LGA Liberal Democrat Group response to the consultation on Tithing for councillors

Prepared by Cllr Alan Connett, Group Whip, 25 October 2021


Introduction

In January, the English Party set up a Tithing Working Group to look at this issue following a resolution by English Council (the English Party’s decision-making body). Tithing is already established in the Constitution as a principle, with 10 per cent a recommended figure now for many years. There are provisions to take account of hardship and there are no proposals to remove these. 

The proposed change would make a minimum 10 per cent contribution required everywhere. ALDC is currently consulting councillors in England on proposed changes to the rules.

Is tithing for everyone?

Do all elected Liberal Democrats pay an official tithe - MPs, Assembly Members, MEPs when we the UK was part of the European Union. In essence, is there parity?

While the Policy is written for councillors, it would be reassuring to know that everyone holding elected office for the Liberal Democrats is contributing at the same agreed rate towards the national advancement of Liberal Democracy.

Pension contributions for councillors

The Coalition Government abolished the opportunity for councillors to be part of the Local Government Pension Scheme. Since then, councillors concerned about their longer-term financial wellbeing have had to make their own private pension arrangements and fund this from their council allowances.

Consequently, whether a councillor receives a Basic Allowance or an additional Special Responsibility Allowance, the provision of a pension is a matter that each councillor should be strongly encouraged to consider.

If councillors are contributing to a private pension - and this should be encouraged - then applying a tithe of 10% on the gross of Allowances paid is effectively a tax on the pension contribution.

Many councillors will reduce their work commitments, work part time or have caring responsibilities etc and so contributing to a personal pension is especially important.

The tithing agreement should not penalise or be a disincentive to councillors contributing to a pension.

Hardship

The LGA Liberal Democrat Group objects to the proposed introduction of the ‘household income’ test to assess eligibility for hardship relief from tithing commitments.

Allowances paid to councillors are not a state benefit. The LGA Councillors’ Census in 2018 shows that councillors, on average, commit 22 hours a week to their role. In addition, many give further time in community roles such as School Governors.

We cannot know the relationships in a household. The proposed policy does nothing to respect financial independence and would councillors 'dependent' on their partners or their children.

For example, is a working adult 'child' living at home and perhaps in a minimum wage job is expected to support their councillor parent?

The proposed policy would assume that household income is ‘pooled’ or that a couple share their incomes. How can this be right? Such a policy does not value the financial independence of the individual.

What will the Liberal Democrat assessment panel do when a councillor's partner or family members decline to disclose their incomes so that an assessment of hardship can be made? In summary, such a rule would create friction and an impossible barrier to be crossed if the family members choose not to disclose their personal financial information.

This proposal is likely to deter people in hardship from asking for relief and places a high bar of proof to demonstrate hardship. Based on the allowances example in the ALDC paper, a councillor receiving an Allowance of £5,000 a year would be tithing at £500.

It seems a very significant burden of proof is being placed on councillors facing financial difficulty to achieve a modest amount of relief.

Tithing payments made to Groups or Constituency Parties

Some Groups we are aware of collect the tithe contributions by payroll deduction direct to a Group account. The funds are then forwarded on a 'per councillor' basis to the relevant local constituency.

This system appears to work very well and avoids issues with changing multiple individual Standing Orders.

The alternative system of payment direct to the constituency by individual councillors can create a new and significant workload for Constituency Treasurers who need to set up the payments and then monitor them. It can also mean that arrears can quickly build if the communication between the constituency and Group is poor.

PPERA Requirements

If payments are made by councillors direct to Constituency Parties, would they need to be declared as individual donations where the annual amount exceeds £500?

Councillors in receipt of Special Responsibility Allowances in addition to their Basic Allowance may well be tithing (donating) at a level which, if it was a single annual contribution, would need to be declared.

As we understand it, Council Groups are not accountable bodies for PPERA and contributions from Groups to the relevant Constituency Party are individually anonymous.

Should the 10 per cent Gross contribution apply equally to Basic and Special Responsibility Allowances

The policy should differentiate between the Basic Allowance all councillors receive and Special Responsibility Allowances.

Often councillors will have reduced days at work or given up something else to take a lead role. A blanket 10 per cent on all allowances is too high a and we recommend a lower figure needs to apply to SRAs.

The LGA Councillors’ Census Report of 2018 shows that just 26 per cent of councillors were in full or part time work. If we are to achieve a better balance and more diverse range of councillors, we need to attract and retain those of working age.

Councillors taking on additional responsibilities are very likely to reduce their work commitment and the Special Responsibility Allowance is relied upon, often replacing the lost salary.

Unlike an employment, there is no exit payment or redundancy support when the additional role comes to an end. The only cushion is what the councillor has been able to save for a ‘rainy day’ alongside any pension contributions they have made.

In short, the LGA Group recommends a lower contribution is applied to Special Responsibility Allowances.

Recommendations

  • A clear statement from the Party that all Liberal Democrats in elected office are contributing at a standard approved rate through a tithing commitment.
  • Councillors are encouraged to make personal pension arrangements and this is factored in to any national recommendation for tithing.
  • Household income is not used to determine Hardship Relief from tithing contributions.
  • Where there is local agreement, tithing payments are made to the Council Groups with agreed contributions transferred to the relevant Constituency Party.
  • We support the recommendation that Constituency Parties or tithing Council Groups (many Council Groups pay the Group fee from the tithe) take responsibility for ensuring councillors are Members of ALDC and fund the subscription from the tithes received.
  • Clear advice is provided on the PPERA implications of tithes/contributions paid by individual councillors direct to Constituency Parties.
  • A reduced tithing contribution applies to Special Responsibility Allowances to encourage more working age councillors into positions of leadership and responsibility, and recognising the SRAs will often replace lost income.

LGA Liberal Democrat Group
25 October 2021

Note

National census of local authority councillors 2018