Council facing £1bn equal pay bill

Times Series: Birmingham City Council may have to sell property or land to help meet a 1bn bill for equal pay claims Birmingham City Council may have to sell property or land to help meet a 1bn bill for equal pay claims

The country's biggest local authority is considering selling land and property to help pay a £1 billion bill for settling thousands of equal pay cases.

Birmingham City Council has agreed settlements with female staff including home care workers and school cooks who were paid less than men for work of equal value.

Some men have also been included in the payouts, while claims are still being submitted.

There has been speculation that landmark buildings such as the NEC could be sold, but council sources said this was not specifically linked to the equal pay settlements.

The council has borrowed money but the Department for Communities and Local Government will not allow it to borrow any more.

A council statement said: "The council has disposed of assets to the value of £76 million over the past two years, largely consisting of surplus land and office accommodation plus right-to-buy sales of council housing.

"The forward programme is likely to include further identification of surplus land and property, a review of our commercial and retail holdings and a review of income-generating assets such as car parks and commercial leases.

"These reviews should be seen in the context of the wider budget challenges faced by local authorities including the financing of equal pay liabilities.

"The review of the NEC group however is prompted by the need to invest and diversify the business to enable its amazing success to be a platform for international expansion and growth."

Chris Benson, from law firm Leigh Day, which represents more than 5,000 women who are taking equal pay claims against local authorities, including Birmingham City Council, said: "There are a number of ways in which Birmingham could have avoided owing these huge sums of money. They could have settled with the workers they underpaid instead of paying London lawyers to defend the indefensible for two years.

"They could, of course, have paid the women fairly at the time, as other councils did.

"Instead they are now left with so much to pay as they owe these women many years of wages, with interest on top.

"They could have also stopped paying the men bonuses sooner. We showed that, even when they knew they had a problem, they still tried new pay systems that contrived to pay the men more.

"If they had only paid their female workers the same as the men, this would never have happened."

Labour MP Gisela Stuart (Birmingham Edgbaston) told the BBC Radio 4 Today programme: "I am enormously sad that we ended up in this position. But if you were the leader of Birmingham City Council at this point, you have inherited the legacy of a huge legal bill, you are facing a situation where some of your basic services can no longer be delivered because of the funding formula, what is the only thing you can do?

"I think, with a very heavy heart, you face up to the fact that you are caught between a rock and a hard place and you get the best deal to settle what was a liability that should not have occurred.

"The previous Tory-led council could have settled. They kept challenging the court decisions time and time again.

"However, I think it is the right thing for the current council to face up to the problem, do the right thing, and get Birmingham back on a viable and financially-sustainable basis.

"If you look at the financial situation of a city that is heavily dependent on central government grants which are being curtailed at every step, we have to find enormous savings - something like £800 million until 2018 - together with that legal bill. If the only way they can do the right thing is to sell some of their assets then I think their duty now is to get the best price."

Brian Strutton, national officer of the GMB, said: "Birmingham City Council has spent years and of millions of pounds of taxpayers' money trying to avoid the legal obligation to give their female staff equal pay.

"GMB has taken thousands of cases against Birmingham who have so far paid out £500 million in settlements and has about the same amount still to pay.

"The council has had an outstanding commitment to sort this out since 1997 and if they had paid up earlier they would not be in the mess they are in now.

"Sympathy should lie not with the council but with the women who have been underpaid for so long and with the local community who may well see their assets sold off to pay for Birmingham City Council's mistakes."

Heather Wakefield, the Unison union's head of local government, said: "The devastating Government cuts to Birmingham City Council budgets and the city's failure to comply with equal pay legislation over many years has created a perfect storm.

"This is what's leading to the potential sell-off of public assets like Birmingham's NEC, which is a high price to pay for local residents to pay, as they will lose a valuable revenue stream.

"It is ridiculous that, more than 40 years since the Equal pay Act came into force, the union is still fighting equal pay claims on behalf of women members.

"The total bill that councils have paid to women in England, Wales and Northern Ireland to settle these claims, and in paying for expensive London barristers, has cost £3 billion - money that should have been put into creating a fair pay system many years ago.

"Birmingham City Council should have accepted that the law must be followed but instead the former Tory controlled council chose to waste time and local taxpayers' money resisting the law."

Local Government Minister Brandon Lewis said: "Local authorities agreed to deliver pay equality way back in 1997 and the majority of councils have achieved that.

"Birmingham City Council dragged its feet, and it only has itself to blame for these legal liabilities. There can be no blank cheque from national taxpayers to bail out the council, given most other local authorities resolved these issues years ago.

"However, we have taken steps to allow councils to use receipts from the sale of assets to fund their outstanding costs."

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