Services cut to pay for redundancies
Nov 10 2010 by Adrian Pearson, The Journal
MONEY earmarked for vital services must be used to fund redundancy payments to thousands of council workers.
Treasury officials, in a visit to the region, said authorities will not be able to borrow cash needed for redundancy pay-outs and pensions, as they have traditionally done.
Instead they will have to find it from existing budgets, meaning everything from bin collections to social care could be slashed to meet the cost of making people jobless.
A private assessment of the cutbacks made to council leaders in the North East revealed the impact is expected to range from “too damaging” to “undeliverable”.
The changes to redundancy costs also mean thousands of workers will potentially be offered a slimmed down redundancy package, decreasing the likelihood people will volunteer.
Instead of using the sale of former assets or borrowing cash. finance chiefs have been told only £200m will be allowed in this way across England.
It is thought larger councils such as Birmingham and other London employees could more than account for this fund by themselves.
Former Newcastle Council leader Lord Beecham said the effects would be “horrendous and immediate” if councils have to find more money for the thousands of redundancies forced upon them.
