Councils are to be given the freedom to borrow more money to tackle the multi-billion pound equal pay bill in local government.
Local government minister John Healey has granted councils permission to borrow against or sell assets – known as capitalisation – to raise cash to make equal pay back payments to thousands of employees – mainly women.
Since 2006, the government has issued more than £1.1bn in capitalisation directions for equal pay back-pay.
The move has been widely welcomed by local government employers and trade unions as practical support that enabled them to meet their own commitments.
Healey said: “Thousands of council workers, and particularly women, lost out due to unequal pay, which in some cases persisted for decades. It is for councils, working with local unions, to right this wrong.
“I want to do everything possible to support them to build on the progress made so far, so I am pleased to offer councils greater financial flexibility to meet and manage their one-off costs of implementing equal pay, by allowing them to borrow against or sell their assets.
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Local government union Unison said the move was “a great step forward” for thousands of women who had suffered pay injustice for years.
Healey said the government would issue guidance shortly that would make clear that cash raised could be used to fund direct payments to no-win, no-fee lawyers, who have been accused of hijacking the process.
