Agenda item

The People, Performance and Development Committee is invited to recommend the revised Pay Policy Statement for 2017/18 to the next meeting of Full Council on 5 December 2017 for publication on the Council’s external website.

The People, Performance and Development Committee is the Council’s remuneration Committee and so this report has been brought for consideration by Members in accordance with the Scheme of Delegation.

Declarations of interest:

None

Witnesses:

Ken Akers, Head of HR & OD

Jonathan Essex, Local Member for Redhill East

Key points raised during the discussion:

PPDC considered a motion submitted by Mr Jonathan Essex, Local Member for Redhill, which had been referred to the Committee by Full Council at its meeting on 10 October 2017. The motion referred to PPDC is attached to these minutes as Annex 1. Mr Essex read the following statement in support of the motion:

 ‘Thank for the opportunity to present this motion today to propose that Surrey County Council formally review and set a target for a maximum pay ratio between the Chief Executive and lowest paid. I suggest supporting for this motion for two reasons:

Firstly, there is a lot of support for introducing pay ratios into pay structures, in addition to reporting the current pay ratios, as set out in item 7 of this agenda. For example, the head of research and advocacy for the Chartered Management Institute says that pay ratio targets should be set. And our Prime Minister, Teresa May promised to make companies publish their pay ratios in July. While this is nothing like the pay ratio differences in the private sector (in August the Financial Times reported that the average pay of chief executives of Britain’s biggest listed companies fell by nearly £1m, to £4.5m, in 2016) surely there should be an equal focus on public sector pay. This would be a sign that we as a Council wish to signal to Teresa May that she should honour the manifesto and introduce a bill to reform executive pay.

Secondly, this is a good time for us to review pay ratios and commitments as we seek to balance our budget in Surrey. Derby County Council have removed the post of Chief Executive entirely in their efforts to balance their council budget. However, what is proposed here is not the removal of this post but a reassessment of pay ratios through adopting a policy for this. Especially as we are currently recruiting for a new Chief Executive Officer - while at the other end of the pay scale Surrey County Council recently advertised for new staff to join as an apprentice working in the Chief Executive’s Office at around £11,000, as set out in Annex 1, Table 6 of this report. And Surrey is currently recruiting full time apprentice roles to work in the Blue Badge Customer Relations Team at the same level, around £6.11 per hour.

So how does Surrey stack up now in terms of pay ratios? Surrey County Council’s pay ratio from lowest to highest salary was reported as having recently rose – from 15:1 in 2015-16 to 16:1 last year and 15:1 again this year. But this reports the minimum Surrey pay as some £4,000 above what appears to be the minimum Surrey pays, to apprentices, who are not featured on our pay scale. Comparing it to the lowest advertised post the current Surrey County Council pay ratio is just over 20. The Greater London Authority have committed to reducing the difference in pay between the lowest and highest paid staff to no more than 20 times, with a long term goal of no more than 10 times” with all staff, contractors and interns paid at or above London Living Wage of £9.75 an hour.

I looked to see the situation at other big county councils. For Essex the reported pay ratio is 13.5. For Kent it is 13. We look like we are on the high side. This suggests that a pay ratio policy may add value.

In closing, this motion aims to place before council to set out what the council’s target in this areas is and therefore this is opportunity for show leadership in this area. I urge you to support the motion, and look forward to the debate.’

1.    Members enquired as to why Mr Essex felt that apprentices should be considered  as part of the pay ratio. Mr Essex stated that he believed apprentices should be included within the calculation to determine SCC’s pay ratio due to the fact that they fill a fulltime equivalent post, are employed on a contract by SCC and that they had to live on the salary that they received by the Council the same as other staff members. He highlighted that the SCC may not have employed apprentices when legislation on pay ratios was first introduced but indicated that not factoring them in calculations meant that SCC had not determined an accurate figure in relation to its pay ratio.

2.    The Committee discussed the practicalities of including the salary award for apprentices within SCC’s published pay ratio. Members highlighted that including apprentices’ salaries within the pay ratio would put it outside the legal parameters set by Government meaning that it would be necessary to either reduce the pay that SCC was able to offer its Chief Executive or increase the salary for apprentices. Mr Essex was advised that PPDC had had a lengthy conversation following the announcement made by the previous Chief Executive of his intention to retire and had unanimously agreed that having a Chief Executive was fundamental to the effective functioning of SCC particularly in such challenging times. As such it was necessary to have a benefits package that would attract top talent to apply for the role of Chief Executive vacancy.

3.    In terms of increasing the pay awarded to apprentices, Members indicated that it would not be possible to incorporate the cost of implementing this within SCC’s staffing budget and would ultimately mean staff redundancies. The Committee also highlighted that SCC commits £2.9m annually to the Apprenticeship Levy. Mr Essex was informed that SCC had published its pay ratio for a number of years and that this had fluctuated over time but had always remained within the legal parameters and had rarely been lower than the ratio outlined in the Pay Policy Statement which PPDC was being asked to approve.

4.    Mr Essex stressed that he fully supported PPDC’s assessment that it was necessary for SCC to have a Chief Executive and recognised that the Council was legally compliant regarding its published pay ratio but suggested that the Committee may wish to introduce its own policy or benchmark in regard to the difference between the salary awarded to the Chief Executive and the lowest paid within the organisation.

5.    PPDC Members rejected Mr Essex’s proposal for SCC to introduce an aspirational policy in regard to its pay ratio. The Committee instead agreed that the report recommending the Pay Policy Statement to Full Council should state that the Council’s pay ratio is in accordance with the outcomes of the Hutton Fair Pay Review and is within the legal parameters set out by Government.

Mr David Hodge left the meeting at 2.48pm

6.    Discussion turned to the Pay Policy Statement and Members sought clarity on the definition of a Chief Officer as detailed within the Statement. Officers indicated that chief officers were those who reported directly to the Chief Executive or to a strategic director and advised that this definition had not been incorporated within the Pay Policy Statement as it was determined by SCC’s Constitution and governance arrangements which are independent of its pay arrangements. The Committee agreed that for the purposes of clarity a definition of a Chief Officer should be included within SCC’s Pay Policy Statement.

7.    Members reviewed the Pay Policy Statement and requested a number revisions ahead of it being submitted to Full Council for approval  at its meeting on 5 December 2017.

Mr David Hodge returned to the meeting at 2.58pm

8.    Information was sought on how the Trade Unions had responded to SCC imposing the 2017 Pay Settlement. The Committee was informed that the response from Trade Unions had been muted despite UNISON Members having initially rejected the Settlement. Officers stated that there had been some reaction by staff on the Council’s internal discussions forums but these had been responded to by members of the HR Team.

9.    PPDC requested a report detailing the number of pay policy exceptions awarded to Council staff in the financial year 2017/18. Officers suggested that this information should be reported to the Committee at an appropriate time following the end of the financial year and it was agreed that the Committee would consider details and analysis of pay policy exceptions for the financial year 2017/18 at its meeting in April 2018.

10.  A Member of the Committee highlighted concerns regarding dissatisfaction among some staff within the Adult Social Care Directorate in relation to the new appraisal framework that had been introduced by the Council. The Head of HR & OD indicated that he had had a conversation with the Strategic Director of Adult Social Care & Public Health to understand the concerns of staff within this Directorate. He highlighted that managers within the Directorate had been restrictive in the way in which they had judged staff members against the performance criteria outlined within the appraisal framework particularly during the moderation process. This had led to very few ‘Exceptional’ ratings within the Directorate and had been the source of this dissatisfaction. The Committee was advised that it would take time to embed the new appraisal process but work would take place with managers to enable them to strike the right balance and support the aspirations of staff. The Head of HR & OD indicated that he would have a further conversation with the Strategic Director of Adult Social Care & Public Health following which he would advise the Cabinet Member for Adult Social Care as to the outcomes of this discussion.

11.  Members stated that the Committee was being asked to give its approval to the Pay Policy Statement quite late in the year and asked that it be brought earlier to the Committee in future years to ensure that SCC does not fall foul of its legal requirement to produce a Pay Policy Statement. Officers indicated that the delay in bringing this item to the Committee had arisen due to negotiations with Trade Unions who had contended some aspects of the Pay Settlement for 2017. The Committee was further informed that the Statement was accurate up until the October pay roll and so SCC had remained compliant with its duty to publish a Pay Policy Statement.

12.  Concerns were raised regarding the possibility of a mandated pay rise for public sector employees being included within the 2017 Autumn Statement to be delivered by the Chancellor on 22 November as this would add significant pressure to the Council’s budget for staff salaries.

Actions/ further information to be provided:

1.    Report recommending the Pay Policy Statement to Full Council to state that the Council’s pay ratio is in accordance with the findings of the Hutton Fair Pay Review and is within the legal parameters set out by Government.

2.    SCC’s Pay Policy Statement should include the definition of a Chief Officer.

3.    The Committee to receive a report analysing data on pay policy exceptions for the financial year 2017/18 at its meeting in April 2018.

RESOLVED:

That the People, Performance and Development Committee are asked to recommend publication of the Pay Policy Statement to the next Surrey County Council Full Council meeting on 5 December 2017.