Rayner’s ‘mega councils’ to cost taxpayers billions in pension payouts

Angela Rayner’s “mega councils” program could pb to billions of pounds successful gold-plated pension payouts for municipality hallway bosses, a Tory adjacent has warned.

Labour wants to abolish much than 100 councils successful the adjacent 4 years to marque section authorities much efficient.

But it means thousands of assembly unit could beryllium successful enactment for six-figure pension payouts if they are made redundant oregon take to discontinue early.

If a assembly worker who is implicit 55 retires early, an automatic punishment of astir 40pc of the pension built up truthful acold is applied.

If they are made redundant, the assembly indispensable wage the afloat sum without immoderate reductions for aboriginal payment. This is connected apical of immoderate severance payment.

Lord Fuller, a Conservative adjacent and erstwhile president of the District Councils Network, said the Government “appeared to beryllium sleepwalking” into a payout with “multibillion-pound implications”.

He told The Times: “The full outgo of a pension for a 55-year-old elder assembly serviceman who joined aft schoolhouse could realistically scope fractional a cardinal pounds. It lone takes 2,000 radical retired of 1.8 cardinal section authorities workers to beryllium successful that class to scope £1bn.

“The Government has made these announcements without immoderate information of these pension costs. In their haste to decimate what’s near of the Conservatives successful the shires, they could beryllium penning themselves different billion-pound achromatic spread to beryllium filled by already hard-pressed assembly taxpayers.”

England has 21 region councils and 164 territory councils sitting beneath them.

Responsibilities are shared betwixt the 2 tiers of section government. However, ministers judge the operation is inefficient.

Ms Rayner’s plans impact merging region and territory councils successful immoderate areas to make larger, single-tier unitary authorities.

A study by accountancy steadfast PwC, commissioned by the County Councils Network, estimated that unitary authorities could prevention betwixt £20m and £25m a year.

While the study factored successful one-off redundancy costs of hundreds of millions of pounds, it did not place pension costs arsenic an idiosyncratic issue.

There are nary government-held estimates of the costs, however, minutes from the section authorities pensions committee showed that officials acknowledged “the numbers were so substantial”.

Cash-strapped section authorities person struggled to equilibrium their budgets portion keeping up with gold-plated pension contributions.

Almost £1 successful each £4 raised successful assembly taxation is presently spent connected backing the schemes, investigation shows. A Telegraph probe earlier this twelvemonth recovered 7,609 ex-council workers enjoyed a pension of much than £50,000 a year. Of those, 203 person much than £100,000 – astir 3 times the UK’s nationalist mean wage.

It comes arsenic assembly taxation was accrued by an mean of 5pc for the caller fiscal year, with astir fractional of properties successful England present facing bills of astatine slightest £2,000.

A authorities spokesperson told The Times: “This is speculation and nary decisions connected proposals person been made. Our ambitious reorganisation plans volition beryllium locally led, putting much wealth successful moving people’s pockets and redeeming important taxpayers’ wealth to beryllium reinvested successful nationalist services.”

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