Councillors handed gold-plated pensions despite £9.4B council tax surge: 'you deserve it'

Councillors are to be handed gold-plated pensions despite record increases in council tax.

More than 16,000 elected officials will be given taxpayer-funded retirement income under the plans announced by Steve Reed, the Communities Secretary, who added: "You deserve it."

The pension perks were unveiled despite a surge in council tax, which is projected to rise by £9.4bn across England in the next four years, and the risk of bankruptcy in several local authorities. The news comes as Rachel Reeves is heckled by protester in Labour conference speech.

A further tax raid is widely expected in Rachel Reeves's November Budget as the Chancellor battles to fill a black hole in the public finances of up to £30bn. On Monday, Reeves warned that "the world has changed" since she previously pledged not to impose more large tax rises, reports The Telegraph.

Tories axed scheme during austerity

Councillors are paid an allowance, but are considered voluntary workers and are barred from accessing the local government pension scheme after a 2014 decision by the Conservatives during austerity.

The scheme, which pays a guaranteed, inflation-linked income to retirees, is currently only open to appointed council officers.

Reed vows to restore pension entitlements

Reed, a former council leader who had access to the scheme while in office, told councillors at the conference he was "outraged" by the decision to remove their pension entitlements in 2014, and said they would now be reinstated.

"I am proud as can be to announce today the reversal of that decision," he said. "You deserve it."

He added that councillors did a "heroic job on the front line", and promised: "I will always have your back."

Tories warn of higher bills

The Conservatives said the decision would lead to higher council tax bills to "bankroll gold-plated town hall pensions".

The LGPS is one of the largest pension schemes in the UK, with six million members. It entitles local government officials to claim a final salary pension on retirement, based on their earnings and number of years of service.

Town hall staff get better deal than private workers

Council staff generally receive a more generous pension than private sector workers, who are mostly enrolled in defined contribution schemes where the final payout depends on the performance of the stock market.

Retirement income equal to half their earnings

Councillors were added to the scheme by Labour in 2003, allowing them to build up benefits each year equal to 1/80th of their annual allowance.

This means someone who was a councillor for 40 years would be able to retire with an income equal to half of their earnings, which could amount to £6,000 a year or more. They would also get a tax-free lump sum valued at three times their annual pension.

Average councillor earns £7,000 a year

On average, councillors spend 22 hours per week on council business and receive an allowance and expenses worth around £7,000 a year, according to the Local Government Association. Some can earn as much as £16,000, depending on the council.

Austerity measure saved taxpayers millions

Councillors were removed from the pension scheme again under an austerity measure by Sir Brandon Lewis, the former local government secretary.

At the time, he said removing councillors' pension entitlement would save the taxpayer around £7m a year, or almost £10m in current prices.

Labour has most councillors in England and Wales

Labour has more councillors in England and Wales than any other party, and accounts for a third of the total number of seats.

However, councils are also under significant political pressure after a string of effective bankruptcies in six areas and strikes that have stopped bin collections in Birmingham since March.

Council tax bills set to soar by billions

On Sunday, The Telegraph revealed that British people are expected to pay an extra £9.4bn in council tax in England by 2029.

A Freedom of Information request revealed that the Government is expecting all councils to increase council tax bills by five per cent each year of this Parliament - the maximum amount allowed by law.

Tory chairman slams grubby decision

Sir Kevin Hollinrake, the Conservative Party chairman, said the "grubby" decision would push bills up higher.

He said: "Councillors do great work in championing their local community. But they should not be employees of the council who are dependent on the municipal payroll, or full-time, professional politicians.

"At a time when council tax is going through the roof under Labour, hard-working taxpayers are now going to be asked to pay even more to bankroll gold-plated town hall pensions."

Reform demands pension pot shake-up

Council pension pots drew criticism earlier this month from Reform UK, which called for them to be divested from net zero investments and streamlined to reduce fees charged by City managers.

Richard Tice, the party's deputy leader, said: "The last thing in the world local councils should do is expand the LGPS. We have to reduce council bureaucracy spending, not increase it."

Local Government Association welcomes move

The decision was welcomed by the Local Government Association, which represents councils.

A spokesman said councillors work "very hard" and sacrifice "working hours and family time to carry out their role".

He added: "Fair remuneration, including pension provision, is vital so that people from all walks of life feel able to stand for public office.

"Reinstating councillors' access to the Local Government Pension Scheme is an essential step in recognising their dedication and service to their communities."