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Chapter 7 - Financial Implications
Introduction
7.1 The criteria set for the Committee requires us to consider "the effect of the advice, assuming that it has been implemented, upon the total cost incurred by local authorities in respect of the payment of remuneration (including pensions), allowances, and reimbursement of expenses incurred by, members of local authorities".
7.2 This criteria does not mean that we have to create arrangements that cost the same as, or no more than, current arrangements. But we do have to consider the implications of our advice upon the amount local authorities spend on paying their councillors. It has been generally accepted that the current basic allowance is set at a low level, so any move to an adequate basic salary for all councillors will have a material effect on the overall expenditure on councillors' remuneration.
Current expenditure
7.3 Table 7 details the amount councils spent on basic allowances, special responsibility allowances, civic allowances, travel and subsistence, and other expenses in the financial year, 2004/05. This information was provided by councils over recent months. The basic allowance was last uprated in May 2004.
Expenditure if our advice is implemented
7.4 Table 8 shows the maximum amount that councils would be able to pay in salaries for councillors, assuming that all councillors accept their full salary entitlement. The key facts are:
- The costs of salaries for basic councillors, and that element of the salaries for senior councillors would be £18.9m. This is £10.5m more than 2004/05 figures for basic allowances.
- The costs of the enhanced element of salaries for senior councillors would be £3.5m. This is £5.4m less than 2004/05 figures for SRAs and civic allowances.
- The average income for councillors will increase from £14,171 to £18,330, an increase of £4,159 or 29%
7.5 We estimate that the effect of our advice, if implemented, will be to increase the overall pay bill by about £5m, or 29.34% compared to expenditure in 2004/05. Table 8 shows the percentage increases or decrease that would apply to individual councils. Generally speaking those councils who have used the SRA arrangements moderately will countenance a larger percentage increase than those councils who use SRAs liberally.
7.6 As a percentage of total local government expenditure, councillors' remuneration would increase from 0.168% to 0.217%, an increase of around 0.049%.
7.7 We note that the basic allowance has not been increased since May 2004. If Ministers decide to increase the basic allowance before 2007, the overall percentage increase will be lower.
7.8 The costs of travel and subsistence and other allowances will depend upon the amount of travel undertaken and business conducted by councillors in any given year. Expenditure in 2004/05 was £3.95m. We expect that the abolition of flat-rate subsistence allowances should mean that figure will decrease from 2007, thus partially offsetting the £5m increase which will result from the introduction of the new salary levels.
7.9 The Local Government Pension Scheme is administered by local authorities (the fund administering authorities). Councillors will represent a very small fraction of the total number of members of each fund and there will therefore be no noticeable effect on authorities' administration costs. In addition, councillors will be paying the 'employee' contributions, with local authorities paying the 'employer' contributions to the funds, the level of which will depend upon take-up. This will be an additional cost for local authorities.
7.10 The cost of the severance scheme, which is to be met by the Scottish Executive, is impossible to calculate at this stage. It will depend upon (1) the number of councillors that apply, and (2) the length of service given by these councillors. If Ministers are minded to set a budget for the severance scheme, either nationally or for each local authority, consideration will need to be given to what arrangements should apply if the scheme is oversubscribed.
Table 7 - Local Authorities' expenditure on councillors' allowances and expenses 2004/05 (Information provided by individual councils)
Council | Total spend on basic allowances | Total spend on SRAs | Total spend on civic allowance | Total spend on other allowances e.g. telephone | Total spend on travel and subsistence | Total spend |
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Aberdeen City | £313,567 | £230,922 | £15,080 | £28,382 | £47,611 | £635,562 |
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Aberdeenshire | £492,950 | £195,868 | £0 | £17,179 | £197,773 | £890,176 |
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Angus | £193,823 | £201,213 | £0 | £10,369 | £49,875 | £455,280 |
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Argyll and Bute | £218,056 | £233,554 | £0 | £13,104 | £157,525 | £622,219 |
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Clackmannanshire | £105,911 | £93,130 | £0 | £2,707 | £3,459 | £205,206 |
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Dumfries & Galloway | £311,961 | £241,966 | £0 | £0 | £118,907 | £672,834 |
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Dundee | £196,958 | £236,518 | £0 | £9,135 | £23,422 | £460,033 |
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East Ayrshire | £213,493 | £223,814 | £0 | £5,530 | £65,942 | £508,779 |
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E Dunbartonshire | £161,088 | £209,188 | £0 | £10,773 | £34,056 | £415,105 |
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East Lothian | £133,584 | £186,872 | £0 | £21,161 | £80,407 | £422,024 |
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East Renfrewshire | £121,520 | £208,960 | £0 | £10,046 | £24,334 | £365,450 |
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Edinburgh | £421,090 | £655,241 | £25,000 | £3,762 | £84,463 | £1,189,556 |
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Eilean Siar | £186,987 | £105,313 | £0 | £24,301 | £208,947 | £525,548 |
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Falkirk | £211,453 | £236,688 | £0 | £5,739 | £85,176 | £539,056 |
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Fife | £569,927 | £402,166 | £0 | £31,756 | £118,308 | £1,122,157 |
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Glasgow | £578,359 | £839,026 | £35,585 | £93,491 | £169,730 | £1,742,077 |
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Highland | £583,320 | £373,860 | £0 | £105,591 | £447,332 | £1,510,104 |
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Inverclyde | £121,513 | £174,379 | £0 | £2,251 | £20,812 | £318,954 |
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Midlothian | £108,402 | £234,128 | £8,000 | £14,662 | £70,398 | £435,590 |
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Moray Council | £154,449 | £144,393 | £0 | £14,484 | £46,874 | £360,200 |
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North Ayrshire | £198,927 | £229,464 | £0 | £12,559 | £76,904 | £517,854 |
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North Lanarkshire | £510,090 | £491,652 | £0 | £69,942 | £315,215 | £1,386,899 |
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Orkney Islands | £127,422 | £195,529 | £0 | £2,162 | £101,209 | £426,321 |
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Perth and Kinross | £275,190 | £247,555 | £0 | £11,831 | £69,150 | £603,726 |
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Renfrewshire | £292,411 | £321,846 | £0 | £13,248 | £153,865 | £774,881 |
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Scottish Borders | £225,799 | £179,450 | £0 | £4,785 | £70,761 | £480,795 |
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Shetland Islands | £133,677 | £244,002 | £0 | £6,201 | £131,732 | £483,871 |
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South Ayrshire | £200,542 | £191,176 | £0 | £18,934 | £37,580 | £448,232 |
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South Lanarkshire | £488,404 | £583,437 | £54,027 | £55,940 | £152,893 | £1,334,700 |
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Stirling | £133,400 | £184,974 | £0 | £6,829 | £32,936 | £358,138 |
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W Dunbartonshire | £131,578 | £200,381 | £0 | £4,429 | £28,932 | £365,320 |
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West Lothian | £234,272 | £332,779 | £0 | £6,055 | £81,534 | £654,640 |
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Total | £8,350,123 | £8,829,441 | £137,692 | £637,337 | £3,308,061 | £20,621,612 |
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Table 8 - Local Authority current expenditure on councillors' remuneration compared with proposals
Council | No. of cllrs | Spend on basic allowance 2004/05 | Spend on SRAs and civic allowances 2004/05 | Total spend 2004/05 | Average councillor income 2004/05 | Total proposed cost basic councillors | Total proposed cost senior/lead | Total cost under these proposals | Average councillor income | Increase/ derease |
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Aberdeen | 43 | £313,567 | £246,002 | £559,569 | £13,013 | £355,396 | £481,607 | £837,003 | £19,465 | 49.58% |
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Aberdeenshire | 68 | £492,950 | £195,868 | £688,818 | £10,130 | £741,696 | £481,607 | £1,223,303 | £17,990 | 77.59% |
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Angus | 29 | £193,823 | £201,213 | £395,036 | £13,622 | £231,780 | £312,266 | £544,046 | £18,760 | 37.72% |
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Argyll & Bute | 36 | £218,056 | £233,554 | £451,610 | £12,545 | £324,492 | £333,513 | £658,005 | £18,278 | 45.70% |
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Clackmannanshire | 18 | £105,911 | £93,130 | £199,041 | £11,058 | £139,068 | £185,433 | £324,501 | £18,028 | 63.03% |
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Dumfries & Galloway | 47 | £311,961 | £241,966 | £553,927 | £11,786 | £494,464 | £333,513 | £827,977 | £17,617 | 49.47% |
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Dundee | 29 | £196,958 | £236,518 | £433,476 | £14,947 | £231,780 | £312,266 | £544,046 | £18,760 | 25.51% |
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East Ayrshire | 32 | £213,493 | £223,814 | £437,307 | £13,666 | £185,424 | £269,772 | £455,196 | £18,967 | 4.09% |
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E Dunbartonshire | 24 | £161,088 | £209,188 | £370,276 | £15,428 | £262,684 | £333,513 | £596,197 | £18,631 | 61.01% |
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East Lothian | 23 | £133,584 | £186,872 | £320,456 | £13,933 | £200,876 | £204,749 | £405,625 | £17,636 | 26.58% |
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East Renfrewshire | 20 | £121,520 | £208,960 | £330,480 | £16,524 | £154,520 | £204,749 | £359,269 | £17,963 | 8.71% |
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Edinburgh | 58 | £421,090 | £680,241 | £1,101,331 | £18,988 | £509,916 | £700,516 | £1,210,432 | £20,870 | 9.91% |
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Eilean Siar | 31 | £186,987 | £105,313 | £292,300 | £9,429 | £324,492 | £204,749 | £529,241 | £17,072 | 81.06% |
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Falkirk | 32 | £211,453 | £236,688 | £448,141 | £14,004 | £262,684 | £333,513 | £596,197 | £18,631 | 33.04% |
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Fife | 78 | £569,927 | £402,166 | £972,093 | £12,463 | £896,216 | £481,607 | £1,377,823 | £17,664 | 41.74% |
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Glasgow | 79 | £578,359 | £874,611 | £1,452,970 | £18,392 | £834,408 | £700,516 | £1,534,924 | £19,429 | 5.64% |
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Highland | 80 | £583,320 | £373,860 | £957,180 | £11,965 | £927,120 | £481,607 | £1,408,727 | £17,609 | 47.17% |
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Inverclyde | 20 | £121,513 | £174,379 | £295,892 | £14,795 | £154,520 | £204,749 | £359,269 | £17,963 | 21.42% |
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Midlothian | 18 | £108,402 | £242,128 | £350,530 | £19,474 | £139,068 | £185,433 | £324,501 | £18,028 | -7.43% |
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Moray | 26 | £154,449 | £144,393 | £298,842 | £11,494 | £247,232 | £204,749 | £451,981 | £17,384 | 51.24% |
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North Ayrshire | 30 | £198,927 | £229,464 | £428,391 | £14,280 | £231,780 | £333,513 | £565,293 | £18,843 | 31.96% |
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North Lanarkshire | 70 | £510,090 | £491,652 | £1,001,742 | £14,311 | £772,600 | £481,607 | £1,254,207 | £17,917 | 25.20% |
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Orkney Islands | 21 | £127,422 | £195,529 | £322,951 | £15,379 | £169,972 | £204,749 | £374,721 | £17,844 | 16.03% |
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Perth & Kinross | 41 | £275,190 | £247,555 | £522,745 | £12,750 | £401,752 | £333,513 | £735,265 | £17,933 | 40.65% |
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Renfrewshire | 40 | £292,411 | £321,846 | £614,257 | £15,356 | £386,300 | £333,513 | £719,813 | £17,995 | 17.18% |
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Scottish Borders | 34 | £225,799 | £179,450 | £405,249 | £11,919 | £293,588 | £333,513 | £627,101 | £18,444 | 54.74% |
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Shetland Islands | 22 | £133,677 | £244,002 | £377,679 | £17,167 | £185,424 | £204,749 | £390,173 | £17,735 | 3.31% |
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South Ayrshire | 30 | £200,542 | £191,176 | £391,718 | £13,057 | £231,780 | £333,513 | £565,293 | £18,843 | 44.31% |
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South Lanarkshire | 67 | £488,404 | £637,464 | £1,125,868 | £16,804 | £712,144 | £481,607 | £1,193,751 | £17,817 | 6.03% |
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Stirling | 22 | £133,400 | £184,974 | £318,374 | £14,472 | £185,424 | £204,749 | £390,173 | £17,735 | 22.55% |
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W Dunbartonshire | 22 | £131,578 | £200,381 | £331,959 | £15,089 | £169,972 | £248,525 | £418,497 | £19,023 | 26.07% |
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West Lothian | 32 | £234,272 | £332,779 | £567,051 | £17,720 | £262,684 | £333,513 | £596,197 | £18,631 | 5.14% |
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Total | 1,222 | £8,350,123 | £8,967,133 | £17,317,256 | £14,171 | £11,621,256 | £10,777,491 | £22,398,747 | £18,330 | 29.34% |
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