Birmingham issues second section 114 notice alongside section 5 report after pay equity system decision falls through

Birmingham City Council's Monitoring Officer has issued a report under section 5 of the Local Government and Housing Act 1989 on the local authority's pay equity system (PES), in conjunction with the council issuing a second section 114 report.

Janie Berry, Birmingham's City Solicitor and Monitoring Officer, yesterday (21 September) said she was "concerned that the council has, at the date of this Report, failed to secure a decision relating to the implementation of a job evaluation programme (also known as Pay Equity System)."

Her section 5 report is intended to make clear to members that "immediate steps must be taken to secure a robust PES," which should:

• Be objective, robust and can be consistently applied and be Equality Act 2010 complaint so as to remove the risks of job enrichment, sex discrimination and cannot be open to legal challenge and thus incur future potential equal pay liability; and
• can mitigate the accruing potential equal pay liability published in June 2023, in the region of £650m-£760m with a monthly accruing liability of between £5m-£14m.

Under the 1989 Act, the Monitoring Officer is required to report on matters they believe to be illegal or amount to maladministration, to be responsible for matters relating to the conduct of councillors and officers, and to be responsible for the operation of the council’s constitution.

The section 5 report was published following statutory consultation with both the Chief Executive and the Interim Director of Finance and s151 Officer. Birmingham must now hold an extraordinary meeting of full council within 21 days to agree a response to the report.

Birmingham issued a section 114 notice on 5 September, principally due to the size of its equal pay liabilities.

Four days before issuing the first section 114 notice, Birmingham's Council Business Management Committee agreed to proceed with a new PES on the basis that three recognised trade unions would sign an addendum in their support for the system by 11 September.

But the decision has since been rendered invalid as two of the unions withdrew support, with the third failing to respond at all.

Birmingham now has no methodology proposed to resolve its equal pay challenges and no process to limit the accrual of additional liability past 1 April 2025.

In light of this, Birmingham's s151 officer, Fiona Greenway, issued a second section 114 notice alongside Berry's section 5 report.

In the second notice, Greenway said: "As a result of the omission of a decision by the Council Business Management Committee, and since the liability will now continue to accrue, it is my opinion that the council is now (a) accruing additional unlawful expenditure in the form of a growing liability, and (b) making a decision (by omitting a decision) that will result in a loss or deficiency for the council and council tax payers. As such this triggers a notice under section 114 (2) of the Local Government Finance Act 1988."

Adam Carey