Birmingham City Council has finally agreed to settle equal pay claims going back decades – with suggestions the bill is lower than feared.
The Labour-run authority declared itself effectively bankrupt last year, partly because of cases brought by two trade unions.
Liabilities covering around 6,000 workers had been estimated at £760million, but the final deal is reported to be significantly lower at between £300million-£400million.
However, there seems little chance of local residents being spared more pain. Council tax is due to rise by 9.99 per cent for the second year running in April, while deep cuts are being made to services.
Councillor John Cotton, the council leader who was handpicked for the role by Keir Starmer, said: ‘This framework agreement marks the end of an intense period of dialogue between the council and its unions.
‘It is an important step on the council’s improvement journey. I would like to put on record my thanks to GMB and Unison for the constructive way in which they have approached these negotiations.
‘I was appointed as leader to end the failings within this council that led to the equal pay liability and this framework agreement is intended to mark the start of a new era of productive and progressive industrial relations built on trust and mutual respect.’
The Labour-run council declared itself effectively bankrupt in September last year after identifying equal pay liabilities estimated at £760million.
Birmingham City Council has finally agreed to settle equal pay claims going back decades – with suggestions the bill is lower than feare
Councillor John Cotton, the council leader who was handpicked for the role by Keir Starmer, said the settlement was an ‘important step’
Earlier this year it was said to be on a ‘narrow path to financial sustainability’ depending on budget cuts.
Mr Cotton acknowledged that the council is facing ‘unprecedented challenges’ and said it ‘will only get through this period by working collaboratively with its staff and their union representatives to focus upon delivering the best possible outcome for communities across the city’.
‘The next phase of the equal pay programme will be to deliver a new pay and grading model and job evaluation scheme so that pay inequality at the city council can end once and for all,’ he said.
In June 2023, the council said it had already paid out £1.1billion to settle equal pay claims over the previous decade.
As of March last year, the council estimated that equal pay liabilities still current were in the region of £650million-£760million, with ‘this liability continuing to accrue at an estimated rate of between £5million and £14million a month’.
However, the BBC said the final figure is closer to £300million-£400million.
The reduction is not expected to affect the wider budget cuts and tax rises, but could mean the council has to sell off fewer assets to balance an emergency loan from central government.
The council approved another year of a 9.99 per cent rise in council tax and a budget containing plans for ‘unprecedented’ cuts to services at a meeting nine months ago.
More than 50 Labour councillors voted through the 2024-25 budget described by the city’s Conservative group leader as ‘a double whammy of higher taxes and fewer services’.
The meeting was told £300million of cuts over two years, including to library services, were needed to secure £1.255 billion in Exceptional Financial Support loans from central government.
The full terms of the settlement reached with GMB and Unison are confidential, but the council said the cost falls within the limit of an Exceptional Financial Support package agreed with the previous government in January.
GMB Union said the agreement meant that, four years after launching their campaign, 6,000 low-paid, predominantly women workers look set to finally receive settlement payments from the local authority.
Settlement payouts are expected to be up to four times higher than the payment offered to workers in 2021.
Rhea Wolfson, GMB’s head of industrials relations, described the agreement as a ‘historic outcome’ for women employed by the council.
‘This result would not have happened without their dedicated and tireless leadership of a campaign which has overcome huge odds,’ she said.
‘They were told there wasn’t enough money, that they must accept that women workers are paid less.
‘But they showed council bosses that the show doesn’t go on without them. Their bravery on the picket line, in the classrooms, care homes, offices and workplaces across Birmingham has been staggering.
‘Pay discrimination is rife and GMB will not turn a blind eye when women workers are being shortchanged.’
Unison West Midlands head of organising Claire Campbell, said: ‘This is a good day for low-paid women who work at the council. They will at last get the pay justice they deserve.
‘Birmingham City Council has longstanding industrial relations issues but this agreement will show what can be achieved when the council negotiates constructively and in good faith.
‘This will hopefully be the much-needed turning point for staff, services and local communities across the city.’
The City Council has approved a 9.99 per cent increase in its council tax element this year, and pencilled in another on the same scale for 2025-26
