Councils consider plans to shed 170,000 public sector jobs

Councils are considering plans to reduce their spending including by cutting up to 170,000 public sector jobs in anticipation of a dramatic downturn in their budgets.

Dame Margaret Eaton, chair of the Local Government Association, said that local authorities were being hit by a “perfect storm” in the recession with increased pressure on their services and a squeeze on their budgets. Privately, councils are looking at how to slash their budgets by 15% over the next three years, using projections on the cuts necessary to reduce the £178m public deficit drawn-up by the respected Institute for Fiscal Studies.

With staff forming the biggest chunk of their spending, many believe that up to 10% of the wage bill must be cut amounting to up to 170,000 of the 1.7m public sector workers employed by councils. They include cleaners, administrators, refuse collectors and care workers.

The government today published a 10 point plan for councils to help them cut spending while protecting frontline services in anticipation of a BBC survey which is due to be published revealing the extent to which councils are planning to cut services. It is understood to include indications from individual councils of the plans for job cuts and spending freezes. It reveals that arts and leisure services will be most vulnerable to cuts while homelessness, children’s social services and planning are likely to be more protected.

Last week Birmingham council, the largest local authority, announced plans to shed up 2,000 jobs, freeze staff pay and reduce services in what is being seen as a foretaste of serious cuts to council budgets.

Eaton said: “Councils are being hit by a perfect storm caused by the recession. Sources of income have dropped sharply at a time when more and more people are turning to councils to help them through tough times.”Local government is feeling the effect of recession in exactly the same way as hard-pressed homeowners and families. Low interest rates mean councils are much less able to rely on their savings, plummeting house and land prices have hit hard and income from leisure centres and a range of other services has fallen.

“Town halls have been swept by the cold winds of recession for more than a year and that means difficult choices have to be made. Up and down the country many councils feel they have to take the decision to cut jobs in response.”

She said that councils would do whatever they could to protect frontline services, but that regardless of who wins the general election, they were expecting significant cuts.John Denham, the secretary of state for communities and local government, confirmed that councils will face spending cuts setting out a guide to help them protect frontline services. “Local people will rightly be intolerant if they are told that front line services will be cut because their council hasn’t done everything suggested on this checklist. If councils adopt our radical efficiency reforms they can protect our top priority frontline services which matter most to local people.”

The checklist advises councils to reduce the number of buildings they run by asking different services to share offices. It emphasises a new system of council budgeting called “Total Place”, which Denham claims could save up to £20bn from the cost of local services by looking at spending on all the local public services , and not just council spending. The scheme, which has admirers from all political parties, aims to end duplication and find new ways of coordinating the provision of services.