Cash crisis hits town halls from Truro to Aberdeen

Councils warn 20,000 workers will face redundancy this spring

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The number of town hall jobs to be axed as local authorities desperately attempt to cut running costs in the recession has risen to 20,000, a survey by The Independent has found.

Councils from Cornwall to Aberdeen are planning deep savings as they struggle to cope with a growing crisis in local government spending.

Nottinghamshire County Council warned yesterday that it planned to shed up to 1,500 jobs as part of a drive to save £200m over the next five years. Birmingham City Council announced last week it plans as many as 2,000 redundancies. The problems faced by the two Midlands authorities are mirrored across the country, with councils of all sizes being forced to cut their workforces.

The widespread planned redundancies underline warnings that former public-sector workers will account for most of the expected increase in dole queues over the next six months. It is also feared that the quality of frontline services provided by councils will suffer because of staff cuts.

Some of the biggest job losses are in the major cities, with 270 council employees expected to lose their jobs in Leicester, 260 in Hull, 243 in Stoke-on-Trent and 170 in Wolverhampton. Leeds will lose 350 jobs through natural wastatge.

County councils that plan to axe staff include Leicestershire (650), Cornwall (600), Oxfordshire (500), Kent (more than 400) and Gloucestershire (126).

Councils in London are preparing to make more than 1,100 town hall workers redundant, with the largest losses in the boroughs of Brent (350) and Westminster (300).

Welsh local government leaders are predicting between 2,000 and 4,000 job losses, including 400 in Powys and 300 in Cardiff. Scotland is also under pressure, with Glasgow council expected to make 1,000 redundancies and Edinburgh 700. Unions predict another 1,000 posts will be axed by Aberdeen City Council.

The Government said last night that its grant to English councils was increasing in the next financial year by 4 per cent – well above inflation.

But many authorities are being forced to draw up drastic economies in anticipation of expected cuts in government grants from 2011 – regardless of which party win this year's general election. One council source said: "There is a wall of fog from the political parties over what's going to be happening next year, but we know we have to put the brakes on spending early."

The recession has also hit many authorities' sources of income over the past year. Income from planning fees, building inspections and property searches has plummeted because of the stagnant housing market.

Low interest rates also mean that councils cannot expect to raise much money from their cash balances.

Authorities are unable to recoup the shortfall from the council tax rates because of strict government rules on how much council tax can be raised.

They have been forced to turn to efficiency savings and redundancies instead to balance the books.

Many councils contacted by The Independent said they hoped to save some of the posts by not replacing employees who left or retired. Others hope to achieve some of the losses by voluntary redundancy.

Dame Margaret Eaton, chairwoman of the Local Government Association, 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."

The Chartered Institute of Personnel and Development has warned that job losses will accelerate – with local government particularly vulnerable. Gerwyn Davies, its public policy adviser, said: "Falls in revenue from planning and parking charges have compounded the cost pressures caused by the political drive to freeze council tax. Job cuts are inevitable as local authorities seek to restructure and become leaner in order to meet the demands of a new era for the public sector."

Dave Prentis, the general secretary of Unison, said many of the job losses were "totally unnecessary and are politically, not financially, motivated." He said: "Shamefully, many councils are using the recession as an excuse to cut services and jobs."

A spokesman for the Department of Communities and Local Government, said: "People rightly value local public services and the Government is working hard to make sure councils have explored every possible step to make efficiency savings before resorting to cuts that may impact on frontline services and jobs."

The news comes as Britain's public finances lurched further into the red, leaving the deficit on track to exceed that of Greece this year, in proportion to the size of the economy.

The Office for National Statistics said yesterday that January alone saw a net shortfall of £4.3bn, in a month which normally sees a healthy surplus. Tax receipts from City bonuses and from self assessment before the 31 January deadline usually leave a substantial surplus – last year it was £5bn. But the deficit this year is the highest on record, depressed by lower City bonuses and the general weakness in the economy. It means that the UK will borrow around £180bn, or 12.8 per cent of GDP, this year, marginally ahead of the 12.7 per cent funding gap that has landed Greece in difficulty.

Case study: 'Staff don't know what will happen to them'

"I was made redundant by the council last year, having been a manager of residential homes for children with behavioural problems. Some had been involved in the criminal justice system, but not all. I had been working in the sector for 20 years.

"When the council reduced the staff working in the home they still had to comply with the legal staff-to-children ratios, but what was harder to quantify was the emotional impact on the staff who were working under fear of redundancy.

While I was there staff were very depressed and they still are. They don't know what will happen in the future, and a lot are jumping ship. Working under that kind of pressure, and having staff leave all the time, undoubtedly impacts on the children, who are extremely disadvantaged and unsettled already.

As I was management, part of my job was to communicate the cuts to the care home staff. To do this we were given a script that deliberately steered staff away from asking difficult questions.

Those that left have mainly gone on to join agencies, or work for different authorities. But I know that many have found that because they'd not had proper skills assessments while they were working for the council, they can't demonstrate their abilities and re-enter the job market at the appropriate point. It's a backward step.

I understand budgets are being reduced and that money is tight. But when you consider the amount that was spent on agency staff, on consultants, on projects that were set up with no forward thinking, there were so many things that could have been done differently.

This council worker spoke under condition of anonymity for herself and her former employer. She had worked for one of the UK's largest city councils for 20 years.