The Corporate Director – Finance and
Resources presented a report on progress since the previous report
to this Sub-Committee on the matter on 26th February
In summary, Officers had:
held discussions with Freedom Leisure, the Council’s main
contractor that will be affected by these proposals;
contacted the procurement team at Birmingham City Council who
explained how they have built living wage compliance into their
reviewed the legal position to understand fully the potential
implications of procurement regulations in relation to Living Wage
Freedom Leisure estimated that this would add
around £110,000 a year to their payroll costs. However, the
Living Wage Foundation did not anticipate that contractual
arrangements with suppliers should altered in mid-contract.
Therefore, the change would not come into force under normal
circumstances until 2025, by which date the actual rate would have
increased. Freedom Leisure had confirmed that their business model
can accommodate paying different rates for similar work in
different parts of the country.
In summary, City Council accreditation with
the Living Wage Foundation appeared to be entirely possible, but
with cost implications. It was estimated that annual excess costs,
most of which will not be incurred until 2025 on renewal of the
leisure contract, would be in the order of £150,000 every
year, based on current pay rates and applying inflation and a
degree of contingency. If this policy was adopted then the City
Council would need to plan for this by incorporating a cost
pressure risk in the Medium Term Financial Plan and reviewing the
balance of costs and benefits during the tender exercise for the
Leisure contract when it is renewed.
In response to questions, the Corporate
Director explained that the anticipated cost represented
approximately 30% of the total contract fee. If that proved to be
unaffordable, a contract variation might need to be considered. The
Corporate Director undertook to do a further piece work to
ascertain how this might impact on the number of staff employed to
deliver the contract.
Sub-Committee Members concluded that there
were significant benefits and expressed support for making an
application for accreditation.
RESOLVED: That the Sub-Committee agree to:
note the analysis set out in this report and the previous report
of 26th February 2020; and
recommend to the Policy and Resources Committee that the Council
applies for accreditation with the Living Wage Foundation.