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Reform UK’s deputy leader has said he is locked in a “ferocious battle” with local government officers who have threatened not to sign off on annual budgets if councils led by the populist party drastically cut employer pension contributions.
Richard Tice told the FT that upcoming reductions decided by council pension committees, which are advised by independent actuaries, risked being too cautious as Reform seeks to prove it can slash costs at cash-strapped local authorities.
Finance — or section 151 — officers were “trying to bully us, saying ‘if you reduce the employer contributions by more than we recommend, we’re not going to sign off the annual budgets’,” Tice said, describing the situation as a “ferocious battle”.
Several Reform councils have unveiled plans for above-inflation council tax rises from April, prompting accusations that the party is “betraying” residents by breaking pledges made before local elections last year.
“Many of these councils could probably head towards zero [per cent council tax] rises if this was done properly,” Tice said, referring to cutting pension contributions, and warning of particular problems at Nottinghamshire and Kent councils.
Reform leader Nigel Farage, centre, at Kent county council after last year’s local election win © Gareth Fuller/PA Wire
Councils belong to the Local Government Pension Scheme, which invests more than £400bn across 86 administering authorities in England and Wales. The LGPS manages the retirement savings of more than 6mn people.
In its most recently published valuation from March 2022, the scheme’s surplus was £22bn. The figure is expected to be much higher for the next valuation, due to be published this spring, owing to higher UK government bond yields and the strong performance of the assets it manages.
As part of the upcoming valuation, fund boards, which include councillors and are advised by actuaries, have spent months determining reductions that could be made in employer contributions while ensuring the funds can still cope with future economic shocks.
The average employer contribution to the LGPS is about 21 per cent of pay. Robbie McInroy, head of LGPS consulting at actuarial adviser Hymans Robertson, said he expected the average contribution rate in England to fall to “15-16 per cent of pay over the next three years”.
Tice, who has been leading Reform’s cost-cutting drive at local government level, said many councils’ proposed cuts did not go far enough, adding that in many cases recommended reductions were the result of “financially negligent” actuaries “applying overprudence on overprudence”.
Council finance directors are anxious that contribution rates do not fall so low that they need to rise again in the future should pension funds suffer a shortfall.
McInroy said: “In nearly all LGPS funds, if it came down to a disagreement, it’s really the pension committee which holds the decision-making power.”
The spats underscore the challenge to Reform, which is leading national opinion polls and seeking to use its approach to running councils to show what it would do if it won the next general election, due by summer 2029.
Budgets for Reform-led councils, draft versions of which have mostly been published, already plan for more than £60mn in savings next year from reductions in employer pension contributions.
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But Tice said there should be a bigger drop in contributions, adding that he would demand that all Reform councils submit updated evaluations of actuarial values this year rather than doing it every three years as at present.
“If they think they’ve won against me this is the next round of the battle,” he said.
Despite promising to cull wasteful council spending when it launched the cost-cutting drive last summer, Reform has carried out no centralised audit work in the town halls it won nearly nine months ago, local authorities have said.
Tice said the party “might have got a bit excited about the comms” when the effort was first announced, giving the impression that it could “stick in a computer cable and we’ll sort it all out for you”.
Average council tax rises, to be set out later this month, would be lower at Reform-led councils than in Labour and Tory councils, he said, adding that “we will use that as part of the campaigning material for elections” in May.
Draft budgets for Reform councils so far show them proposing to raise tax by between 3.8 per cent and the maximum 5 per cent, with Worcestershire potentially higher if ministers grant it exceptional permission due to its financial shortfall.
In a statement, Nottinghamshire county council said its draft budget had been signed off by its Section 151 officer and that it “takes into account” a reduction in contributions to the county’s pension fund.
Kent county council said it did not comment on remarks by sitting MPs, adding that Section 151 officers had a “legal duty to provide impartial, professional advice . . . and to ensure that our budget is lawful, balanced and financially sustainable”.