Scottish Local Authorities Remuneration

Today

Why change is essential:

There is a general recognition that the current arrangements are in need of a complete overhaul
The basic allowance is too low. It does not recognise the modern role of a councillor, and does nothing to widen access to council membership
The "Special Responsibility Allowances", set by councils, are overused. In some cases they are used as a mechanism to top up the basic allowance, rather than as genuine payment for a councillor holding heavy responsibilities
There is a lack of transparency around which councillor posts attract which levels of allowance
There is a lack of consistency across the country with similar roles attracting different salaries
Fundamental changes in local government will take place in 2007, so now is the right time to tackle these issues and get a scheme that's straightforward, open, transparent, and fit for purpose

Recommendations:

A new package which comprises:

A salary of £15,452 for basic councillors, set nationally. (Basic councillors will comprise at least 62 per cent of all Scotland's councillors)
Four salary levels for council leaders, set nationally, of £30,905, £36,055, £41,206 and £51,508
Salaries for a limited number of senior councillors (e.g. Committee Conveners and Opposition Leaders), set by councils within a clear national framework and limits
A mandatory role description, training needs assessment, and personal development plan for all councillors
Membership of the Local Government Pension Scheme if a councillor wishes
Reimbursement of receipted expenses necessarily incurred, rather than payment of flat-rate allowances
The statutory severance scheme for councillors choosing to stand down at the next election which would pay £1,000 gross per year served

Financial Implications - Salary arrangements:

2004-05 Local Authority spending on councillors' basic, SRA and civic allowances was £17.3 million
Basic allowances accounted for £8.4m and SRAs accounted for £8.8 million
The average income per councillor was £14,171
As a percentage of local government expenditure, councillors' remuneration accounts for around 0.168 per cent

Under the proposals (assuming all councillors accept their full salary entitlement)

The cost of salaries for basic councillors, and the basic element of senior councillors' and leaders' salaries will be £18.9 million. This is £10.5 million more than the cost of basic allowances

But

the costs of the enhanced element of salaries for senior councillors and leaders would be cut by £5.4 million, down to £3.5 million, when compared to the cost of SRAs and civic allowances

This means:

However, it is expected that the abolition of flat-rate subsistence allowances should mean that the bill in this area (currently around £4 million) should decrease substantially, partly offsetting the £5 million increase resulting from the new salary levels

The average pay for councillors will increase from £14,171 to £18,330, an increase of £4,159 or 29 per cent, (This figure is distorted by the higher salaries for Leaders and senior councillors)
The vast majority of councillors (around 62 per cent) will be 'basic councillors' and will receive a total salary of £15,452. This is an increase of £1,281 or nine per cent when compared to the current average councillor income

As a percentage of total local government expenditure, councillors' remuneration would be 0.217 per cent, an increase of around 0.049 per cent
If Ministers increase the basic allowance before 2007, the gap between current expenditure and predicated expenditure will be narrowed further

Pensions:

Pensions will be an additional cost for Local Authorities, however, the LG Pension Scheme is already administered by local authorities, and councillors will represent a very small fraction of the total number of members of each fund. There will be no noticeable effect on councils' administration costs

Severance:

The cost of the one-off severance scheme will be met by the Scottish Executive. The cost will depend upon (a) the number of councillors that apply, and (b) the length of service given by these councillors