Setting an example on pay

It’s ironic that, despite the Coalition Government’s deafening silence on the pay of bankers, they have been very quick to raise the temperature on public sector pay. Plenty of accusations of fat cat public sector managers have been thrown around by Ministers who have been far less condemnatory of the telephone number salaries of those in the private sector. 

Labour values give us a desire to increase the standard of living for everyone but in tough economic conditions we have to make difficult choices. As the largest employer in Newcastle, the Council has a major influence on the economic wellbeing of the city, and can have a direct impact on levels of inequality. We want to do all in our power to make Newcastle a fairer city. Over a number of decades income inequality in the UK has increased and pay inequality has become a national issue.

At a recent policy Cabinet meeting local people made it clear that inequality is an issue of concern in our City today. And instead of just talking about the issue, we are acting to close the gap between the lowest paid and the highest paid within the Council.

We are doing this because, while pay is important to individuals, it is fairness of pay overall which is of most importance. The Council’s ratio of pay at the top to pay at the bottom is currently 1:13. This is below the national average of 1:15 in the public sector and 1: 262 in the private sector. We are committed to further reducing this ratio where possible in the future, by introducing a Living Wage to boost the pay of those who are on the lowest salaries. Not only is this a way of helping people at a time when living costs are escalating, it’s a great way of making sure more money goes into the local economies where such low paid workers live.

What the debate has revealed in Newcastle, however, is that average Council pay is lower than that the average pay of the city as a whole. Many staff I have spoken to about this say that pay is only part of the reward for working at the City Council. The Council offers a whole range of benefits including family friendly and flexible working, learning and development opportunities, holiday buy-back, alongside schemes such as car and bike salary sacrifice arrangements. Many people choose to work in the public sector because they believe in public service and pay is only one element of their remuneration, alongside job satisfaction.

This week I am delighted to publish our pay policy, and in doing so make a firm statement about our commitment to reducing inequality and how we are leading by example in the way we run the Council. But the danger is that those organisations who are most open about their policies come under the greatest scrutiny. We need a national debate around the most appropriate way to judge pay and remuneration, according to responsibility and job satisfaction. A greater understanding of the pay differentials that operate in different sectors is a good place to start.

Nick Forbes is the Leader of Newcastle City Council