Local Government and Communities Committee, 18 Mar 2009

Meeting date: Wednesday, March 18, 2009

Official Report 300KB pdf

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Equal Pay

Good morning and welcome to the Local Government and Communities Committee's eighth meeting in 2009. As usual, I ask members of the public and committee members to turn off all mobile phones and BlackBerrys.

Agenda item 1 is evidence from local authorities on equal pay in local government. We have received a written submission from the Convention of Scottish Local Authorities, which was collated on behalf of all local authorities. I welcome our witnesses, who are Philip Barr, head of human resources with the City of Edinburgh Council; Norie Williamson, director of finance with East Renfrewshire Council; Peter Dawson, corporate human relations manager with East Renfrewshire Council; John O'Hagan, executive director of corporate services with North Lanarkshire Council; and Graham Johnston, head of finance with Shetland Islands Council.

We will go directly to questions, and I will kick off. Do the councils believe that they have an obligation and duty to resolve the equal pay issue with their employees?

Yes, we believe 100 per cent that we have an obligation to resolve the issue. In fact, in the next few weeks, we hope to reach agreement on it with the trade unions.

Shetland Islands Council certainly takes the same view and is heading for a ballot with the unions in the course of the next month. We hope to implement thereafter.

I take it that everyone agrees that councils have an obligation and duty. Does anyone disagree?

No.

No.

Why has it taken 10 years?

I will have a go at that. The history of equal pay has been chequered, right from the mid-1970s, when it was self-evident that the legislation was due to take effect. There is also the history of pay restraint in the public sector, productivity deals and the preparations for compulsory competitive tendering. It is fair to say that the collective eye in the public sector was taken off the ball and that the issue was only brought into focus in the aftermath of local government reorganisation, when there was a particular focus on negotiating core conditions for the new authorities. The constituent local authorities had wildly different conditions of service. It was only once that was resolved that the elephant in the room was tackled in the late 1990s. That resulted in the national collective agreement of 1999, which we are now looking to sort out.

The councils are all at different stages. My council implemented the outcome of our job evaluation model with effect from November 2006. Separately, we negotiated a collective agreement on single status and core conditions, which was implemented with effect from approximately a year later—November 2007. That deals with the immediate requirements of the national collective agreement, but it does not of course resolve the equal pay issues that are now going through the tribunal system. We can talk more about that, but I suspect that those issues have some way to go yet before they are flushed out.

We implemented our job evaluation scheme with effect from July 2006. On the history of the job evaluation scheme, the committee heard evidence from the trade unions that, initially, under the national agreement, we were supposed to implement in 2002, but the job evaluation scheme was not in a usable state until May 2002. That is why it has taken us so long. Last week, the unions said that the period of two years from 2002 to 2004 was too short a time to implement.

I have been with the City of Edinburgh Council only since 2003, but I can say that, in my history in human resources, I have not seen such a complex exercise in terms of logistics and legalities. We are considering new terms and conditions for about 17,000 employees and more than 2,000 job titles have to be evaluated. While that has been taking place, changes have occurred to the job titles and job descriptions and the law is continually changing and being interpreted. An example of that was the decision in the case of Redcar and Cleveland Borough Council v Bainbridge last year, which caused all councils to take a step back and consider what to do in the implementation of new pay and grading structures and whether to protect pay. All those factors came into play and caused the timescales that we have.

We will return in later questions to pay protection and the Bainbridge case.

Correct me if I am wrong, but I assume that you have read the Official Report of last week's evidence session. I will refer to the evidence from Mark Irvine of Action 4 Equality Scotland, who made a few statements that, to put it politely, put an uncertainty in my mind. I would appreciate your response to those points. First, Mr Irvine stated that local authorities do not want to reach settlements and that they are "playing for time". As has been suggested, we have had a lot of time in which to reach a negotiated bargain, but about 35,000 tribunal claims are on the go. Do you agree that it is imperative that a settlement is reached as soon as possible in your local authorities and, if so, why? That was one of Mr Irvine's key points.

The committee's witnesses come from different points of the compass. North Lanarkshire Council takes the view that we have implemented the outcome of the job evaluation exercise. Indeed, our three-year detriment period is due to expire in 2009.

That view is not universally accepted by union colleagues. We took the view that we were entitled to implement the outcome, having involved the unions in the exercise. The tribunals and perhaps, ultimately, the courts will require to determine whether that outcome was legitimate, as we think that it was. We needed to remove uncertainty from the workforce and to begin to address uncertainty about the council's future finances. That is why we took that step. For right or wrong, we separated the issues of conditions of service and single status and implemented what we accepted as being properly the outcome of a collective bargaining arrangement.

It takes two to bargain, and the issue was not without difficulty. It was November 2007 before we were able to sign up with union colleagues. Separate negotiation was required with craft workers, who were a small group that was not part of the 1999 collective agreement. Only this month were we able to settle a local collective agreement with those workers.

Our focus is now on dealing with the litigations and the constantly changing legal landscape. Courts can decide that we have got the detriment position wrong, but our detriment period will have come and gone by the time that the issue is decided.

We have definitely not been dragging our feet. It is in everyone's interests to resolve as soon as possible an issue that is a millstone round the necks of councils, particularly their HR functions, given the time and effort that we are putting into it.

The City of Edinburgh Council has met Mark Irvine and Stefan Cross Solicitors and we have agreed compromise agreements for their clients—and the same compromise agreements for all our rated-as-equivalent women manual workers. Those people have been paid during the period of discussion with trade unions while we implement the new scheme. Compromise agreements are costing us approximately £5 million a year while we put together a new grading scheme for rated-as-equivalent women manual workers. As you can imagine, it is in our interests to move as quickly as we can towards resolution.

How many of the councils whose representatives are present have a negotiated or an imposed agreement with their trade unions?

East Renfrewshire Council reached a negotiated agreement with its trade unions.

Is that the norm or the exception?

Shetland Islands Council is heading to a ballot and is hoping to implement an agreement later in the year.

Do you plan to impose a settlement if that approach is not successful?

No. We want to see the results of the three ballots from the main unions before we decide on our next step.

East Renfrewshire Council had a collective agreement when we implemented our scheme. I think that we are in the minority of councils who achieved a collective agreement. However, we were heading down the road towards enforcement before we achieved an agreement.

Last week the committee heard that there are 35,000 claims against local authorities in Scotland—witnesses have mentioned the claims. Given that many councils have not yet reached a settlement or settled in the litigation cases, do you think that the influence of Action 4 Equality Scotland and Stefan Cross Solicitors is an aid or a barrier to reaching a solution?

It is a fact of life. Action 4 Equality and Stefan Cross are lawyers. They are representing women who have suffered clear injustice. We will deal with that—that is how I see it.

I take a slightly different view. It might be said that no-win, no-fee lawyers have galvanised part of the process—that is true—but the agenda has not been ignored, at least not since the collective agreement in 1999. We were working with union colleagues towards a settlement of the issues—perhaps not at a pace that was appropriate or suitable, but within the constraints of the local government finance that was available. There is no doubt that the appearance of no-win, no-fee lawyers has led to progress, but there is a downside to that. I refer to litigation against union colleagues who negotiated with councils, such as Allen v GMB, which had the effect of making many union colleagues take a large step back. That was not particularly helpful at a number of stages.

If you agree generally with what has been said, you should not feel impelled to answer.

There are 35,000 cases across the country. I can speak only about those that have been submitted against East Renfrewshire Council. The trade unions would have you believe that all the cases are valid. They all have different strengths, but we see no validity in a number of cases that have been submitted against us, which name comparators who earn less than the women who are making the claim. Not all of the 35,000 claims are valid.

Equally, there are a number of claims that you would concede.

Yes, there are a number of very strong claims.

The question is: why are people stuck in litigation when we all acknowledge that many of their claims could be settled? Before the evidence session finishes, we may be able to consider how matters could be moved forward, rather than just the history of the issue.

The written evidence that COSLA submitted raises all sorts of questions about how on earth local authorities can plan for the future. COSLA's response to our question about likely outstanding legal costs was

"How long is a piece of string?"

I invite you to comment on the issue, as COSLA's evidence does not tell us much. How are councils planning ahead for the legal costs associated with this exercise?

Legal costs will not be a make-or-break issue for North Lanarkshire Council. For the most part, we have tried to deal with the matter by developing and implementing a job evaluation scheme, the appeals process for which finished at the end of December. We have tried to deal in-house with most of the litigation that is in hand. Fees of counsel are involved from time to time, but we have deliberately tried to minimise external costs.

Costs are and will continue to be very uncertain. They will depend on the outcome of the Bainbridge and Surtees cases, on what is decided in relation to the detriment argument and on the outcome of tribunal cases that are currently being heard. Some major test cases will come before tribunals in this calendar year and beyond, and I have no doubt that some of them will reach the courts.

Many councils have made budgetary provision. North Lanarkshire Council budgeted £30 million for job evaluation over five years, beginning in 2006-07. There will be a tail-end of some millions beyond that, as people drift to the top of the grades that have been established. Separately, we have budgeted about £23.5 million to deal with equal pay claims. We can be reasonably clear about the cost of job evaluation, but we cannot be absolutely clear about the eventual cost of equal pay compensation. However, many of us have done as much prudent budgeting as is possible in the current climate.

I agree with John O'Hagan. I would not call the legal costs immaterial, but they are certainly a far lesser sum than the potential costs of the equal pay claims, which are what is of concern to us. Like North Lanarkshire Council, East Renfrewshire Council, having reached a collective agreement, has a good assessment of the single status costs. We have provided for that through efficiency savings that we have required of service departments. We have also made provision in our accounts for 2007-08 for our assessment of the potential costs of the equal pay claims that are at the tribunal stage, but the uncertainties of the legal cases that are being considered present difficulties. We are well aware that the financial picture is looking fairly bleak and we are taking steps to address that, but if equal pay came along on top of that, we would be in an extremely difficult financial position and we certainly do not have the reserves or the funding in place to address the worst-case scenario that might result from the cases that are being considered.

I underline that last point. COSLA is correct when it says that it is difficult, if not impossible, to determine the exact costs of litigation—they could be massive. Most councils would find it extremely difficult, if not impossible, to make provision for worst-case scenario costs, as they have already used up sums to deal with Bainbridge.

Edinburgh has set aside resources to pay for the three years' protection, as we are obliged to do by the agreement. Protecting the men means that we have to pay for litigation by, or make compromise agreements with, the females, and we have provided for that. We know exactly what we will have to pay for as we move forward with our new pay and grading approach. However, we do not know what will happen in court with the equal value claims that will come along or the sex discrimination cases that might follow. We will not know that until the cases have been dealt with in court. However, major sums are at stake.

Mr Williamson mentioned reserves. COSLA's submission provides us with a limited picture, stating that two councils indicate that 0 per cent of the pay claims would be covered by reserves and that four councils indicate that 100 per cent will be. Where do reserves fit into the picture when councils are thinking about this issue?

Audit Scotland is encouraging local authorities to hold a prudent level of reserves to cater for any unforeseen circumstances that they might face. Given the current economic situation, those unforeseen circumstances, beyond equal pay, could be significant.

East Renfrewshire Council has a policy aim of holding a general reserve of 4 per cent of its net expenditure. Currently, that reserve stands at 2.3 per cent. Given the current climate, I regard that as a prudent level. However, when we made the compromise agreements in 2005-06, 94 per cent of the employees to whom we offered the compromise agreements accepted them, which resulted in a drain on our reserves of about £3.5 million. We have been trying to build that up again during the past couple of years.

Reserves can be used only once. One of the issues that local authorities are talking to the Scottish Government about with regard to the worst-case scenario is the possibility of capitalising redundancy and equal pay claims and writing off the costs over a number of years. Clearly, we would still have to meet the cost, but that arrangement would certainly help us to manage the situation over a longer timescale. At the moment, we receive no additional financial support from the Scottish Government either for single status or equal pay claims.

I am sure that COSLA would accept that the historical stuff is the legal responsibility of local authorities rather than the Government. However, as Bainbridge is a new liability, is there an opportunity to speak to the Scottish Government about funding in that regard?

It is difficult to say no to that. Clearly, any Government assistance that can be provided would be welcome. However, at the risk of adding more uncertainty to the area, there are a lot of arguments around Bainbridge that are still to take place. For example, initial commentaries suggested that detriment of any kind would be unlawful, so we would all have to revisit detriment schemes. However, the reality is that the structure of the collective agreement in England and Wales is quite different from the structure of the agreement in Scotland. South of the border, the agreement required local collective agreements on issues of detriment, whereas the national collective agreement in Scotland specified a three-year period.

When we get deeper into the judgment, it strikes me that tribunals will interpret it in such a way as to suggest that as much regard will be had to the outcome of the detriment process as to the pay model in determining whether the detriment process is gender neutral. In my council, the split is 51 per cent to 49 per cent, so we are not admitting that we have a problem with Bainbridge at this stage. However, during the coming months and years the tribunals system will take a view on that and we will have to reflect in light of that view.

Are 32 local authorities taking 32 different positions? Is that the heart of the problem? Has COSLA advised councils to make provision for paying out because of Bainbridge?

Advice has not yet been published, but I think that it is being prepared.

Joe Di Paola told the Equal Opportunities Committee that COSLA had communicated with councils about the liability that might arise from Bainbridge. Mr Barr said that the City of Edinburgh Council has made provision and is preparing to pay out, but your council has taken a different position. Will North Lanarkshire Council challenge the Bainbridge decision?

No, I did not say that we were going to challenge the decision; I said that the tribunals will have a job to interpret it.

You will make women fight another battle to enforce their rights.

No. We have settled about 3,500 compromise agreements so far.

As a result of Bainbridge?

No, not as a result of Bainbridge. I am saying that I do not think that the received wisdom should be that Bainbridge necessarily creates a universal set of new liabilities. The position will be different for each council.

Your council says that there is no automatic liability; Edinburgh says that there is. What do the other councils say? Have they made provision to pay out more as a result of Bainbridge?

East Renfrewshire Council has not made provision in relation to Bainbridge. I think that you are hearing a difference of opinion between Mr Barr and Mr O'Hagan because North Lanarkshire Council has implemented its scheme and is coming to the end of its detriment period, whereas Edinburgh has yet to implement its scheme. The councils have different problems.

We think that the offer that Shetland Islands Council has made, which will be balloted on, will not generate claims under Bainbridge. We think that the offer will address the problem.

However, like Edinburgh, you have yet to settle.

Yes, but we think that the settlement that we have put on the table will not generate Bainbridge-style problems.

Mr Barr, did you want to clarify the position at City of Edinburgh Council?

Thank you. We sought and received advice from counsel. We are paying compromise agreements for the three years' protection because we are protecting bonus—other councils might not be doing that. We are doing what we are doing because the national agreement says that the males should be protected for three years. The males are receiving bonus, which is discriminatory, therefore the females have a case—that is what our counsel said. Other councils might not be protecting bonus, and other types of protection might not be discriminatory, as our approach to protecting male bonus would be.

In dealing with regrading and the creation of single status pay structures, I can see that it is desirable to have pay protection mechanisms for employees who will be adversely affected. Mr Barr presented a report to the City of Edinburgh Council the other week that said that 90 per cent of staff end up in a better situation after pay modernisation while only 10 per cent are worse off as a result of regrading and linking into the new system.

I will describe what I find slightly difficult to understand about the whole Bainbridge situation. The legislation is 30-odd years old. Why, given that pay inequalities existed, did nobody think that transitional arrangements should be made to ensure that people were not worse off? I understand that that is what pay protection is all about. How has pay protection for the minority that Mr Barr's report describes ended up creating multimillion-pound claims for everybody else? That is bizarre. Surely the legislation should have allowed for transitional arrangements to level the playing field and deal with the situation once and for all, so that we could get on. We seem to be getting deeper into the mire.

That comment is very good and echoes what I said to counsel some years ago when we considered the issue. I thought that we could have a holiday, as it were, from the legalities while we redeemed the situation. However, I was told that, although we have had time since the 1970s to resolve the issue, we have not done so; that our economic difficulties do not supersede an individual's rights under law; and—I might be wrong, but it is what we were told—that even if we in Scotland or in the United Kingdom attempted to move away from the legalities, that would be overcome in European courts, because the matter involves human rights, equalities and justice. We are where we are, so we must deal with that under law.

I happened to read the report that Mr Barr made to the council. I understand from it that Edinburgh has set aside between £15 million and £20 million in the next three years to meet Bainbridge claims on behalf of some categories of employee. You made it clear that that arises from bonus protection schemes.

That is correct.

The report contains alarming unspecified liabilities for other Bainbridge-related costs from claims by staff on administrative, professional, technical and clerical grades and further equal pay claims from administrative, professional, technical and clerical staff that are not Bainbridge-related but are based on other criteria. Do you have a ballpark figure for those costs? I know that your report does not contain one.

That is a very good question. The report does not, for various reasons, contain a ballpark figure. First, we have not calculated with our counsel the worst-case scenario. We have been told to compromise with women manual workers—those whose jobs were rated as equivalent—because we cannot win against them in court. The APT and C claims—which involve not manual workers but white-collar workers who were paid monthly—are from women who say that they have similar claims to women manual workers. We have been told that we can and should contest those claims, and our council has said that it will do so because that is in the taxpayer's interest.

It might well be that we win. However, if we do not win, and thousands of women win instead—in Edinburgh's case, between 2,000 and 3,000 women could claim successfully—we will be in a different position. Males who sat next to those women doing the same APT and C jobs will make not an equal pay claim, but a sex discrimination claim, on the basis that those women are receiving money because they are women and the men are not receiving it because they are male. Once that happens, every male manual worker who does not receive a bonus will be able to make a sex discrimination claim.

A raft of developments will follow. That is why I pointed out the complexities of what we are dealing with and the requirement to get the arrangement as precisely right as we can under law—not only for now, but for the future, so that we never face such a situation again.

Councils are taking their time to do this properly because we never again want to find ourselves open to such complex litigation and difficulties arising from pay and reward. That is why we are all jumping through hoops, as it were, to resolve the situation. Does that answer the question?

Yes. That was helpful.

I put this question to witnesses last week. It seems to me that there was a period from 1999 to 2004, when the national agreements were being negotiated and single status was being set in discussion with the trade unions, when relatively slow progress was made. We then had the galvanising effect—I think that that is how Mr O'Hagan described it this morning—of the entry of the lawyers, the equal pay claims and the tribunals, when judgments started to flow and compromises began to be reached, which accelerated the process.

Would not it have been better to have had at the start a few judgments from the tribunals—a series of test cases—to establish the ground rules for equal pay in terms of people's rights under the Equal Pay Act 1970? That would have given you a framework against which to judge single status. It seems that we thought that single status was going to resolve the issue but it did not. Five years or more passed and then we started getting all these tribunal decisions, which have complicated the matter. Maybe, if we had asked the tribunals first, we would have established the law in relation to equal pay. You could then have negotiated single status around that.

I am sorry, but we did take advice. We perhaps did not go to tribunals at the time, but the Scottish councils job evaluation consortium was formed, which took advice from lawyers and even from Queen's counsel. Is that right, Philip?

Yes.

We took advice from QCs, particularly on the detriment issue, before we started to develop our pay and grading schemes. At that stage, the advice was that we could provide three years' detriment, as per the national agreement. It is only recently that the Bainbridge decision has come along and turned that advice on its head. We did plan for what we were doing.

Right. Not very much seems to have happened for five years, however, until people started going to Stefan Cross Solicitors and other lawyers to lodge tribunal cases. That was a galvanising factor, as Mr O'Hagan put it.

Surely, the law in relation to equal pay should have been established earlier. You could then have got on with negotiating your agreement to deal with the problem. At the moment, everybody seems to be rushing to play catch-up to an ever more complicated series of tribunal decisions involving the multiplicity of factors that you have described. I am not confident that we are going to get to the end of the process. No sooner do you come up with a solution to one problem than somebody pops up with another claim elsewhere. Where is it all going to end?

That is exactly my analysis—there is no simple solution. No sooner do we tackle one problem than it gives rise to a separate issue. I am not suggesting that anyone in this room would do this, but one of the worst mistakes that one could make on this subject would be to try to simplify it.

I have encouraged my elected members to consider the liabilities in two broad categories. The first category consists of what we call green book claims, which are claims arising from work that is rated as equivalent—the type of claims to which Mr Barr has referred. Those arise from a national agreement for manual workers that dates back to 1987 and which have, for the most part, been the focus of the recent tribunals. They are backward-looking claims. For example, a cleaner of a certain grade might be worth a gardener of another grade, but the gardener got a bonus and the cleaner did not. For the most part, councils either have tackled such claims or are in the advanced stages of tackling them.

The future uncertainty stems from the fact that having taken part in the job evaluation scheme and shared it with colleagues—in our case, 15,000 employees were affected by it—we are giving what some might feel is evidence of past inequalities. As a result, people who might be due to move up a grade can use the evidence from the job evaluation scheme to claim that they have been underpaid; indeed, claims that are moving forward under red book conditions are not for work that has been rated as equivalent but for work that is of equal value.

Those claims will start to arise as soon as the job evaluation schemes roll out. However, because of different history and different circumstances, they will, for the most part, be different in many authorities. We could be self-critical and wonder why local government did not tackle the issue in the distant past, but given the present position, I do not see any simple way through this. This issue has still some way to go.

I should make one key point about why we did not take a few cases to the courts initially to try to find a way forward. I understand why people ask that question; indeed, I asked it myself when I joined the City of Edinburgh Council in 2003. As my colleagues made clear to me, every council was in a different position legally with regard to, for example, whether bonuses were variable or guaranteed, whether a new pay and grading structure would eradicate bonuses, the percentage of guaranteed pay in the bonus and so on. Because each council had a different legal statement about what they needed to do under litigation or to defend themselves, we ended up with 30-odd councils doing 30-odd different things.

Mr Williamson said that because claims have been financed by money from reserves, the council's reserves have been depleted to a level that is below what might be described as desirable. If I understand Mr Barr correctly, the £15 million to £20 million that the City of Edinburgh Council approved last week for the interim settlement for the Bainbridge cases is coming off the payroll budget. Is that right?

Yes, it has been provided for over the period.

Is it a payroll cost?

Yes.

Will that therefore cause other complications in respect of the number of staff that the council will be able to employ and so on?

It will place immediate pressure on the council.

Is it expected that the claims will have to be managed on a payroll basis? Is there a reserve for paying them? How will all this be financed?

The draw-down reserves that I referred to earlier were for the compromise cases that were settled two or three years ago. The fact is that we do not have the reserves to accommodate payouts of the amounts that we have been talking about, if more cases come forward. Given that future grant settlements will most likely be tighter, we are already radically reviewing our processes and service provision and making any efficiencies that we can while continuing to try to deliver better services for the customer. However, if claims come on top of all that on-going work, that will impact seriously on the services that we can provide.

You never tackled this matter during the 10 years of unprecedented growth in public expenditure and when you did not have a legal logjam to deal with. Is it not a bit too convenient to come up with all these excuses and say now that the matter is now complicated, that you have become bogged down in legal processes and that you do not have the money any more? After all, we established at the start of the meeting that you have a legal obligation to the workers, who are mainly women.

I acknowledge that there was an unprecedented growth in local government finance over the past 10 years. However, with that came priorities and responsibilities such as free personal care—

Do you really think that it is not a priority to fulfil a legal duty to your female employees or to plan for a legal imperative at a time of unprecedented growth in funding?

I understand exactly why you are saying that. However, we planned for new pay and reward structures; we made a provision of 3 per cent, which equated to £10 million in the first year, increasing to about £15 million in year 5. We also accepted and provided for the fact that introducing the system would compromise female manual workers. However, the problem is the unforeseen litigation costs for the APT and C cases—which, I should point out, may or may not be won.

I accept that.

We in Edinburgh are saying that the costs could be dangerous, and we feel that it is only right to highlight the possible legal risk. However, as I say, we provided for and financed anything that could have been foreseen and that we knew was on the horizon.

Absolutely. I do not want to suggest that we did not regard the matter as a priority. We settled the cases that we were aware of; it is all the uncertainty that is causing the concern.

Does anyone disagree with the view that was expressed last week that many of the 30,000 historical claims for backdated money that have gone to tribunal are relatively simple and could be negotiated and fast-tracked? This is like some breakdown in a dysfunctional family in which the family members rush to lawyers and get stuck in the mire.

Let me try to break up and simplify the big problem. As I understand it, there are historical claims, many of which could be negotiated and fast-tracked, and there is the here-and-now Bainbridge problem, which the 32 authorities could address through some joint conclusion instead of dealing with 32 different legal positions. For example, could the advice that these cases are unwinnable—which was provided by the QCs that the City of Edinburgh Council got in—be applied to other local authorities?

Finally, in an effort to ensure that no more lawyers need be involved and that there is no more prevarication, could we get more academics in to ensure that what is put in place in the 32 local authorities is future-proofed and equality-proofed?

We have been using Kay Gilbert from the University of Strathclyde to ensure that our pay and grading structures do exactly what they should do—that is, pay appropriately and fairly—and that there is no further litigation.

It is a no-brainer for most councils: we cannot win these cases in court. As a result, we are doing exactly what you have suggested. We in the City of Edinburgh Council know that those women are entitled to settlements, so we are settling with them.

Stefan Cross has said that the situation is in some way the councils' fault. I understand why he is saying that—some might say that he would say that—but in Edinburgh alone there are 850 Stefan Cross claims outstanding from women who still want to go to employment tribunal. The problem is that there are 3,500 cases associated with those 850 women, because Mr Cross keeps putting in more and more claims for each of them. He simply will not stop. I understand the point about the churn, but the legal backlog that the councils face is not a problem solely of their own making.

I accept that. If the lawyers instituted a voluntary moratorium on new cases, we might have some space to deal with the existing ones.

However, those questions were asked last week. This morning we are questioning the local authorities, not Stefan Cross.

Many of my questions have already been asked. I have to say that I am still uncertain about why it has taken so long to deal with this matter and why it has become so complicated. I hear what you say about not trying to simplify the issue, but I am concerned that we have allowed it to become so complicated that there seems to be no resolution. I have not heard from any of you how we can solve the problem.

Is there at this stage an opportunity for councils to work more closely together to find solutions that will not bring about yet more challenges to what you have settled on? There was initial reluctance to settle because nobody wanted to be first or to be the test case, then people started to settle, others came in behind them and there were further challenges. There seems to be a rolling programme. I accept that local authorities are the legal employers and must operate as such, but there does not seem to have been a great deal of collective working between the authorities to arrive at a settled position.

More could have been done, but, in COSLA's defence, it is not the case that nothing has been done. A standing commission has been given to a firm of specialist employment lawyers, which advises COSLA as emerging case law takes hold and is then tested, supported and overturned. We must bear it in mind that these are, for the most part, reserved issues, so a number of steps must be taken through the court system south of the border before there is clarity. In many cases, the initial outcomes have been changed and decisions have gone in different directions once the Court of Appeal down south, and sometimes the House of Lords, has looked at them.

It is not the case that nothing has been done. I come back to the point that local authorities are at different stages. My council, for good or bad, was in early. We were one of the first to implement job evaluation and the like. I have occasionally taken stock and asked, "Was that a wise decision?" As we have just about let a detriment period of three years expire, I view with some horror the prospect of a court decision that states that that was all abortive expenditure and that we all have to start again, or something along those lines.

Local authorities have come from different positions. I will not be too specific, but in a number of areas some of the major categorisation divides in local government between APT and C workers and craft and manual workers and the like were changed by internal processes, particularly as we tackled conditions-of-service issues after the reorganisation in 1995. A number of us took the opportunity not to do away with bonuses but to rationalise them. That did not solve the problem, but it addressed an issue about service delivery. Our council inherited all or parts of four districts, two sub-regions and a new town, so our effort was concentrated on dealing with service delivery continuity rather than with tackling the equal pay challenges. That is not an excuse, but it is an explanation.

It is interesting that your situation, whereby reorganisation brought together all those different local authorities, has allowed you to reassess where you are, which has perhaps helped. However, Edinburgh, for example, was still one local authority with one set of rules and yet it has not reached the stage that North Lanarkshire Council has reached. That seems perverse.

I will not speak for Philip Barr or the City of Edinburgh Council. The point that I seek to make is that different issues arise in different contexts in different councils. One example is home support workers. In many cases they are treated as what we have called green book claims, because they were under that categorisation, but we moved home support workers from manual grades to APT and C grades in the late 1990s. One or two other councils also did that. We think that it changes their status in respect of being good claimants. It changed our risk analysis, so when we dealt with, for example, compromise claims with what we thought were the high-risk categories, the offer that we made to home support workers was a compromise amount, which was discounted to reflect that legal risk. In the case of other local authorities, such action may not have been appropriate. I cite that as an example of authorities approaching similar issues from different perspectives.

Where do we go from here to ensure that we do not spend the next 10 years continuing along the path of claims and counter-claims? How do we resolve the situation so that all your employees know that they are being treated fairly?

The solution lies in two areas. First, we must apply correctly and robustly an equality proofed comprehensive pay and reward system. That will be done in every council throughout Scotland.

Will there be a national system, or will there still be local systems?

There will be local differences, because certain jobs are different, but that should not necessarily cause a major problem, as long as the process is carried out properly in each council.

How else will we bring the current situation to an end? Over the next few years the equal value claims—the APT and C claims—will be dealt with and any sex discrimination claims will be dealt with one way or another. We will then be on the path home and, under those circumstances, we will have a pay and grading system that is not open to litigation. We must keep it that way and maintain the disciplines surrounding it to ensure that the current situation never arises again.

My last question comes back to the point that the convener raised about fast-tracking some cases. Mr Irvine suggested in his evidence last week that we should use genuine material factor hearings. Would that be helpful?

Yes. We all go for pre-hearings and a genuine material factor hearing is basically about asking, "Do we have a defence that says that these women are not entitled to this money?" They would say that they are entitled to it. Our defence would be a genuine material factor: that is, that there is a good reason under law why the women are not entitled to make that claim. That is what would happen in an employment tribunal.

We have been told by our counsel that it is worth defending the cases and that there are defences that we can put forward, and we shall do so. I cannot see where Mr Irvine is coming from. If he wants to have a pre-hearing, one can be held should the law require it.

It is another step rather than a solution.

Yes.

It is clearly your responsibility to defend cases when you feel that there is a clear defence. However, we have heard from trade unions, Stefan Cross Solicitors and others and, indeed, by implication, from local authorities today, that there are fewer defendable cases. People have conceded that the value of the award is the issue rather than the legal point. That is what Mark Irvine discussed and what Mary Mulligan and I have discussed this morning.

Good morning, gentlemen. A number of questions have been asked today, and we are finally getting somewhere on equal pay and single status.

I reiterate the point that the convener has just made. As I understand it, the majority of tribunal claims are for the difference between the settlement figure that the local authorities have offered and what the individuals think they would be able to receive if they went to a tribunal. You can clarify whether that is true.

Mr Dawson said that a number of claimants had strong cases against his authority that they could win at a tribunal. We are trying to find out why councils do not settle, but instead keep the situation going. The convener said that Action 4 Equality and Stefan Cross's company continue to throw in tribunal claims. The difficulty of the tribunal system is that claims must be made before they are time barred. We cannot ask for a moratorium on claims from employment lawyers who are acting for the unions or on a no-win, no-fee basis, because that would mean that people were time barred from pursuing their claims against authorities. As the convener said, why do councils not settle the strong cases?

How far are the local authorities that are represented today prepared to take tribunal claims if they lose them? Are they prepared to go to an employment appeal tribunal or all the way to the House of Lords, as has been mentioned?

You raise several points. You said that I stated that we recognise that different claims have different strengths. We have engaged with employee representatives—Stefan Cross and the trade union lawyers—to reach agreement. We have made increased offers to claimants, but we have not yet reached an agreement with their lawyers. We place a value on the claims and the lawyers place another value on them. We must reach a prudent settlement and we are engaged with lawyers on that.

Mr Barr and I said that we regard a range of other claims as being not as strong. In fact, we do not recognise at all a number of claims against us. We must defend such cases. You asked how far we are prepared to go. That is tied in with how much our lawyers' fees will be. No decision has been made at an employment tribunal yet. After employment tribunals have dealt with some test cases, a range of councils might step back and say that argument is lost and they now need to settle.

We are at not a tipping point—that is the wrong phrase. We are at a stage in the process at which several issues are being flushed out and clarified through the courts. I suspect that the tribunal hearings that are going on and those which are scheduled for the coming months will result in decisions that apply the law as it is understood and which are based on evidence and conclusions on factual outcomes. We will all consider those decisions and reach a view on whether, although we have settled claims—my council has settled more than 3,000—after a further consideration of the risk analysis, we should offer compromise deals on another raft of claims. I suspect that that will be flushed out in the next few months.

I honestly do not know whether significant changes in the legal background will occur, but none of us anticipated four or five years ago the legal changes that have happened in the past couple of years, so such changes cannot be precluded.

To answer one of John Wilson's questions, nobody will be so intransigent as to take cases to the inner house of the Court of Session or the House of Lords if doing so has no purpose, if it does not serve the public purse well or if the balance of argument is in the claimant's favour. However, before the tribunals speak, I am not sure whether a significant raft of claims is ready for settlement.

We have heard that COSLA engages employment lawyers to advise it of the implications for staff of employment law changes. I assume that it also takes counsel on some issues. How many of the local authorities that are represented employ counsel and external advisers, in addition to the COSLA advice?

As I said, my council has mostly dealt with the matter in-house. We have a standing QC whom we consult from time to time on particular issues. He will represent us at the first tribunal hearing, which will take place shortly. However, we do not have a separate standing firm of employment solicitors.

Thank you, gentlemen, for your time and your evidence.

We will take a moment to change over the witnesses.

Meeting suspended.

On resuming—