Birmingham Council to settle equal pay claim after bankruptcy, sources say

ITV News understands that Birmingham Council is poised to pay out hundreds of millions of pounds to women workers including teaching assistants and cleaners, ITV News' Deputy Political Editor Anushka Asthana reports

Birmingham Council is poised to pay out hundreds of millions of pounds to women workers including teaching assistants, carers, caterers and cleaners in order to finally settle the thousands of equal pay claims that have pushed the local authority to the brink of bankruptcy.

ITV News understands that councillors have been invited to an "extraordinary meeting" next Tuesday to discuss the settlement.

Tonight neither the council nor the GMB union would confirm any details or specify a figure but sources have told me that there could be a compensation payment of around £250m, with an additional lump sum that could result in up to £400m in total.

Sources tell me the deal was struck between Birmingham Council's leadership - and the trade unions - which will see them pull back from legal action in around 6,000 cases. Individual workers could each gets tens of thousands of pounds in compensation, but some could get much more.

The largest group to benefit are likely to be teaching assistants.

Payment could start as early as next year with compensation for workers who took a claim, as well as possible payouts to mitigate further challenges.

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If the figure is correct, it is likely to satisfy the trade unions but it is some way below the suggestion last Autumn that equal pay liability could stretch to £700m.

Critically, that higher figure was used as one of the key justifications for triggering a section 114 notice - which is seen as a council effectively declaring bankruptcy.

Moreover, the notice was issued by the council's finance director while the leader of local authority John Cotton was on holiday.

The actual size of the final liability will raise serious questions over whether the section 114 was necessary, particularly given the dire consequences for the city's residents, who will see council tax rise by 21% over two years. Some insiders tell me the council was suffering a lot of other problems, and was on a path towards the 114 anyway, but they admit that the sudden timing of the announcement raised eyebrows.

One source said the inflated figure of £700m seemed to assume pay claims by all employees, which was never a possibility.

Birmingham is one of a number of councils that have faced major equal pay claims, many revealed by ITV News. The basis of them tends to be that predominantly female roles like those in the care sector, school kitchens, teaching assistants and cleaners, have less generous terms and conditions than predominantly male roles like bin men, road workers and in fleet.

The equal pay scandal started to blow up for Birmingham when the council began issuing memorandum of understanding documents (MOU's) to female workers in which they offered a pay settlement, but said that in return the staff must sign up to an agreement settling "all equal pay claims and related claims associated with the subject matter".

But when the GMB union saw the document they warned members not to sign, arguing they could be paid much more through equal pay claims.

The legal claims in Birmingham compared the predominantly female roles to those in waste and refuse, carried out primarily by men. Two issues were highlighted - firstly that the men had been offered "task and finish" in which they were paid per task instead of per hour. As a result, they could go home much earlier than the women working in care or catering, or they could overtime, also unavailable to the women.

The second issue was that the men had seen their jobs inflated from grade 2 to 3 - but because of additions to their job description that did not line up with their actual tasks. As a result the council is likely to abolish that role. That raises the other uncomfortable side to this debate.

As well as the impact these equal pay claims can have on council finances, and so the local services and council tax faced by residents, they may also have consequences for the predominantly male roles where unions themselves negotiated the superior terms and conditions.

In Birmingham's case, the council is likely to find ways to ensure the waste workers are moved onto genuine grade 3 roles, with additional training if necessary. But not all workers have been moved over, resulting in anger from a different union - Unite.

In fact, it is balloting around 400 Birmingham refuse workers for strike action over the decision to remove the role. Its General Secretary, Sharon Graham, said the attack was "abhorrent" arguing the workers go above and beyond, and are not responsible for the crisis.

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