Councillors Allowances and Expenses - LGIU

The information below relates to District and County Councils. However, 
the Chairman of Farcet Parish Council does get reimbursed for any
expenses incurred whilst carrying out his duties as Chairman.
The present Chairman claims no allowances. The amount and the way it is paid will be reviewed annually.

The Councillors are reimbursed for travelling to training or meetings
or items purchased on behalf of the council. However, they do not
have an allowance paid to them .
 

LGIU Local Government Information Unit

Independent Intelligent Information

Councillors Allowances and Expenses (LGiU)

1/6/2009

Author: Tracy Gardiner

Reference No: PB 2204/09L

This covers: England

Overview

Allowances and expenses are subject to a great deal of public interest
given the furore over MPs' expenses. In comparison, local government
has particularly rigorous standards of transparency and accountability.
Councillors must enter on a public register all their financial and other
outside interests. They must also declare their interest in any item to
be debated in council or committee. The rules on what councillors
may claim in expenses and allowances are set by an independent
panel. No councillors can sit on this panel but they can be called to
give evidence.

All councils publish their members' allowance scheme setting out
the allowances members are entitled to receive and what expenses
they are able to claim for. Most allow councillors to claim for some
travel, subsistence, meals and accommodation when away from
home when it is required for council approved duties. There are
strict rules about this. The total amount of allowances claimed by
each councillor are published annually by the council in the local
newspaper.

While serving as a councillor an individual is restricted from being
employed by the council. They are also restricted from being
employed by the council for a period after they are no longer a councillor.

Being a councillor is not necessarily a full-time role and many continue to
work in addition to being a councillor. They may hold other public
body positions for which they may receive income. However, there
are strict rules about declaring any interests.

Councillors do not receive severance pay at the end of their term of office.

Some councils have devised ways to allow the public to hold
councillors to account and ensure value for money in return for the
allowances they receive. Some have developed role descriptions
defining what is expected: they may also collate and publish attendance

at meetings records, and require councillors to report on their activities
 regularly and systematically. Several councils have introduced a
clawback scheme where councillors who fail to perform adequately
are asked to return some of their allowance(s) and their

expenses.

Who decides the level of allowances and expenses

Local authorities in England are required to set up independent
remuneration panels (IRPs) to review and make recommendations on
councillors' allowances. The panel must consist of at least three people,
none of whom may be a member of the local authority in question, or its
committees, or an employee of the council. Government guidance suggests
ways of selecting a panel and that care is taken to ensure the independence of

the panel and the public perception of its independence. The panel's
recommendations may remain in place for up to four years, after which
the allowances scheme should be reviewed by the panel. The panel is
also required to meet whenever the council decides to amend its allowances
scheme.

Authorities are not obliged to accept and implement their panel's
recommendations (except on the issue of pensions: when a panel determines
an authority should not permit members to join the Local Government
Pension Scheme, its decision is binding). The allowances scheme is an issue
for all councillors and must be voted on by the full council.

Publicising the allowances' scheme

The council must advertise the scheme which it adopts and publicity
must be given to the recommendations of the panel. The publicity
 must specify the main features of the scheme and describe the
responsibilities which attract a special responsibility allowance.

Government guidance suggests the information should be published
on the authority's web-site, in at least one local newspaper and in
the authority's own newspaper, if it has one. As the scheme must be
adopted by full council it is subject to public scrutiny and media attention.
The council must also publish the actual amounts paid to its councillors

in any given year and total sum paid by it to each member in respect of
basic, special responsibility and childcare and dependent carers' allowances.

What allowances can be claimed

The Local Government Act 2000 and the consolidated Members'
Allowances Regulations of 2003 enables a panel to consider the
following allowances:

• Basic allowance

• Special responsibility allowance

• Dependents' carer's allowance

• Pensions for members

• Travel and subsistence allowances

• Co-optees allowances

• Provision for suspension of allowances under certain circumstance

• Suitability of an index for allowances and what that index may be.

Variation in allowances schemes

The ability to tailor schemes according to local circumstances has
led to a wide variety in

the levels and types of allowances being paid to elected members

The IDeA's 2006 annual survey of member allowances for all
English local authorities provides the most up-to-date comprehensive
information. A further survey carried out by the IDeA in 2008 remains
unpublished. It is expected after the June election period. The 2006
survey data shows some interesting features from which the following
highlights have been extracted:

Average allowances paid in English local authorities by type

£5,648 £16,356 £9,243 £5,686

Council type

Basic Leader's Cabinet Scrutiny Planning Chairs

allowance SRAs* SRAs* Chairs Chairs SRAs*

SRAs* SRAs*

London £9,227 £31,784 £17,634 £10,738 £9,978 £8,066

Boroughs

Met Councils £9,512 £25,690 £12,161 £8,394 £7,787 £6,001

Shire Counties £8,941 £25,665 £14,912 £9,929 £6,070 £4,074

Shire Districts £3,991 £11,065 £5,944 £3,721 £3,824 £3,034

Unitarities £7,406 £20,338 £11,748 £5,311 £6,962 £5,818

All types

£5,172 £4,064

*These special responsibility allowances are paid in addition to
the basic allowance. Source: 2006 Survey of Members' Allowances
 (LGAR, 2007) In summary, the survey shows that the average
members' basic allowance is £5,648 and that this has increased by
9% on average since 2004. London Boroughs as a whole continue
to provide the most generous allowances while shire districts
continue to offer significantly less recompense for their members.

According to the last available data, Dr Declan Hall at the Institute
of Local Government Studies (Inlogov) found that on average the
leader's allowance roughly equates to 3 times the average basic
allowance, while a cabinet member's allowance is approximately

60% of the leader's allowance and the allowance for an overview
and scrutiny chair is approximately the same as a basic allowance.

Basic allowance

All members of an authority are entitled to a basic allowance.
The data shows that the highest basic allowances are received
by metropolitan councillors with the lowest by district councillors.

There is a great spread between the amounts of basic allowance,
even among similar types of authority. The highest basic
allowance in 2006 was afforded to Birmingham City Councillors
who received £15,147. The lowest basic allowance for a metropolitan

authority was in neighbouring Solihull at £6,613. The lowest basic
allowance was for South Ribble at £1,500.

Special Responsibility Allowances

Special responsibility allowances recognise that some members,
usually those on the executive or who chair council committees,
will spend more time on council work. Many of these members will
spend in hours what amounts to a full time job on council business

and it is unsurprising that the allowances for directly elected mayors
and leaders are the most significant.

Directly elected mayors are most often the members who receive the
highest remuneration and the highest paid of these are significantly
better paid than many council leaders elected by the council. There
seems to be some consensus that the nature of the post of directly
elected mayor is seen as a full time post which may require an

allowance similar to a professional salary. Both the directly elected
mayor of Newham and the Leader of Birmingham City Council
receive an allowance of £67,227, similar to the pay of a backbench MP.

Dependents' carer's allowance

This allowance assists members by covering the cost of employing
another person to undertake their caring responsibilities while they
attend meetings. The number of authorities offering this support to
members with caring responsibilities has increased to 84% of councils.
Many authorities also make a distinction in the amounts that may be

claimed for childcare as opposed to other dependents' care. Payments
usually vary between £5 and £7.50 an hour. Only two-thirds of councils
offer a childcare allowance, usually between £5 and £6 per hour.

The survey does not reveal the extent to which this allowance is being
used - and anecdotal evidence tells us that while many more authorities
are offering this allowance they have a membership that rarely makes
use of it, even where councillors may have caring responsibilities for
dependents. The number of councillors who have caring responsibilities
is decreasing and this is the group least likely to stay as elected

representatives. Councillors cite caring responsibilities as the second
biggest factor affecting their decision to stand down. Councillors from
ethnic minority backgrounds have a significantly higher proportion of
caring responsibilities.

Pensions

Less than half of authorities offer their councillors access to the
Local Government Pension Scheme (LGPS) despite 60% of
independent remuneration panels recommending that members should
be eligible to join. Only two of the authorities who responded to a survey
restricted membership of the scheme rather than making it available to
all members. A further three decided to permit only the basic allowance to

be pensionable rather than the basic and special responsibility allowances.

It is interesting to note that when questioned in 2004 in a survey by the
Local Government Employers organisation, of all the 4311 councillors
who were both eligible to join and whose authorities had made the
scheme available to them, only 912 had decided to join the LGPS.
In 2008 this figure rose, with 1090 councillors joining. among 4062
who were eligible to do so. Pensions have been taken up by less than 5%

of the approximately 20,000 councillors in England. Despite some
authorities allowing members to join there may be little incentive for
those on low levels of members' allowances to enter into the pension
scheme.

Tax and benefits

Councillors' allowances and expenses are subject to the normal
taxation rules for the public in general. Councillors may claim exemption
for tax only where the expenses actually incurred were wholly, exclusively
and necessarily in the performance of their official duties. This is in contrast
to the allowances paid to members of the House of Lords for example,
which are free of tax, and are regarded as an allowance which

contributes to the democratic process.

Councillors' allowances are taken into account and treated as income
by the DWP when considering means-tested benefits. The rules on
benefits are complex and vary according to the benefit: the effect of
these rules can be that councillors lose their entitlement to benefits if
they are in receipt of allowances. The DWP may deduct

legitimate expenses from a member's allowances when assessing a claim.

The LGiU has published a revised edition of its best selling guide
Councillors' Tax and Benefits 2009 which offers guidance to councillors
and their advisers in an easy to read plain English format.

Comment

The issue of Members' allowances continues to divide opinion. Some
believe that all councillors should be regarded as volunteers, and as
such receive relatively little Allowance or remuneration. Magistrates
and school governors do not receive allowances, although both may
 claim expenses and magistrates may claim for financial loss. Others
believe that a more enabling approach would be to set allowances
at a level which would enable people to stand who might not otherwise
be able to do so, as a living wage is essential to allow anyone without
independent means to serve as a councillor. Other public bodies pay
a range of salaries, including primary care trusts, regional

development agencies, and police authorities.

Attracting potential candidates to stand for election is not solely
linked to the issue of remuneration as few people become a councillor
for the financial rewards. Other factors such as a general lack of public
understanding of the role of councillors, the time taken to perform the
role, a lack of appreciation, and lack of confidence in local authorities all

hamper the ability to recruit new potential councillors. Some have
argued for additional special allowances aimed at attracting and retaining
under-represented groups. The framework in which councillor allowances
operate is subject to a high degree of transparency and accountability.
Nevertheless, there are improvements which could still

be made.

The publication of actual allowances paid to each member is
something which all authorities are required to do. The public may
wish to have further detail in respect of publishing the totality of allowances
and expenses, such as claims for subsistence and travel expenses, pension
contributions, provision of telephones and IT equipment and so on.

The great degree of variation between authorities (even those of a
similar type) in allowances adds to the confusion in the public's
understanding of the councillor's role. Some of the public believe that
all councillors are in receipt of large allowances and are shocked when
they learn that the typical allowances are so modest. When informed

about the true level of allowances, most members of the public in
employment say that it is not a sufficient incentive to become a councillor
and that the allowances paid are not reasonable.

A national independent panel for England would solve the current
 inconsistent and confusing approach. It would have responsibility
 for determining the principles of the allowances scheme, deciding a
reasonable rate for the role and communicating how it has come to its
recommendations to the public. It would also have the advantage of

having local councils time and money as the cost of running each IRP
is estimated on average at the equivalent value of two elected members'
allowances for each authority. If a national IRP were to be set up it
would call for evidence from councils and the public.

The national IRP's recommendations would allow for local / regional
variations to be taken into account as well as differences in types
of authority. In practice, no legislation

is necessary for local authorities to co-operate in establishing a joint
or a national IRP. The London Boroughs have successfully established
a single IRP for many years. The publication of a national survey of
councillors' allowances is important in establishing the benchmarks for
what authorities are paying their councillors. This briefing has relied

on data published in 2006. Since that time authorities will have amended
their schemes and the figures quoted provide a useful retrospective of the
recent period rather than an up-to-date analysis. When the comparative
figures become available, the LGiU will update this briefing.

References

Haberis, A. and Prendergrast, J. (2007), Research Report 1 Incentives
and Barriers to Becoming and Remaining a Councillor: a Review of the
UK Literature, DCLG, London

Hands, D., Taylor, S., Featherstone, R. and Bovaird, T. (2007)
Understanding the barriers and incentives to becoming and remaining a
councillor in England, London, Councillors Commission.

Hall, D, and Brooke, R (2007) Members Remuneration - Models,
issues, incentives and barriers, London, Councillors Commission.

Local Government Analysis and Research - LGAR (2007) 2006
Survey of Members' Allowances Local Government Association
and Improvement and Development Agency, London

Local Authorities Regulations (Members' Allowances) (England)
(2003) Statutory Instrument 2003 No. 1021 HMSO, London

Local Government Employers (April 2004), Pensions for
Councillors, Circular 155, London

Local Government Employers (Dec 2008), Pensions for
Councillors, Circular 222, London  

Local Government Information Unit - LGiU (May 2009),
Councillors' Tax and Benefits, London

Local Government Information Unit - LGiU (May 2005),
Don't make allowances - Let's reward our councillors, Perilous
Democracy Factsheet Series, London

Local Government Information Unit (2003), Reviewing
Members' Allowances Policy Briefing 155-03, London

Local Government Information Unit (2004), Members'
Allowances 2004, Policy Briefing 136-04, London

Office of the Deputy Prime Minister - ODPM (2003)
Guidance on Consolidated

Regulations for Local Authority Allowances in England,
HMSO, London

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