Somerset Council will spend £3m over the next two years carrying out a full review of pay levels and rewards for its staff.

The council is currently going through an extensive transformation programme – with around £33m being saved in the first phase, which concluded in April with the loss of around 300 staff.

Councillors voted in September to appoint Newton Consulting Ltd. to take forward the next phase of the programme, dubbed 'Inspiring Innovation', spending up to £20m over the next few years (with an initial spend of £1.5m).

In parallel to this, the council has agreed to spend up to £3m on a root and branch review of its pay structure, in order to ensure it can recruit and retain staff and thereby reduce its agency spending.

The pay and rewards review was discussed at length when the council's corporate and resources scrutiny meeting met in Taunton on Wednesday (October 29).

Councillor Theo Butt Philip, portfolio holder for transformation, human resources and localities, said: "Members will be well aware of the need for a full review of pay and grading.

"We have not done a full review for 21 years [as Somerset County Council]; we did a light touch review in 2014.

"We have a large number of staff on different terms and conditions as a result of various changes – in-sourcing, outsourcing and five different organisations becoming one.

"We know the challenges we have in different areas of the council in recruitment, with our salaries not always being right for the market.

"We know there are a significant number of retention and recruitment allowances in place, and we need to develop a much more consistent and appropriate system for pay and grading."

The £3m being committed to this pay and grading review (which was agreed in principle by the council's executive committee in May) does not form part of the £20m Newton Consulting transformation contract.

While the funding will come from the sale of non-operational assets, much of it will be spent in-house – with consultancy firm Korn Ferry providing "external support" and providing additional resources if and when required.

Nicola Houwayek, the council's workforce transformation lead officer, said this was "the next natural step following local government reorganisation" and would ensure that officer pay was "affordable, fair and equitable".

Any changes will be implemented from April 2027 to allow for extensive consultation with staff and trade unions, along with a contingency for any legal challenges that may arise.

The council has estimated that, if no further staff are cut or made redundant, its wage bill could rise by around £7m by 2027/28, representing an extra £14m by 2028/29 – rises which will have to be paid through council tax increases.

Officers have stated that transformation "may result in a smaller, appropriately and fairly rewarded workforce in the future" – but have stressed that no further staffing cuts are planned at this time.

Councillor Lucy Trimnell, shadow portfolio holder for adults services, housing and homelessness, questioned whether the council was in danger of legal challenges under equal pay legislation – something which could, in the case of Birmingham City Council, lead to a declaration of effective bankruptcy.

Ms Trimnell (who represents the Wincanton and Bruton division) said: "The last thing we want to do is pay £3m for somebody to tell us that we've got to pay [our staff] many, many millions of pounds more than we can afford.

"Are we at risk of any equal pay claims or issues currently, or are you foreseeing that may be an issue going forward?"

Dawn Bettridge, the council's service director for human resources, replied: "We don't have any current claims that we have received or any legacy claims that we are dealing with.

"The reason that we are prioritising this programme is that the longer we go away from vesting day [when Somerset Council was created in April 2023], particularly with the pressure that we have to look at recruitment and retention, the higher the risk that we would receive equal pay claims.

"I'm sure all of you are aware from the national news of the millions of pounds that other local authorities have had to pay out in equal pay claims. We are actively looking to mitigate all risks around this."

Clive Heaphy, the council's interim chief financial officer, added: "The risk of equal pay claims is high across the sector of the moment.

"During my time at Birmingham City Council, we paid out £1.2bn in equal pay claims – that's the equivalent of four years' worth of Somerset Council's entire budget.

"It's a major problem and it's continued for many years. Glasgow [City Council] has similarly sized claims to Birmingham, as does Southampton [City Council] and many others.

"Even in the private sector, big supermarket chains like Asda and Sainsbury's are facing big claims as well. We have to get this right."

The business case for the pay and grading review will receive final approval from the council's executive committee when it meets in Taunton on November 5.