Apr 2011 18

Last week’s report on mileage payments highlights a significant issue in local government spending decisions. The amounts paid out to staff are high, but are only part of the problem. Sandwell Council claim they could save £1 million a year if they reduced their mileage rate to the HMRC rate of 40p per mile. £1million would fill a lot of potholes!

We have not for one moment suggested that council staff should not be reimbursed for travelling. But perhaps the most revealing thing to come out of the research was that many councils blindly follow Local Government Employers’ (LGE) recommendations. In 2010-11 LGE recommended that local councils pay 65p per mile for casual users driving a car with engine size 1200cc. Not only do they suggest higher rates, but the payments of variable rates to different drivers doing different jobs in different cars can make payments unnecessarily complex. Over 80 per cent of councils pay these rates.

LGE claim that they “work with local authorities, regional employers and other bodies to lead and create solutions on pay.” But it sounds like the LGE work more on behalf of council employees than employers. And they certainly don’t seem to have taxpayers’ interests at heart when negotiating these rates. Councils should ignore this sort of advice and focus their resources on protecting and improving the quality of their front line services. They have a duty to use taxpayers’ money efficiently.

60p per mile: slow down!

The average mileage rate went up 2.78p between 2009-10 and 2010-11. Now that councils have to rein spending – and not before time too – they should reduce the amount they pay out in mileage allowance rates.

Not only will it save taxpayers’ money, it is also unfair that someone who is self employed, or working for most other organisations across the UK, receives a tax free payment of 40p per mile (and often a lot less) whilst a council employee can claim back 25p a mile more.

It is clearly possible to reduce the amount councils pay out in mileage payments and some councils have. By far the easiest way would be to reduce all mileage rates paid to the HMRC approved rate (now 45p per mile after the Budget). It strikes me as odd that LGE should advise a different mileage rate to HMRC; 25p per mile is a large and expensive inconsistency.

It is encouraging that LGE say they are looking at entirely reforming the system. But why bother? If all councils paid the HMRC rate from tomorrow the savings would be considerable.

  • Graeme Pirie

    Can you confirm Warwickshire for me please. I am told by the Council leader that their rate is 40p?????

    • Wayne Morris

      In 2010/11 Warwickshire paid 65 pence per mile.Total paid out for 2009/10 [latest figs available is £5,734,049!!
      They are number 11 in highest payers.

  • Overtaxed

    Apart from this rip off Local Authorities should be obliged to advise how much of the local taxes are used to fund local Government pensions.

    • Blarg1987

      Would you agree shareholders should have the same rights to find out how much of their share dividens are used to pay for pensions in private firms? I know a lot of them have been closed down or re organised but there are still several that are final salary schemes.

      • Overtaxed

        They already do, it is required by law and presented in the Annual Report and Accounts.

        • Blarg1987

          And local authorites follow the same laws as well, so you can find out how much goes towards pensions. If you mean it per person then as you said above, the Annual reports and Accounts does not work it out.

  • Christopher Coles

    Councils paying 65p per mile. I thought anything above the HMRC rate was taxable. Do they pay the tax?