TEWKESBURY BOROUGH COUNCIL

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1 TEWKESBURY BOROUGH COUNCIL Appendix 1 Report to: Executive Committee Date of Meeting: 3 September 2014 Subject: Report of: Corporate Lead: Lead Member: Number of Appendices: Living Wage Tina Nicholls, Business Transformation Group Manager Mike Dawson, Chief Executive Councillor Ms A E Ricks Two Executive Summary: The UK has a growing problem with in-work poverty. More than half (52%) of the people living in poverty live in a working family. The Living Wage is an hourly rate set independently and updated annually (in November). It is calculated according to the basic cost of living in the UK. Employers choose to pay the Living Wage on a voluntary basis. Recommendation: That the payment of the Living Wage, as a supplement, be APPROVED with effect from 1 October 2014 and that the rate be amended annually in line with the national living wage level. Reasons for Recommendation: To help combat in-work poverty and to improve the working conditions of the Council s employees. Resource Implications: These are contained within the body of the report. Legal Implications: Payment is discretionary and is not linked contractually nor is it is part of any legal obligation. It is therefore envisaged that payment to staff that are eligible will not affect current pay and grading arrangements or grading structure. The Living Wage will be reviewed hence any discrepancies that may develop can be addressed quickly. Risk Management Implications: None arising from the report.

2 Performance Management Follow-up: The payment of the living wage as a supplement will be reviewed in November 2014 and annually thereafter, by the Human Resources Adviser and Finance and Asset Management Group Manager. Implications for Biodiversity: None directly. 1.0 INTRODUCTION/BACKGROUND 1.1 The Living Wage is an hourly rate set independently and updated annually (in November). The UK Living Wage (outside of London) is currently 7.65 per hour. This figure is set by the Centre for Research in Social Policy at Loughborough University. 1.2 The National Minimum Wage is 6.31 per hour for anyone who is 21 years and over. Unlike the National Minimum Wage, the Living Wage is not a statutory requirement but a voluntary undertaking. Apprentices are excluded. 1.3 Citizens UK launched the modern Living Wage campaign in the UK in 2001 with parents in East London. Today it is a national movement. The Living Wage Foundation, which is part of Citizens UK, is responsible for promoting, supporting and administering the formal accreditation of Living Wage Employers. Once accredited, organisations can display and use the Living Wage Employer s Mark. In order to be accredited an organisation must satisfy the following criteria: 1. Pay all its staff at least the Living Wage. 2. Commit that, within six months of the annual uprating of the Living Wage, its pay rates will be uprated accordingly. 3. Demonstrate progress towards requiring any contractors to do the same. 4. Have a plan in place to work with any remaining contractors to get them to pay the Living Wage. It is not proposed to seek accreditation and adopt the Living Wage in full. 1.4 In-work poverty is an increasingly significant problem in the UK and the number of people living in households in poverty where someone works is now larger than the number in households where no one works. Low pay is an important part of the explanation for inwork poverty, and reducing the incidence of low pay would make a contribution to addressing this problem. 1.5 The Joseph Rowntree Foundation, Rewarding Work for Low-Paid Workers report dated April 2014, found that while low pay per se may not be the sole determinant of in-work poverty, and not all people who are low paid today will always be low paid, it was found to be clearly a very significant contributory factor, and for a substantial number of people it can be a life-time experience.

3 2.0 THE LIVING WAGE 2.1 How is the Living Wage Calculated The Living Wage calculation takes into account the Joseph Rowntree Foundation Minimum Income Standard research in which members of the public identify what is needed for a minimum standard of living. This is then combined with an analysis of the actual cost of living including essentials like rent, council tax, childcare and transport to produce the Living Wage figure. 2.2 Who pays the Living Wage There are currently just over 350 organisations across all sectors that are fully accredited to the Living Wage Foundation. 16 Local Authorities have full accreditation, 7 of which are London Boroughs A number of organisations across all sectors have adopted the Living Wage on an informal basis (either permanently or temporarily), although it is difficult to ascertain an accurate understanding of this. 3.0 LOCAL AUTHORITIES IN THE SOUTH WEST 3.1 A survey by the South West Councils organisation in October 2013 asked County/Unitary/District Councils for their current position on the Living Wage. Out of 40 respondents, 6 have implemented the Living Wage, 1 is firmly committed, 8 have decided not to implement and 17 are currently considering their options (this included Tewkesbury Borough Council) and 8 responded Other. 3.2 South Gloucestershire Unitary Authority implemented the payment of the Living Wage on 1 October 2013, but has not signed up to become an accredited Living Wage Employer. Gloucestershire County Council proposes to introduce the Living Wage, as a Living Wage supplement for their employees, including schools. However, the supplement would not be linked to future increases in the Living Wage. Gloucester City Council implemented the Living Wage on 1 November UBICO has stated in its business plan that it will introduce the Living Wage. 4.0 ESTIMATED COST OF IMPLEMENTING THE LIVING WAGE 4.1 The Living Wage is 7.65 per hour. All employees currently paid on salary grades A and B, spinal column point 5 ( 6.45 per hour) to spinal column point per hour) would receive an increased basic salary. The posts affected would be limited to the cleaners and waste collection operatives. 4.2 It is estimated that the annual cost of implementing the Living Wage could be in the region of 7,500 per annum. In estimating the cost, vacant post, on-costs and an assumed 1% pay award from 1 April 2014 have been included. The estimated additional cost in 2014/15 is 3,250 and this can be met from within existing salary budgets.

4 4.3 Payment of the Living Wage as a Supplement It is proposed that the Living Wage is paid monthly to employees as a supplement to their pay. This allows the existing pay and grading structure to remain intact while introducing a supplement that recognises cost of living pressures. The payment of the Living Wage would be reviewed each year following the annual uprating (in November). 5.0 OTHER OPTIONS CONSIDERED 5.1 Whilst the Living Wage is focused on gross hourly pay, the Council does offer additional benefits to support our employees, most notably: a defined-benefit pension scheme (employer contribution rate 14.7%); 6.0 CONSULTATION generous sickness pay entitlement; generous holiday entitlement; childcare voucher scheme offering tax/national insurance reductions; and skills training where appropriate. 6.1 The members of the Joint Staff Consultative Group, at their meeting on 24 July 2014, recommended the payment of the Living Wage as set out in this report. 7.0 RELEVANT COUNCIL POLICIES/STRATEGIES 7.1 None. 8.0 RELEVANT GOVERNMENT POLICIES 8.1 None. 9.0 RESOURCE IMPLICATIONS (Human/Property) 9.1 These are contained within the body of the report SUSTAINABILITY IMPLICATIONS (Social/Community Safety/Cultural/ Economic/ Environment) 10.1 None.

5 11.0 IMPACT UPON (Value For Money/Equalities/E-Government/Human Rights/Health And Safety) 11.1 The Council does not anticipate any vulnerability to equal pay claims if the Living Wage were to be adopted for all employees. It is likely that the Council will be able to justify the differential treatment compared to other employees on the basis that the application of the Living Wage is a proportionate means of achieving a legitimate aim i.e. paying the Living Wage RELATED DECISIONS AND OTHER RELATED FACTS 12.1 None. Background Papers: None. Contact Officer: Janet Martin, Human Resources Adviser Tel: janet.martin@tewkesbury.gov.uk Appendices: Appendix 1 Grading Structure. Appendix 2 Equality Impact Assessment.