Item 10 - Real Living Wage Accreditation - Update
West Dunbartonshire Council · 13 August 2025
Back to Corporate Services Committee — 13 August 2025 and its agenda
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – People & Technology Corporate Services Committee – 13 August 2025 ___________________________________________________________________ Subject: Real Living Wage (rLW) Accreditation - update 1. Purpose 1.1 The purpose of this report is to present options associated with real Living Wage accreditation and the anticipated consequential costs for the Council. 2. Recommendations 2.1 Note the assumptions contained in tables 1 & 2; and either 2.2 Approve the option to proceed with accreditation, with the real living wage rate applied on 1 April each year, or 2.3 Retain the status quo in light of the anticipated cost pressures, the funding gap and requirement to make further budget savings. 3. Background 3.1 The real Living Wage, currently set at £12.60 across the UK and £13.85 in London, is independently calculated based on the actual cost of living, including essentials such as food, housing, and energy. The real Living Wage is a voluntary rate set by the Living Wage Foundation. In contrast to the UK Government’s National Living Wage (NLW) of £12.21, the real Living Wage is designed to ensure that employees earn enough to meet basic needs, promoting dignity and financial stability. The new rate is communicated around September/October each year and requires to be fully implemented by 1st May the following year, if not before. 3.2 The Council pays the nationally agreed minimum rate, known as the Scottish Local Government Living Wage (Scottish Local Government Living Wage), recently revised to £13.06 because of the agreed pay award for 25/26. This rate will increase to £13.52 from 1 April 2026. Consequently, the Council is now paying above the 2024 real Living Wage rate (£12.60) however the 2025 rate is yet to be announced. 4. Main Issues 4.1 The Council faces increased pressure from Glasgow City Region to attain real Living Wage accreditation and officers have been exploring the implications and indicative costs of implementing this, subject to the decision of this ITEM 10
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Committee. There is also an annual accreditation fee of £550, plus VAT, payable to Living Wage Scotland. 4.2 The growth rate of the real Living Wage is dependent on economic conditions, inflation rates and changes in the cost of living. The current volatility makes predictions challenging and consequently, the undernoted (Table 1) can only be considered indicative. Table 1 £9.90 £10.90 £12.00 £12.60 £13.10 £13.51 2021 2022 2023 2024 2025 2026 £16.00 £14.00 £12.00 £10.00 £8.00 £6.00 £4.00 £2.00 £- RLW Prediction Growth PA 10.1% 10.1% 5.0% 4.0% 3.1% 4.3 Based on the above, the option and costs are set out below: Option 1: Achieve accreditation and implement real Living Wage 1 April 2026 - £13.10 This would have no further impact in 2026/27, noting that the agreed pay award was settled beyond the Council assumed level, as the Scottish Local Government Living Wage rate for 26/27 (£13.52) is above the projected real Living Wage rate (£13.10). 4.4 However, if real Living Wage rates were to be 10% higher than the growth predicted in Table 1 which may be at the lower end, it would result in circa £21k increased cost pressure per annum for every 10% movement in growth (as opposed to real Living Wage increasing by 10%) – refer to Table 2. Table 2
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4.5 Based on the above some sensitivity analysis has been performed to review the financial implications of option 1 if real Living Wage was implemented at £13.86 (£12.60 + 10%): Option 1: Achieve accreditation and implement real Living Wage 1 April 2026 - £13.86 This would have a predicted cost pressure of circa £196k in 2026/27 as it would be significantly above the agreed pay award Scottish Local Government Living Wage rate. 4.6 All assumptions include current apprenticeship rate of £11.44; increased employer pension contributions for 2025/26 and employer national insurance rate assumed at 9% due to proportion of part time workers. 4.7 Committee is asked to consider whether to achieve accreditation and implement real Living Wage on 1 April 2026 (Option 1). Alternatively, Committee may decide not to proceed with accreditation (Option 2) at this time given the unbudgeted financial impact in 2026/27 and beyond. 4.8 The Scottish Government’s Fair Work Criteria mandates payment of the real living wage in order to receive grants. At present these Grants amount to many millions of pounds per annum in both Capital and Revenue. While the Council currently meets this requirement, with the granted exemption for apprentices, if the real Living Wage changes, or the exemption is withdrawn, and the Council no longer meets the criteria for non-exempted groups, then there is a real and substantial risk that the Council would not be able to access these grants until such time as it can comply with the criteria. 5. People Implications
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5.1 The changes may impact employee morale and productivity, necessitating robust engagement and communication with trade unions and employees as to rationale for the decision. 5.2 No direct impact on FTE is anticipated however, options with significant cost implications are likely to necessitate further FTE reductions to cover the additional costs. 5.3 The council is already paying the Scottish Local Government Living Wage, which is negotiated through national pay settlements. This ensures that direct employees are not on poverty wages. 6. Financial and Procurement Implications 6.1 Depending on the chosen option, and the rate of real Living Wage each year, there are likely to be additional costs for which the Council has no budget provision. 6.2 Real Living Wage accreditation requires payment of RLW to 3rd party contractors, subject to certain conditions. The current procurement process asks if the supplier pays the real Living Wage but does not include pass/fail criteria. There would be an expectation that those not paying real Living Wage would not have their contracts renewed at end of term. This is not currently an issue for the Council but could become one in future. 7. Risk Analysis 7.1 There could be reputational risks associated with the decision depending on which option is taken. Any decision not to progress with accreditation could land badly with Glasgow City Region colleagues. 7.2 Any decision to progress carries the risk of committing to an unknown pay increase in real Living Wage each year which may additionally necessitate FTE reductions. 7.3 Economic volatility, high inflation rates, increased costs of housing, energy, food and other essentials could all result in a higher real Living Wage rate than predicted. 7.4 The Council has significant budgetary pressures, £8.3 million funding gap in 2026/27, projected to rise to £41.3m by 2029/30. Therefore, any financial commitment requires careful consideration. 7.5 The Scottish Government’s Fair Work Criteria mandates payment of the real living wage in order to receive grants. As noted in Paragraph 4.8, failure to pay at the rate of the real Living Wage could result in the loss of grants until resolved, with consequences including short term revenue losses or longer term impacts on major projects. If this were to occur, the Council would either
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have to manage in year losses or potentially reduce programmes to reflect the loss of grants. 8. Equalities Impact Assessment (EIA) 8.1 An Equality Impact Assessment (EIA 1298) details the potential benefits of committing to the real Living Wage particularly for those in lower grade posts which are generally populated by women, younger people, those with a disability and those from an ethnic minority group. 8.2 The Council already pays £13.06, effective 1 April 2025, which is currently above the 2024/25 real Living Wage. Based on analysis of the real Living Wage increases over recent years, predications for 2026/27 would likely not incur additional cost for the Council as the increase would be in line with the agreed pay increase. However, it is important to note that the current volatility makes predictions challenging and consequently, the predicted increase for 2026/27 can only be considered indicative. 9. Consultation 9.1 The Trade Unions were advised of the proposals at the Convenor meeting on 15 July 2025 and the final report was shared following pre-agenda on 23 July. 9.2 Colleagues in finance, legal, economic development, procurement and HR were involved in the preparation of the options. 10. Strategic Assessment 10.1 This proposal aligns with the Council’s strategic objective of delivering efficient and cost-effective services, contributing to its priority of being a “continuously improving Council delivering best value.” Victoria Rogers Chief Officer People & Technology Date: 29 July 2025 Person to contact: Victoria Rogers, Chief Officer People & Technology Appendix: EIA 1298 Background Papers: None Wards Affected: None
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