Agenda item

The Living Wage - Annual Review

To consider the report of the Chief Executive (reference 18/35) attached



The Cabinet considered a report by the Chief Executive (Reference 18/35) providing an update on the implementation of the UK Living Wage.  In her introduction to the report, the Human Resources Manager, Ms Blades explained the background to the UK Living Wage, the National Living Wage and the Council’s own Living Wage pay supplement which commenced in July 2013.  As part of the annual review of the Council’s Living Wage, Ms Blades then outlined a series of factors for Members to take into account: the national pay negotiations; the impact of paying the UK Living Wage on the Council’s pay and grading structure, pay differentials and affordability.  Key points were that: in December the National Employers made a final pay offer which consisted of a two-year pay increase from 1 April 2018 and the introduction of a new national pay spine from 1 April 2019 to ensure that the requirement to pay the statutory National Living Wage for lower paid employees was met.  For some staff this would entail an increase of between 3.7% and 9.1%.  The new pay deal still had not been agreed between the National Employers and all the unions.  This final offer was much more than anticipated; although not yet nationally agreed the higher salary costs would increase the Council’s funding gap by £320,000 in 2018/2019 and a further £220,000 in 2019/2020.  With the pay offer being bottom loaded, and these costs now incorporated into the budget, the current Council Living Wage rate of £7.85 per hour had therefore been superseded by the new minimum rate on the revised pay scales of £8.50 per hour.  Following the pay offer, the budget proposals now made provision for a minimum hourly rate of £8.50 per hour in 2018/2019 and £9.00 per hour in 2019/2020.  Funding the higher than expected pay award in 2018/19 (and balancing the budget) had only been possible by bringing forward the draw from the General Fund.  If the Council wished to apply the current UK Living Wage rate of £8.75 per hour it would result in an additional cost of approximately £104,000 per annum.  Making such a change would also mean that staff currently paid at SCPs 6 to 14 would receive the same hourly rate and this could therefore create difficulties for example, where a Scale 3 employee was required to undertake first line supervision for someone paid the same as them.  Backdating the application of a higher Living Wage was not in the 2017/2018 budget and if this were approved then the additional cost would depend on the rate agreed and the date of application.  The costs of backdating would vary significantly and be a lot higher if the backdating included a period when seasonal staff worked i.e. up to £90,000 depending on the rate agreed and date it was applied.  Assuming that £8.50 per hour was not exceeded then the 2018/2019 budget would however be unaffected.  In respect of the criteria and current timetable for reviewing the Council’s Living Wage pay supplement, Ms Blades asked Members to reconsider the condition that Council employees must have worked for the Council for twelve consecutive weeks before being eligible for the Council’s Living Wage pay supplement which put seasonal workers at a disadvantage, and of applying the Living Wage from 1 July each year which was out of sync with when the UK Living Wage rate was announced in November and with the Council’s annual budget setting process finalised in February each year.  The Portfolio Holder, Councillor Turner thanked Ms Blades for a very comprehensive report, and whilst reiterating her commitment to a fair and living wage, proposed that a decision to review the Council’ Living Wage pay supplement be deferred until the national pay deal had been finalised, and that the Council approve the two amendments to the current scheme suggested by the Human Resources Manager.  With the permission of the Chairman, Councillor Siddons then addressed the meeting, noting the complexity of the issue before Members, but hoping that the full Council could find a way through to agreeing the UK Living Wage, as originally proposed by the Labour Group.  The Chairman commended a full and thorough report which ensured that Members could consider the matter openly and transparently.

RESOLVED that the Cabinet recommend that full Council:

(i)         Note the report;

(ii)       Defer the decision to review the Council’s Living Wage pay supplement until all the details of the national pay deal are known;

(iii)      Approve that the Council’s Living Wage pay supplement be applied at the time the period of employment commences and the supplement be reviewed at the same time as the Council’s budget setting process in January/February each year.



This report provides an update on the implementation of the UK Living Wage and invites Members to consider a number of issues as part of the annual review that is required to be undertaken in relation to the continued payment of the UK Living Wage.


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