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RENEWING LOCAL DEMOCRACY: THE NEXT STEPS
CHAPTER 4: REMUNERATION
Introduction
44. Chapter 2 of this document sets out in broad terms the ways in which Ministers aim to renew local democracy, and some specific proposals for encouraging people from groups which are currently under-represented to seek election as councillors, and removing barriers to their so doing. Chapter 3 deals with the electoral system under which councillors are elected. This chapter looks at one very specific way in which Ministers wish to support the councillors elected to serve their local communities, and to enable them to make the career choices which will inevitably arise if they wish to take on additional responsibilities within the council.
45. The available evidence suggests that councillors are not motivated by the level and type of remuneration available to them. There is no real way of knowing whether the current system of remuneration discourages some people from standing for election. It is clear, however, that many councillors are finding it increasingly difficult to combine their role as a councillor with other activities, and this may be a factor in some people's decision not to seek election. It is certainly a factor in some councillors' decision to stand down from office, and may be a factor in preventing some from taking on more responsibility.
46. Ministers value the important role which councillors play in their local communities, and recognise that councillors often have to face difficult choices between their chosen career, their families, and their role as a councillor. They are aware that an increasing number of councillors are spending a significant amount of their time on council business, and that the number of councillors doing so has grown since the reorganisation of local government in 1996. Indeed the expectations of the role which councillors fulfil have developed even since the Kerley Group report. While some councillors do need to spend a significant amount of their time on council business, Ministers believe that the majority of council positions should be capable of being occupied by people who choose to undertake council work while having other responsibilities, and they wish to encourage councils to facilitate this approach. At the same time, Ministers wish to ensure that people are adequately recompensed for the important responsibilities they undertake. They therefore wish to ensure that the level and type of remuneration available does not actively discourage people from serving, that it recognises properly the responsibilities they carry, that it is sufficient to support councillors in the valuable role they perform and that, when necessary, it is sufficient to enable councillors to take on additional responsibilities as an elected member.
Recent Developments
47. In considering the question of councillors' remuneration, Ministers have had regard to the work which has been done by others in this area in recent years. In June 1999, the McIntosh Commission recommended that :
47.1 All councils should produce a job description for members; and
47.2 A pay and conditions package for councillors should be drawn up for the approval of the Parliament, to be implemented on completion of councils' internal reviews. Remuneration for councillors should in future be subject to independent review.
48. Ministers therefore asked the Kerley Group to advise on an appropriate system of remuneration for councillors, taking account of available resources. The Group's report included a number of recommendations in respect of remuneration. In particular, the Group recommended that all councillors should be paid a salary of 12,000 per annum, and that council leaders, and councillors with significant additional responsibilities should be paid larger salaries, based on the roles they carried out and on the size of their local authority. The largest salary would be paid to the leaders of the Glasgow and Edinburgh councils and would be equivalent to the salary of an MSP. All of these salaries would include an element for pension provision and for personal expenses, such as childcare.
49. The Kerley Group also prepared outline role descriptions for councillors which were intended to provide a framework for councils in developing job descriptions for councillors and proposing information on the skills, experience, aptitudes and training required for carrying out the role of councillor effectively. These role descriptions made a clear distinction between councillors, those with significant additional responsibilities and leaders of councils. (Role descriptions based on those prepared by the Kerley Group are included at Appendix D.).
50. Ministers have concluded that outline 'role' descriptions are a more appropriate way of seeking to outline the many and varied activities which councillors carry out, rather than 'job descriptions'. They are also clear that any system of remuneration should be sufficiently flexible to recognise the different roles which councillors fulfil.
51. It is worth noting that some of the Kerley Group's recommendations appear to have been made in the expectation that most councils would be adopting a cabinet style of operation in future, following the reviews carried out with the assistance of the Leadership Advisory Panel. In practice, six councils have done so. One of the consequences of the Cabinet approach or any other streamlined decision making process would be that a minority of councillors would have particularly heavy responsibilities, and would need to give more time to their council role, while the remainder would, primarily, be engaged in scrutinising the work of the executive and/or council. The remuneration options considered in this chapter should be seen against that background, though decisions about a council's structure are, of course, a matter for each individual local authority.
The Executive's Position
52. Chapter 2 of this paper sets out the key factors of which Ministers wish to take account in bringing forward proposals for change. These factors are equally important when considering the most appropriate system of remuneration for councillors in future, and it is worth repeating them here:
52.1 Encouraging the widest possible range of people to serve as councillors;
52.2 Recognising that people will have diverse personal circumstances;
52.3 Removing any inappropriate barriers to serving as a councillor;
52.4 Ensuring that councils are representative of the communities they serve; and
52.5 Allowing for progression to enable councillors to assume more responsibilities over time.
53. In addition, there are a number of other, specific factors of which Ministers wish to take account in considering possible options for councillors' remuneration. These are:
53.1 That any system of remuneration should be fair, transparent and applied consistently across Scotland;
53.2 That any system of remuneration should be sufficiently flexible to take account of the different roles councillors undertake, including the varying time commitments required of them; and
53.3 That the remuneration available should support councillors while carrying out the valuable role which they play in their communities and enable them to realise their full potential, and to progress through the ranks of council membership if they choose to do so.
54. The question of whether being a councillor is a part-time or full-time activity is obviously key to this consideration. Ministers believe that as more councils move to a more streamlined style of decision making, fewer councillors will be undertaking the significant levels of additional responsibilities which have resulted in many of them spending all their time on council business in the past. Ministers wish to encourage councils to facilitate this approach. Any system of remuneration needs to be flexible enough to take account of current and future differences in the degree of responsibility which councillors undertake.
The Case for Change
55. Councillors are currently remunerated by a system of allowances. The key elements are a basic allowance which is paid to all councillors, and additional allowances, particularly Special Responsibility Allowance (SRA), which are paid to many, but not all, councillors. The level of basic allowance paid varies according to the size of the council, and the level of SRA varies according to the detail of councils' own allowance schemes. This system has been in place for a considerable period of time, and councillors and local authority staff are familiar with the way in which the system operates.
56. The system of allowances, and, in particular, the level of allowances paid clearly do not encourage people to stand for election as a councillor. Nor do they appear adequately to recompense many councillors for the role which they now play. Many councillors believe that the level of basic allowance paid is too low, and that those councillors who do not receive SRAs are not paid enough for the activities they undertake. Conversely, about two-thirds of councillors now receive SRAs. This proportion seems very high, and it appears that some councils may be using SRAs to compensate councillors with limited additional responsibilities for the fact that the basic allowance is too low. Indeed, the Kerley Group noted that the number of councillors receiving SRAs varies significantly, ranging from one third of councillors in some areas, to all councillors in others. It seems clear that the allowance system is relatively unstructured, there is no clear progression, and the level and number of allowances paid varies from council to council. It is also far from ideal that it has been left to individual councils to determine the levels of SRA which councillors should receive. The Kerley Group suggested that the SRA system may be perceived to influence the way in which responsibilities are allocated within a council. As the Group's report highlighted, the level of SRA paid ranges from 250 to 29,750. This degree of variation seems unhelpful. The levels of allowance paid at the upper end of the spectrum may be relatively generous in some cases, but may also be insufficient to recognise the very heavy responsibilities which a small number of councillors undertake. Ministers are therefore committed to changing the current system of allowances for councillors.
Options for Change
57. Ministers have considered a number of options for introducing a new system of remuneration. These options are set out below. One or more of these could be introduced: they are not mutually exclusive. Ministers recognise that the wide variation in the levels of SRA paid under the current system have in part arisen because decisions about councillors' remuneration have in the past been left to individual councils. In order to ensure that decisions about the level of remuneration to be paid to individuals are perceived to be fair and consistent, it might be appropriate to introduce local or national remuneration committees.
An Allowance Based System
58. While the current system of allowances is clearly flawed, there are a number of ways in which the system could be improved in the short-term. These include:
58.1 Retaining the current allowance system but standardising the amounts paid across all council areas. The functions performed by councillors in each area are broadly similar and they should be remunerated at the same rate wherever they serve. Any variations in the level of allowance paid would therefore reflect any additional responsibilities which a councillor has, rather than the fact that the council area is larger or smaller. This would make the system more transparent and ensure its consistent application across Scotland, but the system would still do nothing to encourage people to stand as councillors, nor would it have a clear element of progression to support those moving through the ranks of the council.
58.2 Retaining the current allowance system but adjusting the amounts paid and/or the numbers receiving each allowance. The current basic allowance could be increased to recognise the role which all councillors are expected to play. At the same time, more stringent criteria for the payment of SRA, or a cap on the number of councillors who can receive it would reduce the number of councillors receiving this allowance. This would remove some of the inconsistencies of the current system, and might encourage some people to stand for election to the council. But again, it would do little to support those taking on additional responsibilities within the council.
58.3 Abolishing the current system of allowances and introducing a new one. This would afford an opportunity to address the inconsistent application of the current allowance scheme, and to introduce an element of progression to support those moving through the ranks of the council. It is, however, difficult to see how any system of allowances can avoid paying some form of basic allowance to all councillors, and an extra allowance or allowances to councillors who have significant additional responsibilities. There is therefore a limit to how fundamentally different a new system could be.
58.4 Introducing a Financial Loss Allowance as an addition to the current system of allowances in recognition of income foregone as a result of undertaking council duties. Councillors did receive such an allowance in the past, but it was paid as an alternative to Attendance Allowance, was subject to a strict upper limit, and councillors had to prove that they had lost income as a result of undertaking council duties before they received any payments. As a result, far more councillors claimed Attendance Allowance, and the Financial Loss Allowance for councillors was abolished (it is still available to co-opted non-councillors). Such an allowance on its own would do little to tackle the problems with the current system, but, coupled with another option, it could serve as some form of recompense to those losing income as a result of their activities as a councillor, and meet the particular circumstances of some elected members.
Salary Options
59. Ministers recognise that some councillors currently spend so much of their time on council business that they cannot realistically share council activities with full time employment. Ministers believe that more councillors should be able to take on other (non-council) responsibilities in future and that the number of councillors spending most of their time on council business should decrease. Regardless of the time which individual councillors spend on council business, Ministers believe that they should be recompensed properly for whatever level of responsibility they undertake. It is also important that the level of remuneration available is sufficient not to discourage people from standing for election, and to allow councillors who choose to do so to progress their careers within local government. The Kerley Group recommended that all councillors should be paid a salary, with council leaders, and councillors with significant additional responsibilities being paid larger salaries, based on the roles they carried out and the size and population of the authority.
60. It would be possible to devise a salary system for councillors which could either take account of the size of each council, or introduce standard rates of pay across Scotland. There would be 2 main elements:
60.1 A basic salary for all councillors, with an additional element or elements for those councillors with significant additional responsibilities; and
60.2 A further additional element for those with particularly heavy responsibilities, such as the leaders of councils.
61. A salary scheme of this sort should encourage people to serve as councillors, provide adequate recompense to councillors for the responsibilities they undertake, and provide a method of progression for those taking on additional responsibilities. The real difficulty would be in determining which councillors should receive additional salary elements, and inevitably there would be a danger that some councillors who currently receive significant amounts of SRA could lose out financially. Local or national remuneration committees could have a key role to play here. It might also be necessary to limit the number of councillors who receive additional elements of salary in recognition of the additional responsibilities they undertake. This could be done as an absolute number, or as a proportion of the number of councillors overall.
Combined Salary and Allowances Option
62. An alternative approach would be to recognise the very different role which council leaders and the small number of councillors with heavy additional responsibilities play by creating 2 different remuneration systems. The simplest way of doing so would be by paying a salary to those with particularly onerous responsibilities but retaining a (revised) system of allowances for the remainder. It is difficult to know whether such a scheme would do anything to encourage or discourage people from seeking to serve as councillors. It would recognise the heavy burdens a small, but significant, group of councillors carry, and recompense them accordingly, without unduly complicating the position for all councillors. Again, it would be important to ensure that such an approach was applied consistently across Scotland, and seen to be fair.
Pension Options
63. At present, councillors do not receive any form of pension, and the allowances they receive are not intended to enable them to purchase a private pension. Some councillors will, of course, have accrued rights in pension schemes, either before or while serving as a councillor. Those who have served for a long time, or who have spent the majority of their time on council business are, however, unlikely to have done so. Some councillors will also have lost pension rights as a consequence of taking time away from work to fulfil their role on the council. The Kerley Group recommended that the salaries paid to councillors should include an element for pension provision. In England and Wales, DTLR have consulted on a proposal that a small number of councillors (determined by an independent panel) should be entitled to join the pension scheme which covers local authority staff. If some or all councillors are to be paid a salary in future, then the issue of pensions will also have to be considered.
64. Ministers are committed to establishing some form of pension provision for councillors, and are considering 2 options as set out below:
64.1 Including an element for pension provision in the salaries paid to councillors, as proposed by the Kerley Group. This would enable councillors to choose the level and type of provision which best suited their individual circumstances. It would also recognise that some people will be long-serving and/or full-time councillors, with no other form of pension provision; while others will serve for a short period of time, or on a part-time basis, and may well have accrued pension rights elsewhere; and
64.2 Giving councillors access to the Local Government Pension Scheme. This is the simplest way of enabling councillors to accrue rights in an existing pension scheme, and is the approach being adopted for some councillors south of the border where the necessary primary legislation is already in place. This approach may not be sufficiently flexible to take account of the wide range of councillors' personal circumstances, and might complicate matters for people who have also accrued rights in other pension schemes. If this approach were adopted, it might therefore be helpful to enable councillors to opt out of the pension scheme if they prefer to do so.
Severance Pay
65. A number of groups have suggested to Ministers that there should be some form of severance pay scheme to recognise the contributions which long-serving councillors have already made to their local communities. The scheme used in the Republic of Ireland has been cited as a possible model.
66. Ministers recognise that many long-serving councillors have been inadequately rewarded for the work they have done and that the allowances they have received will not have enabled them to make appropriate pension provision. They are also aware that a number of councils would welcome the introduction of a severance pay scheme. Ministers are, however, reluctant to see large numbers of experienced councillors standing down at one time. Nor would they wish to enter into an open-ended arrangement which could be very expensive for the taxpayer. Ministers are not yet persuaded that in the current climate there would be public support for any such scheme.
Ministers would therefore like to know :
whether respondents are in favour of the possibility of introducing local or national remuneration committees in future, independent of councils;
whether respondents agree that the current system of allowances needs to be overhauled;
whether any of the allowance based options set out above should be adopted in the short or long term.
whether councillors should be paid a salary in future, and the level at which any such salary should be paid;
whether the salary paid should vary according to the size and population of the council area, or whether the amounts should be standardised across Scotland;
whether a salary should be paid to all councillors, or whether there is a case for distinguishing between those with less onerous responsibilities who are therefore paid allowances, and those with particularly heavy responsibilities who are therefore paid a salary;
whether an MSP's salary provides an appropriate comparator for those councillors who carry the greatest responsibilities as the Kerley Group suggested, or whether there are other more appropriate comparisons to be made;
whether decisions about which councillors should receive additional elements of salary should be the responsibility of a remuneration committee, at local or national level;
whether there should be a 'quota' set for the number of councillors who should receive additional salary elements.
whether pension provision for councillors should be made through salary or through the Local Government Pension Scheme; and
whether respondents have views on the issue of severance pay.
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