UK councils are facing a “totally unmanageable burden” of up to £3bn in equal pay claims, the Local Government Employers (LGE) association has warned.
Councils in the West Midlands alone could be hit with a £1bn bill in government equal pay directives as thousands of female staff claim up to six years back pay and wage rises, the LGE said.
An LGE report urged the government to permit local authorities to borrow cash to raise the necessary money to meet the costs.
Local authority leaders said steep council tax increases and cuts in services would be inevitable unless additional costs could be met through borrowing.
The LGE also urged MPs to consider legal reforms to encourage employers and unions to reach agreements on equal pay via a process of arbitration. The association blamed no-win no-fee solicitors for the spiralling costs in equal pay claims.
The most significant liabilities were found to be in the West Midlands (£928m), the North West (£740m) and Yorkshire & Humber (£371m), the LGE report showed.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
The government’s single-status agreement, devised in 1997, requires councils to harmonise pay and conditions for comparable posts. An estimated 1.5 million public sector staff across the UK have been affected by the agreement.
A spokesman for the Treasury said: “It is for local government to ensure it implements pay reviews that remove discriminatory aspects of its pay structure and tackles equal pay proactively and in an affordable manner.”
