Millions lost on junkets, pay-offs and sickness

Council spending has risen by 84% in the past ten years, to over £160bn. But with Town Halls facing a 28% cut in budgets tough decisions have to be made. The Bureau investigates how local councils have been spending their funds.

Councils are facing unprecedented budget cuts of 28 per cent by 2015, with an estimated 100,000 job losses in the next five years.

For the last nine months, the Bureauhas carried out the largest ever Freedom of Information request into local councils, to find out exactly what they’ve been spending our money on, and how they’ll be able to slash their budgets by over a quarter.

Spending by local government in England, Wales and Scotland has risen 84 per cent in the past ten years, to over £160bn a year. But this decade of plenty has come to an abrupt end – the government announced last month that they will be slashing council funding by 28 per cent over the next five years.

So how have councils been spending taxpayers cash? And will such huge savings actually make them more efficient, as the government is hoping?

Sickness Absence

The Bureau found that many councils face a very costly problem – employees take over a third more sick days than their counterparts in the private sector.

Our research reveals that one in five councils in England, Scotland and Wales reported an increase in sickness levels of over 10 per cent in the past five years. On average, councils lost 9.4 days per employee in 2009/10 due to sickness absence.  This compares to an average 5.8 days in the private sector, according to a report in June this year by the Confederation of Business Industry.

The overall sickness rate for councils is marginally lower than five years ago but there are still some councils with startling levels of illness. Topping the table of those councils that responded to our queries is Aberdeen City Council where workers are off sick for over three weeks a year on average – 15.9 days per employee.

Sue Bruce, Chief Executive of Aberdeen City Council, said that environmental factors such as the harsh winter, and the recent turbulent history of the council were partly to blame.

Ms. Bruce doesn’t deny that it is a big problem for the council and she estimates that staff absence costs the council up to £5m a year. But, she says, they have introduced new measures to combat the problem, which are showing improvements already, and they have now dismissed 25 workers over sickness absence issues.

She said: “The new management team and the new culture we’re embedding here is making a difference. Over the course of the last 12 months we have actually improved by an average of one day, so it’s gone from 15.9 to 14.8 over the last several months.

“It’s [still] not acceptable at that rate, but we’re satisfied that the measures that we’re putting in place, which complement all of the governance and accountability measures we’ve put in over the last 18 months or so, are generating improvements across the board – in financial management and performance management, and, as we see gradually, into absence management.”

Last week Aberdeen City Council announced £127m of budget cuts over the next five years. Janet Adams, GMB union regional officer, said the threat of job losses will lead to more stress on the workforce, meaning sickness absence levels are likely to increase or stay the same between now and next February, when the cuts are announced.

She said: “Council workers do face a lot of uncertainty around their jobs. With job cuts for the past three years and continuing for the foreseeable future until they get more money from central government. That does cause a lot of stress and strain.”

Consultant Stephen Taylor, who has advised the government and councils on efficiency and remuneration, said: “Sickness absence is actually quite a good measure of the ability to manage people, it’s 40 per cent higher in local government than it is in the private sector and they need to act on that, there’s no excuse for that.”

John Ransford, chief executive of the Local Government Association (LGA), the membership body for English and Welsh councils, said that some councils do need to manage sickness absence better.

Sickness in councils has been coming down over the years – it’s been getting better but it certainly doesn’t compare with best practice in the private sector. Some jobs are incredibly stressful – child care work certainly, given the microscope it’s been placed under in recent years – and work with the elderly…

But sickness needs to be managed – we need to be far sharper on the reasons why people are off – interviewing when they come back – to look at their sickness, to say that work is the important thing, continuity of work and sickness must be managed very carefully.  And there is no doubt we need to get far better at that to use our resources more effectively.
John Ransford

Incentives

The Bureau’s investigation highlights the lengths some councils will go to in order to encourage employees to turn up to work.

We have discovered that 25 councils have offered prizes to staff with perfect attendance, ranging from financial bonuses to Marks & Spencer vouchers or extra days off.

Conwy County Borough Council, in Wales, ran a one-off prize draw in 2008, offering bikes, fruit baskets and a step machine – at a total cost of £673.61.

Just up the coast, Fylde Council, in Lancashire started a “100 per cent attendance club” last year, with a draw for M&S vouchers, certificates for all staff and refreshments, to a total value of £350.

Other councils offered workers extra days off. For example Liverpool City Council awards two additional days’ leave after 12 months of non-sickness. All of the councils we approached told us that these incentives were just one part of a wider strategy for managing sickness rates. But other local authorities told The Bureau of Investigative Journalism they were against the idea of prizes for coming into work.

Eastleigh Borough Council said: “As staff we are paid to attend work; that should be incentive enough.”

And Chichester Council told us: “We do not incentivise staff for their attendance as schemes like that have been described as discriminatory and divisive.”

Private Healthcare

Our research shows, though, that some councils go even further to keep their employees fit for work, raising questions as to whether councils have been making the best use of taxpayers’ money.

In fact, our FOI has discovered that 56 councils spent over £2.9m last year on providing private medical insurance for over five thousand employees.

Local Government Association (LGA) Chief Execuive, John Ransford told The Bureau of Investigative Journalism:  “The provision of private health care only exists in a very small number of authorities – mainly in London and the South East. Over the years it’s been one of the things thats been introduced as a staff attraction and retention issue.

“We’re coming out of a period of economic prosperity where councils were competing with other people for staff and it was one of the measures used.  Now, these councils will argue that it helps keep their workforce fitter – gets people back to work quicker if they suffer a major injury or illness – but it is not a major factor in local government generally across the country.  And it’s up to each local authority to determine its own priorities and conditions for its workforce.”

Foreign Travel:

Our research also found that councils have spent £4.5million on foreign travel, going on 5,457 trips over the past four years.

Sunderland was the biggest spender, funding 41 trips costing £82,223 in 2009/10 while Birmingham spent £57,734 on 75 trips in 2009/10.

Of the £82,223, Sunderland council spent nearly £27,800 on seven visits to Washington DC for “Friendship agreement Activities”.  Three council representatives also travelled to Hairbin and Nanjing, China for a signing ceremony in each city, which cost £11,695.

Birmingham, which spent £57,734 on 75 trips in 2009/10, sent four people to attend the European Artistic Gymnastics individual Championships in Milan, costing £3,536.  Representatives from Birmingham travelled to Guangzhou, China to see Birmingham Royal Ballet perform “Romeo and Juliet”, costing the taxpayer £6,750 in January 2009.   The council funded a £3,190 visit to Quebec, Canada for two representatives to watch the Trampoline, Tumbling and Double Mini Trampoline Championships in 2007. This was in preparation for Birmingham who hosted the event this year.

The disclosures showed how an Events officer from Brighton council travelled to Barcelona to watch the Beach Volleyball World Championships at a cost of £200.

North East Lincolnshire Council, which had £7million invested in Icelandic banks when they collapsed, made three visits to Iceland in the year before its financial crisis.  One trip cost £4,186 for a town twinning visit to Reykjavik, and two more to assist with a potential seafood project, costing £1,251.

The disclosures also showed Leicestershire County Council’s then chairman Mike Jones took his wife and “International Links Co-ordinator”, with his chauffeur, on a trip to Rouen, France, costing £1,101.

A spokesman said: “At the time, the total cost of this visit was cheaper by car than buying individual train tickets from Leicester to London, the Eurostar to Paris and then a further train to Rouen. There are no cheap flights to this region.”

In Aberdeen, one official went to Toronto, Canada on “Communities in Bloom” trip, costing £1,206.  It also spent £2,465 on a ‘fact finding’ visit to Lafayette, USA, and three further fact-finding visits to Mexico in 2010, costing £1,925.

Shetland Islands paid £1,621 for a council member to present a paper at a mental health conference in Hong Kong.   The council’s executive director went to Valencia for the launch of a new tug boat, costing £1,710.

Hackney’s chief executive Tim Shields was sent Boston on a training and development course costing £1,629 in April last year.  The council also spent £30,000 on sending five representatives to Beijing in preparation for London hosting the 2012 Olympics.

Councils defended the trips.

John Ransford, chief executive of the Local Government Association said: “It’s up to each council to make decisions about the meetings in other countries they undertake according to local circumstances and local priorities.

“Councils forge links with foreign countries to boost economic development, secure investment and build closer cultural ties between Britain and the rest of the world.  Sharing best practice is important to the improvement of councils’ performance and that sometimes means learning from the best overseas.  It’s important to look at each case in context with a full understanding of the background to these trips.”

Sunderland council said foreign travel had brought numerous benefits, including 8,250 new jobs and investment totalling £1.5 billion over the past five years.  Janet Johnson, the council’s deputy chief executive, said its foreign travel “reflects the aim of the international strategy and the need for cities sich as Sunderland to engage internationally”.  The city had “formal relationships” with Washington DC and was developing links with China.

A spokesman for Aberdeen council said “international trade development” was vital to Aberdeen’s economy. He said: “The overseas visits in the period in question helped us to secure almost £3million in external funding from Europe.  “On top of that are the very significant sums of money in terms of inward investment and international business for the city which are generated by our representation overseas.”

Brighton said attending the volleyball championships was a requirement of the city hosting the event the following year.

A Birmingham City Council spokesman said: “We have an extremely transparent process through which all of our expenditure on overseas travel is approved by members and published for interested parties to see.  “Expenditure on such travel has also fallen year-on-year. It is broken down by cost, destination and the benefits gained by the city from making each individual visit.”

Shetland Council said sending its manager to Hong Kong “was deemed to be an excellent opportunity for the Council to enhance Shetland’s reputation by sharing its good practice on an international stage”.  A spokesman added that the tugs were “a major investment by this Council in infrastructure to service the oil terminal that’s so important to the Shetland economy.  “Having been involved in every stage of the build project, it was deemed appropriate to have a presence at the most significant stage – the launch.”

A spokesman for Brighton said: “We cannot confirm exact details but it’s likely to be linked to the city’s growing involvement in beach volleyball, including the possibility of staging high-profile competitions, events or training activities in the run-up to the Olympics.  “We have a dedicated beach volleyball centre in the city capable of hosting such activity.”

Hackney said the council met “Olympic sponsors, investors and businesses and developed relationships that have the potential to lead to job opportunities and apprenticeships for Hackney residents”. A spokesman added: “Meetings with Haidian district officials allowed us to share knowledge on how best to maintain high quality services for residents during the Games. The contacts made and insights gained are proving invaluable as we continue to plan for 2012 and its legacy.”

The council had also paid for Tim Shields’ travel and accommodation costs, while BT paid for the courses which looked at how current business thinking can be applied to Government. Mr Shields paid for his own expenses.

Redundancy payouts

But spending on staffing has soared in the past decade showing an increase of 78 per cent in council expenditure on employees. Local authorities have recognised this and, according to our Freedom of Information request, they have reduced staffing levels by 30,000 over the past 3 years.

The Bureau of Investigative Journalism has discovered that some councils pay out generous redundancy and severance terms to their staff.

For example, the London Borough of Newham has spent almost £10m pounds on redundancy and severance since 2007 laying off 379 staff – an average payout of £26,904 per employee. Workers in the private sector receive an average payout of just £9,000.

A Newham Council spokesperson said: “We have saved £68m over three years and we expect to save almost £140m in total by the end of 2014. We have the lowest council tax in outer London and there has been [a] zero percent increase for the last two years.”

Glasgow City Council, which spent £19m laying off 1,036 staff, told the Bureau of Investigative Journalism: “Glasgow has one of the highest total values for redundancies because we have let the most people go; however, given that this is one of the biggest local authorities in the UK, with an annual budget of around £2.5bn, that’s not surprising.”

The council said that 9,000 employees were transferred off the council payroll last year when a department was turned into a limited liability partnership.

Sheffield City Council has already made 500 staff redundant at a cost of £4m. But they could face further staffing cuts of up to 1,500 staff.

Councillor Paul Scriven, leader of Sheffield City Council, told The Bureau of Investigative Journalism that the council has £5m in reserves to deal with future redundancies but he does not deny that the council may have to find money from elsewhere to foot a much larger bill.

“If we haven’t got enough sitting in reserves in the first few years we’ll have to look at how we are allowed to use our resource to put more into reserves,” he said.

There is a rock and a hard place here in that staff are expensive to employ and because of the way redundancy works, it’s expensive to bring careers to an end in that way.

Now, councils have been planning for this. One of the reasons why councils have reserves in expenditure is precisely to pay for this sort of situation.  All the time they must balance the cost of reducing staffing levels against the cost of providing services, because the public’s expectations won’t change just because the resource base changes, and a lot of our services – like care of older people or carers of young children – they don’t reduce simply because the economy changes.

In fact, you could argue the other way – because economic circumstances are difficult, there are more demands for those services.
John Ransford, Chief Executive of the LGA

Lord Wills, a former Labour MP and Government minister, said: “I think what that reveals is a lack of adequate governance with local government. A lot of local authorities are very good, they’re parsimonious, they’re decent, honest, honourable people doing their best for the people that they serve, but in some clearly they’ve got out of hand, and what I think this reveals overall is that the system of governance for local government needs to be reviewed.”

Reporters: Sam Kingsley and Henry Richards