The Staff Side would like to raise the following matter for discussion:
How and in what time frame does the Council propose to respond to the impact of the cost of living crisis on staff in the light of the LBB pay award of 2.25%, effectively a very significant pay cut with the RPI climbing to 11.8% and the CPI to 9.4% in July. Other factors which will also be impacting the financial security of staff include October’s energy price increases which have yet to take effect on heating bills with the consequential impact affecting retail cost of goods and services that staff rely on. Whilst capped, this new cap is still 27% above the summer 2022 cap. In addition there is the increased cost of borrowing predicted over the last few days.
Minutes:
The Vice Chairman asked how and in what time frame did the Council propose to respond to the impact of the cost of living crisis on staff in light of the LBB April pay award of 2.25%, which was (in her view) effectively a very significant pay cut with the RPI now currently climbing to 11.8% and the CPI to 9.4% in July. Other factors which were also impacting on the financial security of staff included October’s energy price increases which had yet to take effect on heating bills, with the consequential effect of increasing the price of retail goods and services that staff were dependent upon.
The Vice Chairman stated that whilst capped, the new energy cap was still 27% above the summer 2022 cap. In addition, there was the increased cost of borrowing predicted recently.
When the pay award was considered, the CPI was 5.4%--this was noted in a report to the GP&L Committee in February 2022. She said that in August 2022 the data was worse: RPI – 12.3% : CPI – 9.9%. The Vice Chairman referred to the current economic climate and its impact on staff because of the current market uncertainty and the rise in interest rates.
She outlined the following impact on staff:
All Staff:
· Heating: energy costs were rising despite central government intervention
· Food: prices were rising at their fastest rate for 40 years
· Cost of fuel – (car milage allowance)
· Mortgages / rental costs
· Debt (Loans & credit cards)
· Possible impact on pensions--although it was recognised that LBB had a good track record.
Impact on lowest paid
The 2.25% pay award this April brought the lowest hourly rate (BR3 spinal point 8) within the London Living Wage (LLW) by a penny (then £11.05 /hr), but…
· The LLW was an independent calculation based on what people needed to live on); the annual review reflecting the cost of living crisis was revised last month to £11.95 per hour.
· Now BR3, BR4 and up to spinal point 14 in BR5 fell below the London Living Wage.
· The lower paid spent a greater proportion of their income on basics (shelter, heating & food). The rate of grocery inflation rose to 13.9% last month--its highest level since records began in 2008 (Financial Times).
The Vice Chairman suggested that there would also be impacts upon the Council in terms of the effect on recruitment, retention and staff morale. It was important that in times when it was difficult to recruit staff, that the Council had a good staff retention rate.
The Assistant Director of HR (Human Resources) responded and said that the Council realised and appreciated the difficulties that existed now and that may also develop in the future. She explained that this was an issue that was being looked at nationally. The Council was monitoring the national discussions that were taking place and was waiting to see what the outcome of these discussions would be. One of the unions had accepted a national increase. The Council was also reassessing the ‘Real Benefits’ programme in an attempt to get more retailers and supermarkets involved. It was noted that the rates of car allowance were set by HMRC and the Council were in ongoing discussions with HMRC concerning this. If the rate went higher it would have a tax impact for staff.
The Assistant Director for HR informed the Committee that a seminar for staff was planned for the end of November which was designed to help staff with budgeting and financial management. This had been agreed after one of the ‘Ask the Chief Executive’ sessions. The Vice Chairman highlighted the pay scales for LBB in 2022 and illustrated the spinal points which now fell below the LLW, pointing out that the lowest pay scale in Bromley now fell in the order of £1,700 a year below the LLW.
It had to be borne in mind that in addition to the severe financial impact staff were facing, there was the additional issue of staff’s mental health and well-being. The Leader said that the Council did not recognise and would not be committing to the LLW as a basis for pay consideration. The next pay review was a matter that would be discussed with staff representatives in about a week or so. The date of the meeting would need to be clarified. The Vice Chairman advised that there was a formal pay consultation process between HR and the Trades Unions.
A Member commented that inflation also affected Council finances and contracts. He advised that when the Council made decisions on pay, they relied on the advice of experts and that for next year’s pay award we would have to see what grant was received from Government. He also wondered if a two year pay award should be negotiated next time. The Chairman was not keen on the idea of a two year pay deal. He felt it would not take into account inflationary spikes and would be too rigid.
Thomas Carver highlighted the current financial difficulties that staff were already facing and suggested that the negotiations with HMRC with respect to the mileage allowance may need to be escalated. He also said that he did not require debt management advice but rather more money for his rent. The Leader said that he was very happy to offer his support regarding the fuel allowances.
The Assistant Director for HR said that the debt management seminar had been requested by staff and that Emma Downie was escalating matters with HMRC. Mr Carver suggested that the matter may need to be escalated by the Director for HR or the Chief Executive.
The Vice Chairman commented that although Councils would be affected by inflationary pressures, they would still be required to pay the finally agreed pay award. If LBB payed below whatever was agreed nationally, the Council would be saving money at the expense of staff; they should therefore commit to meeting whatever was agreed nationally.
The Chairman commented that until this year the Council’s pay award had matched or exceeded the eventual national pay settlement. The next pay settlement would have to take into account inflation that had occurred since April 2022 as well as what would be provided by the Revenue Support Settlement from central government which was due to be reported upon in December.
RESOLVED that the update regarding the Council’s response to the cost of living crisis be noted.