Localism Bill

My Lords, this is a substantial group of amendments that includes several government amendments. Perhaps I can put our amendments into some context and address the issues raised by the other amendments in this group. Our amendments set out the requirement for relevant authorities to approve and publish a pay policy statement which, in addition to the measures already in the Bill, must set out an authority’s policies on remuneration of its lowest-paid employees and the relationship between the remuneration of its chief officers and the rest of its workforce. As Will Hutton set out in his report on fair pay in the public sector, published on 15 March, there is value in ensuring that decisions about senior pay are taken in the context of similar decisions on lower-paid staff. Such an approach broadens the debate beyond discussion about salary amounts of top earners and into whether the pay of those individuals is justified. These measures, therefore, further increase local democratic accountability and transparency over how decisions on pay are made, and embody the commitment given by Ministers to reflect on the measures in the light of Hutton’s report. The measures seek to minimise the potential burden on authorities and ensure that decisions on pay remain ones for individual employers to take locally. The opposition amendments would take those measures beyond the scope of pay accountability. Our intention, through the provisions in the Bill and our amendments, is to bring greater accountability and transparency to an authority’s approach to remuneration of its own employees. We do not seek to prescribe what the approach should be by requiring authorities to publish a list of numbers, or by roaming about on other matters such as local decisions around recruitment or engagement with providers—which would be the effect of the opposition amendments. Our Amendment 101, in its requirements relating to the remuneration of the lowest-paid employees, is broader than the Opposition’s proposal and will lead to the publication of policies in a rounder way than by focusing on policies relating to total salary costs and numbers of staff, which is what Amendment 101A would achieve. Amendment 101 would require authorities to disclose their policies on the relationship between remuneration of their chief officers and the rest of their employees, including the lowest paid. We do not feel it necessary to require authorities to break down their policies in this regard in the way proposed in Amendment 101A. Indeed, Will Hutton, in his report on fair pay in the public sector, highlights that, in seeking to measure pay dispersion using a pay multiple, comparison between top and lowest pay is not the most effective approach. As we have made clear, charities, voluntary organisations and businesses—particularly small businesses—have repeatedly called for the amount of regulation and red tape surrounding local government contracts to be reduced. I am sure that noble Lords opposite agree with that general principle. In this context, it is not appropriate to use this Bill to impose further duties on authorities to have policies relating to the pay of those who work for an organisation with which it contracts. Nothing in the Bill limits the extent of information that an authority may include in its pay policy statement. Authorities may take the local view to include any other policies as they think fit. This could include policies on contracting staff where they have developed them locally. We will undertake to make this clear in guidance rather than set it out in the Bill. I am grateful to my noble friend Lord True for his work in submitting Amendment 105. Perhaps I can reassure him and other noble Lords that local authorities must always abide by relevant employment legislation when carrying out their duties as employers. This obligation extends to the formation of their policies on pay. Pay policy statements are intended to be an articulation of such policies. The measures that we are introducing do not take precedence over employment law. A pay policy statement could not be lawfully used by relevant authorities to sanction matters that are not in line with their existing legal duties and obligations. Similarly, any changes to policies included in a published pay policy statement, which must be approved by a full council, must also adhere to requirements placed on authorities as employers under employment legislation. We can undertake to reinforce this position in guidance, to which authorities must have regard. We believe that this will achieve the aims of the amendment without it being necessary to remind authorities of their duties as employers as set out in the Bill. I hope that I have assisted the Committee in its consideration of this matter. I beg to move Amendment 99.