Councillors allowances should be reduced, says independent remuneration panel

An independent remuneration panel has recommended that councillors' basic allowance be reduced from £7,644 to £7,578, a reduction of 0.86%.

Councillors put forward a number of arguments as to why the allowance should be increased, surprisingly including that "The public have never complained about the level of allowances". However, the panel's recommendation is based on a protocol linked to the average wage of the Borough resident.

The Panel comprised Mr M. Allen, Chief HR Officer, McBride Ltd; Mr D. O’Toole, Principal, Hopwood Hall College, and Mr T. Joiner, Director, Deployment Ltd.

The panel's report

The views of elected members [councillors] seem to be that a comparison with allowances in other authorities, specifically those in the Greater Manchester region, show most elements to be at or towards the bottom of payment levels. This is clearly something that elected members feel unhappy about.

In considering this, however, the panel noted that there is a significant lack of knowledge and thus understanding of the Protocol that has been used by the Panel and presented to the Council on frequent occasions. This protocol links allowances to the average wage of the Borough resident, and is thus in the opinion of the Panel related to something objective and relevant, rather than a comparison based purely on administrative grouping.

The Panel can see no objective argument for relating allowances in Rochdale to such diverse authorities which make up Greater Manchester.

Elected members find it easy to accept there is no comparison with Central Manchester but seem to find it harder to accept the same lack of comparability for other local authorities in the Region.

In our view, population size, economic wealth and activity, population density, numbers of councillors and numbers of citizens, amongst other factors, vary and cannot be pulled together to give a fair comparison with Rochdale. We encourage councillors to look at our protocol and understand better our rationale. We are not minded to change this protocol in the absence of data that argues objectively otherwise.

We are unanimously against the averaging that has also been suggested to us. It is clear that any such step, if followed more widely by local authorities, would simply push up allowances across the board by the mathematical factor involved in such arithmatical approaches. In any system there will be a lowest and a highest.

Averaging will only push up the lowest to the middle and leave the highest above the middle. In our view that has been responsible for some justified criticism in “other places” of the private sector and Boardrooms.

We were reassured in discussion with Party Leaders that elected members are asked to do hours of work which are consistent with our approach. We fully accept that the volume of work and time spent by elected members varies considerably but the reasonable expectation of a new member doing a regular job without special responsibility could involve 12 – 30 hours per week. 110 hours per month has been our previous assessment which seems to hold good. Those with special responsibilities do more and the allowance system rewards them for this.

We were given a range of well-put arguments for raising the allowances. These include:

• The quality of work now required, needs an increased level of reward
• The public have never complained about the level of allowances which would indicate they are very modest if not too low
• There is now more involved in being a councillor than ever before, including training, ability to make submissions for grants, etc
• The public in general appreciate the job done by their local councillor (notwithstanding maybe complaints about the collective thrust of the Council)

We see merit in all of this but have difficulty accepting these are conclusive arguments for an increase, and we cannot accept the “peanuts and monkeys” approach suggested to us, which is a charter for pay levels linked to professionals in the private sector. Council work involves a degree of public service and the role in our view is not to be professional experts – the officers do this in their service of the Council (viz Service Directors et al).

We are attracted by the argument that elected members should be called to account more for the effective way they carry out their duties. We are content that within the hands of current Party Leaders this is happening. However, we recommend that some form of formal arrangement is incorporated into allowances entitlement, partly to reassure the public, partly to assist council leaders but importantly to reduce the large variation in accomplishment that is apparent between the most and least competent. This could be a separate matter which the Panel would be pleased to consider if requested.

None of this negates the argument that to be a councillor involves a degree of sacrifice and it is a concern to the Panel that, aside from those retired or of private means the role is very difficult to carry out, if not close to impossible in a pragmatic sense. This is not a subject the Panel feels it can address separately within Rochdale, but has many consequences for the diversity that we accept is necessary for effective public service.

We have thus approached the calculation of allowances in two ways. Using our established protocol established to calculate the basic allowance; a balance of voluntary versus paid hours as 55% to 45% respectively, then using the median hourly pay rate figure for the Borough (£11.50 per hour calculated by £453 median weekly wage x week of 39.4 hours) gives a basic allowance of £569.25 per month or £6,831 per annum. We then add the consolidation previously calculated of £739.54 in 2008 up-rated in line with the increase applied to council officers since 2008:

2009 + 1% = £746.94
2010 + 0% = £746.94
2011 + 0% = £746.94
2012 + 0% = £746.94

Giving a figure of £7,578 for the basic allowance compared with the current allowance of £7644. This is a decrease of 0.86% or £66.

We have looked at an alternative by reference to the number of residents and number of councillors compared with other Greater Manchester Boroughs (thus objective in  comparison). The figure of 212,000 residents in Rochdale against 60 elected members each due a basic allowance of £7,644 gives a figure of £2.16 in basic allowance per head of population. This compares with other Local Authorities on the attached table and thus shows Rochdale as 8th out of ten and very close to the seventh. This calculation could be further sophisticated by using all special allowances but the initial simplicity of the above approach gives, we feel a reasonable indicator and corroboration of our overall approach. The Panel are not advocating this method of calculation but regard this as supportive data, and one that shows the Borough is not the bottom of the AGMA list.

We take into account that the allowance has not increased for three years and we commend the Council for their restraint to reflect the difficult economic times for both the Council and Rochdale Citizens. We think this should be properly and fully recognised as best practice in the circumstances. However, in the light of our above considerations, we recommend the basic allowance is changed to £7,578.

It is not part of the Panel’s remit to consider the affordability of the allowances. However we are mindful of the climate of economic uncertainty and constraint in the country as a whole and of the significant cost cutting required by Central Government of Local Authorities, leading to job losses and service reduction. We leave it to the elected members to consider how to respond in such a situation, but our assessment of the basic allowance leads us to conclude the reduced allowance is fair. The allowance is firmly linked to earnings of the people represented by those in receipt of the allowance. We do not recommend breaking that link solely because of economic difficulties. We have previously recommended a reduction in the allowance based on the same formula, at a time when the situation was not as difficult as it is now. The earnings of the average citizen in the Borough will be affected by the general economic environment, and will, in due course, reflect the economic health of the Borough, although we also accept there will be a “lag” effect. We do not recommend changing this.