by 52 weeks.
Public Service Discount	33% (374 hours)	Based on LGA Councillors Census 2013 Table 7
Rate for Remuneration	£13.76 per hour	Based on ONS ASHE table 8.5a: mean gross hourly earnings of all full time employees resident in Rochdale Borough 2016

 

The second row - public service discount - cites the LGA Councillors Census 2013 Table 7 as the source (see page 42 of the PDF below) on which the percentage discount is based. The 33% is significantly down on the 55% public service discount (that is, unpaid hours) remuneration panels in previous years deducted, but there is logic in the methodology used to arrive at the figure if it is accepted, as the panel posits, that around a third of a councillors time is spent "engaging with constituents, surgeries and enquiries". However, had the panel also chosen to use the number of hours spent working with 'community groups' (which logically is also a form of engaging with constituents) the public service discount would be around 50%.

The third row - rate of remuneration - is contentious in that the figure used from the Office of National Statistics (ONS) is £13.76, which is the mean (average) hourly rate for full time employees, including overtime, in the borough.

Mean (or average) and median are statistical terms that have a somewhat similar role in terms of understanding the central tendency of a set of statistical scores. While an average has traditionally been a popular measure of a mid-point in a sample, it has the disadvantage of being affected by any single value being too high or too low compared to the rest of the sample. This is why a median is sometimes taken as a better measure of a mid point.

The 2013 remuneration panel took this on board and used the median wage for its calculation, the 2016 panel did not and have used the mean, which is a higher figure and gives a much more favourable resulting allowance.

Using the 21.8 hours per week, taking off the 33% public service discount (though it is arguable this could be 50%) and multiplying by the full-time 'median' hourly rate of £11.94, the resulting basic allowance is £9,069.

 

Variable	Amount	Evidence provided
Time/Hours	1133.6 hours per year	Based on the LGA Councillor Census 2013 figure of 21.8 hours per week multiplied by 52 weeks.
Public Service Discount	33% (374 hours)	Based on LGA Councillors Census 2013 Table 7
Rate for Remuneration	£11.94 per hour	Based on ONS ASHE table 8.5a: median gross hourly earnings of all full time employees resident in Rochdale Borough 2016

 

The job of a councillor is part-time, not full-time, so why did the panel use the hourly rate for full-time?

The hourly rate for part-time would arguably be a more comparable benchmark.

Using the 21.8 hours per week, taking off the 33% public service discount (though it is arguable this could be 50%) and multiplying by the part-time (mean) hourly rate of £10.27, the resulting basic allowance is £7,800 - almost identical to the current allowance.

 

Variable	Amount	Evidence provided
Time/Hours	1133.6 hours per year	Based on the LGA Councillor Census 2013 figure of 21.8 hours per week multiplied by 52 weeks.
Public Service Discount	33% (374 hours)	Based on LGA Councillors Census 2013 Table 7
Rate for Remuneration	£10.27 per hour	Based on ONS ASHE table 8.5a: mean gross hourly earnings of all part time employees resident in Rochdale Borough 2016

 

Using the more statisically reliable median part-time hourly rate, which is £8.11, the resulting basic allowance is £6,160 - a significant reduction on the current allowance.

 

Variable	Amount	Evidence provided
Time/Hours	1133.6 hours per year	Based on the LGA Councillor Census 2013 figure of 21.8 hours per week multiplied by 52 weeks.
Public Service Discount	33% (374 hours)	Based on LGA Councillors Census 2013 Table 7
Rate for Remuneration	£8.11 per hour	Based on ONS ASHE table 8.5a: median gross hourly earnings of all part time employees resident in Rochdale Borough 2016

 

In concluding, in each instance the 2016 remuneration panel has interpreted the data in a way that results in a much more favourable outcome for councillors' allowances.

 

• Public Service Discount of 33% instead of 50% or 55%.
• Using the 'mean' rather than the 'median'.
• Using full time earnings as the benchmark rather than part-time earnings.

 

It should also perhaps be noted that whilst the 2016 panel ostensibly relates its proposed allowance to local earnings, the massive 34% increase is, in fact, incongruent with ONS statistics which show that wages in the borough have actually fallen since the last panel's report in 2013.

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