The TaxPayers' Alliance - Burning our Money

Council Spending Uncovered No. 5: The Ten Percent Challenge

• TAXPAYERS' ALLIANCE THROWS DOWN GAUNTLET TO COUNCILS
• WITH SIMPLE AND MODEST SAVINGS COUNCIL TAX CAN BE CUT BY 3.5%, WHICH IS £40 OFF THE AVERAGE BAND D BILL
• INDIVIDUAL DETAILS FOR HUNDREDS OF COUNCILS SHOWS SIMPLE SAVINGS IN PUBLICITY, MANAGEMENT AND PENSION COSTS

Ahead of the local elections on May 1st, this fifth Council Spending Uncovered paper brings together the previous papers which revealed large amounts of spending poured into publicity, middle and senior management and gold-plated pensions, and issues councils of all parties across England and Scotland with a simple challenge:

If councils cut publicity, management and pension costs by just 10 per cent, they can cut council tax by an average of 3.5 per cent, or around £40 off an average Band D bill.

This is the TaxPayers' Alliance "Ten Per Cent Challenge".

KEY FINDINGS:

• In 2006-07, councils in England and Scotland spent over £400 million on publicity, £1.9 billion employing managers earning over £50,000 and over £4.3 billion on employer pension contributions. The total of the three expenditures is therefore £6.6 billion.
• Saving just 10% on those three areas alone would therefore reduce expenditure by £660 million.
  In the same year, council tax collected in England and Scotland totalled £18.7 billion (excluding Fire and Police precepts). Saving £660 million from that total would allow councils to reduce council tax by 3.5%.
• The average Band D council tax bill in 2006-07 (including both the district and county council where relevant but excluding the GLA and Fire and Police precepts) was just over £1,100. A 3.5% reduction would equal around £40.

The full report, which can be found here, provides detailed breakdowns for the savings that can be made by each local authority in England and Wales.

Matthew Elliott, Chief Executive of the TaxPayers’ Alliance, said:

“Council tax has doubled in the last decade and is now so high that it tips many families and pensioners over the edge.  But it doesn’t have to be that way.  Local authorities of all parties could make meaningful council tax reductions if they saved a modest 10 per cent in these three non-priority areas.”

Andrew Allum, Chairman of the TaxPayers’ Alliance, said:

“These 10 per cent savings could easily be achieved if local authorities focused resources on the real priorities.  We hear repeatedly that councils are cash-strapped, but there is a lot they can do to reduce costs, cut council tax and better serve their local residents.”

COUNCIL SPENDING UNCOVERED NO.3: PENSIONS

INDIVIDUAL DATA PROVIDED FOR EVERY COUNCIL IN THE UK

Download Council Spending Uncovered No. 3: Pensions (PDF)

• £1 in every £5 of council tax spent on local government pensions
• 2006-07 saw a 13% rise on 2005-06
• Average council spends £10 million a year on pensions
• Total bill for Local Government pensions is £4.6 billion

The first two papers in the Council Spending Uncovered series - which investigates wasteful and frivolous town hall spending - revealed a £450 million local government publicity machine and that £1 in every £11 of council tax is spent on middle managers' pay. This third paper examines local government spending on pension contributions, which again is recorded in the annual accounts of councils across the country. Those accounts reveal the shocking burden of gold-plated local government pensions, and detail both that spending and how it is growing for every council in the country.

Public sector pensions are of course a controversial topic, but one that must be urgently confronted in order to avoid a future crisis. Against a general climate of demographic change and pension funding concerns, public sector pensions are particularly an area of risk to taxpayers due to their extremely generous nature and often unfunded liabilities. Local Government pensions are no exception. Given that pensions are supposed to provide security for our future it is a worrying irony that, unless urgently reformed, public sector pensions pose a serious risk to our financial wellbeing.

To improve the situation, the TaxPayers' Alliance calls: 1) for each council to cease the payment of added years benefits to staff who retire early; 2) for councils to collectively campaign for national reform of the pension scheme; 3) for Hazel Blears, Communities and Local Government Secretary, to reform the Local Government Pension Scheme.

Key findings

• In 2006/07, the average local authority spent £10 million on pension contributions every year, which is a 13% rise on 2005/06.
• The total bill for Local Government pensions is £4.6 billion a year.
• £1 in every £5 of council tax is spent on pensions.

Andrew Allum, Chairman of the TaxPayers’ Alliance, said:

“It’s unacceptable that ordinary families and pensioners who struggle to pay inflated council tax bills see so much of their money spent on gold-plated council pensions that have all but disappeared in the wider economy.  With pension costs jumping 13 per cent in one year, the problem is clearly getting worse and requires urgent attention.  Councils should start correcting their own behaviour immediately, and the Government must face down union pressure and reform the outdated local government pensions scheme as soon as possible.”

It should be noted that:

- There has in the past been significant controversy over how much council tax is spent on pensions. Council tax is not the sole source of income for councils, nor is it earmarked for pensions, but all spending comes from the same pot - any savings made could be used to reduce council tax.

- The overall terms of the Local Government Pension Scheme are set by national Government, which is why we urge Hazel Blears to carry out radical reform of the scheme. That does not absolve councils from blame, however, as each has the opportunity to reign in their payments and to lobby the government for reform.

- Frustratingly for those who believe in accountability and transparency, local authority accounts can differ between councils and over time. That said, this is the most comprehensive and up to date study of the issue.

Council Spending Uncovered 2: Middle Management Pay

• Average local authority employs nine times as many people on £50,000-plus packages as ten years ago, an increase three times larger than growth in the wider economy.
• Average local authority spends £4 million on employing people earning over £50,000.
• The total bill is almost £2 billion - almost £1 in every £11 of total council tax revenues.
• 12,600 local council officials earn as much or more than an MP's salary of £60,277.

The first paper in the Council Spending Uncovered series – which investigates wasteful and frivolous town hall spending – revealed a £450 million town hall publicity machine.  This second paper examines the increase in town hall spending on middle and senior managers – those being paid at least £50,000 per annum. Local authority accounts reveal that over the past decade councils have hired a new class of middle and senior management and then increased their pay and benefits packages much faster than the economy-wide average.

It is of course quite normal that wages should increase above the rate of inflation in a growing economy, and, over time, we would expect more people to earn £50,000 and above.  But the increase in the number of local authority employees being paid more than £50,000 per annum has been phenomenal, far outstripping the rate of increase in the economy as a whole.

Key Findings:

• The average local authority is employing over nine times as many people on £50,000-plus packages as ten years ago – 66 people in 2006-07 compared with 20 people in 2001-02 and 7 people in 1996-97.
• By contrast, in the economy as a whole, the number of people earning more than £50,000 has increased by less than three times over the past ten years.
• The average local authority spent over £4 million employing people on £50,000-plus remuneration packages last year. 
• The total bill for council middle and senior managers on £50,000-plus remuneration packages was almost £2 billion last year almost £1 in every £11 of total council tax revenues.
• The remuneration of local authority middle and senior management is racing past that of MPs.  There were 12,600 local authority middle and senior managers being paid at least £60,000 last year – equal to or exceeding the £60,277 salary of MPs in November 2006.

Matthew Elliott, Chief Executive of the TaxPayers’ Alliance, said:

“With council tax doubling in the past decade, it’s extremely disappointing that town halls have chosen to hire a new class of middle managers, many of whom are being paid more than MPs.  Local authorities should study these findings carefully to see where savings can be made, instead of using their half billion pound PR machine to obscure their finances from taxpayers.”

Download Council Spending Uncovered, No. 2: Middle Management Pay (PDF)

Corin Taylor talks to PR week about council publicity spending

This clip, from Friction TV, has the first five minutes. The full video is here.

More money wasted on waste at Tower Shamlets

Early this year we released our Town Hall Rich List which showed that Tower Hamlets, one of the poorest boroughs in the country, had 27 employees earning more than £100,000 a year. One of those 27 individuals was a Mr Alex Cosgrave, who earns £148,173.38 as Corporate Director of Environment and Culture.

According to the council recycling league tables announced today, which name Tower Hamlets as the worse council in the country for recycling, Mr Cosgrave is not exactly providing the service local taxpayers must expect for forking out that much each year for his services. This is despite the fact that the council has spent £3.5 million in the last year alone attempting to expand its services, including council workers "doorstepping householders to encourage them to be greener" and local mosques "encouraged to spread the word at prayers."

Not only that, but the council proudly announces that it offers £50 vouchers to 10 properties each month who dispose of their rubbish in a manner the council deems fit. Clearly all this taxpayers’ money that is being thrown around by the council is not working, so predictably there is talk of wasting yet more money. Apparently central government is thinking of wading in to increase recycling in Tower Hamlets - "In 2006 the government threatened to send in a recycling "hit squad" to Tower Hamlets."

At this rate, it won’t be long before government starts doling money out to people who monitor their neighbour’s recycling patterns and then run off to the local council office to snitch on them.