west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Council Perks Race Ahead of Private Sector: Should We Care?

Carmarthenshire’s county councillors received £1,313,397 in allowances and another £47,663 in expenses in 2011-12, a total of £1,361,060, which was 0.84% less than in 2010-11 – a gesture towards the recession endured by the county’s residents, albeit on the lower end of the empathy scale.

The payments to councillors averaged £18,393 each, although the big sums in 2011-12 were reserved for the leader, the Independents’ Meryl Gravell at that time, whose allowance was £35,462, and the deputy leader, Labour’s Kevin Madge (now the leader), who received £37,236.

Why should the deputy receive a bigger allowance than the leader? Perhaps I should make a Freedom of Information request to ask why.

In many wards, electors see their councillors on a flurry of occasions in the run-up to polling day, but not much otherwise. To take one example, octogenarian councillor Tom Theophilus, re-elected for Cilycwm in 2012, indicated in his election literature that he does not hold surgeries as a matter of principle, preferring to hold ad hoc private meetings, but this means he lacks regular planned contact with voters, who are paying him a not inconsiderable sum to represent them. It is probably our fault as voters – we should ask more of our representatives. The county council’s decisions on new housing and retail developments, school closures, road improvements, and so on affect us all, and we could remind our councillors more often that they have been elected to represent the residents in their wards.

Turning to the earnings of Carmarthenshire County Council’s officers, we see that in 2011-12 the seven most senior officers, and 66 more, all earned over £60,000. That’s 73 officers in all, in receipt of over £60,000 each.

Chief executive Mark James, who was awarded the CBE in the 2012 New Year Honours, was the only one in the stratospheric zone above £150,000, with a total of £209,498 made up of £185,365 in salary, £22,396 in pension contributions and £1,737 in expense allowances, but five more were in the range £124,622 (director of education and children’s services) to £147,193 (director of regeneration and leisure) and one more, the head of education services, was almost at £100,000, receiving over £99,000 in salary, pension contributions and expense allowances.

The council’s contributions to pensions are recorded as 12% of pensionable pay, although officers’ eventual pensions will depend on their final salary and length of service, and not on the notional value of contributions allocated to them and recorded in the council’s annual accounts.

The next highest emoluments, after the chief executive, were the £147,193  — salary of £130,251 and the rest in pension contributions and expense allowances — to the director of regeneration and leisure, Dave Gilbert. Mr Gilbert, who is also deputy chief executive, was awarded the OBE in the Queen’s 2012 Birthday Honours, nine years after joining the council to lead the regeneration and leisure department. During his time in charge the department has overseen the prestige projects of the Parc y Scarlets rugby stadium, the Ffos Las racecourse, and also the redevelopment of Carmarthen Town Centre and Carmarthen Leisure Centre, as well as the ongoing regeneration in Llanelli, a town badly hit by retail parks on the periphery.

The Dyfed local government pension scheme, which is administered by Carmarthenshire County Council, is a substantial benefit offered to employees. At the usual retirement age of 65, the pension is calculated at one-sixtieth of the final pensionable pay, multiplied by each year of service. A retiree with a final pensionable salary of £50,000, and 40 years’ service, would receive £33,333 to start, and their income would rise each year in line with inflation.

This is a wonderful pension scheme. In contrast, final-salary schemes have mostly disappeared from the private sector, replaced by defined-contribution schemes in which the eventual pension depends on the amount of money saved and the rate at which that lump sum can be converted into an annuity.

If the 65-year-old local government officer retiring after 40 years at a pensionable salary of £50,000 was in a defined-contribution scheme, how much would he or she need to have saved to purchase an inflation-linked annuity of £33,333?

The answer is not far short of a million pounds — £945,135, according to the best-buy tables published by the Annuity Bureau.

I think it highly unlikely that the typical local government officer could save nearly a million pounds for a pension. The Dyfed final-salary scheme is tremendous value for employees, and is well regarded by the pensions industry, which has short-listed it for the Professional Pensions Pension Scheme of the Year 2012.

A long-service job with the council is a passport to a financially comfortable retirement. My only reservation is the increasing disparity between pensions in the public and private sectors, and I don’t think we can afford to let emoluments in local government, and the rest of the public sector, race too far ahead. The argument that you need to pay a lot to attract the best people conflicts ethically with the argument that employees must have their remuneration cut in order to remain competitive in a global market.

Pat Dodd Racher, August 8th 2012

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2 thoughts on “Council Perks Race Ahead of Private Sector: Should We Care?

  1. Y Cneifiwr on said:

    Another very interesting post. I think the only reason why the bill for allowances fell very slightly was that there were a couple of vacancies. Not as a result of belt tightening.

    The expense claims made by individual councillors (no longer published by the council, incidentally) also show a huge difference. Some claim virtually nothing, while others, such as Cllr Theophilus, appear to be permanently on the road in gas guzzlers.

    From memory, the reason why Meryl Gravell was receiving less than Kevin Madge was that she voluntarily forwent part of her entitlement, whereas Kev trousered the full whack.

    • Thank you very much for the additional information.
      To go back to the post, I wish it were possible accurately to cost the annual value of the final-salary pension scheme, instead of placing notional amounts in the accounts, but I don’t think that can be done. I would reiterate that these days, a final-salary pension is a colossal benefit.

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