Councils face difficult choice over “inevitable” job losses

Many councils across the country are finding “creative solutions” to keep their wages bill down without actually shedding jobs but ultimately redundancies will be inevitable, according to a joint report by the Audit Commission and the Local Government Association (LGA).

England’s 353 councils employ some 1.6 million people and have an annual wages bill of almost £30 billion and between them they have the country’s largest workforce – larger even than the NHS, although it remains the single largest employer. But, with government funding for councils shrinking by over a quarter between 2011/12 and 2014/15, councils need to reduce their workforce costs substantially while still providing much needed services.

Council workforces have a distinctive profile, according to the report, ‘Work in progress: meeting local needs with lower workforce costs’. More than half of staff work part time (55 per cent), more than half work either in social care or schools support (54 per cent), and more than half earn below the UK's median pay of £19,620 (53 per cent).

The report is aimed at councils as employers and aims to show how local authorities across England are reducing their workforce costs, with some finding creative solutions.

Not all councils face the same financial challenges, but the report’s message is that all must reassess what they do, how they do it, and what their priorities are. Major restructuring will take more time, however this option may be the only way to maximise savings and protect key services.

Councils are finding ways to cut the pay bill without losing jobs, but redundancies are inevitable the report says. Local government was already reducing posts before the cuts in government funding. In the past year an estimated 145,000 jobs have gone, and this figure will increase in the future. So far many redundancies have been voluntary, but the report warns that compulsory ones are set to rise.

“Each council must find its own way of cutting costs tailored to local needs, local circumstances and its own workforce,” said the Audit Commission’s cChairman Michael O'Higgins. “Councils are often the largest employer in their area, so downsizing can affect the local economy. Local government is a people business, with staff costs accounting for almost half the money spent by councils, so they need to be aware of all their options and the tools at their disposal. This report gives case studies and comparisons, while remaining focused on service quality. That is why it is so valuable.”

'Work in Progress' recommends quick action to decide on the most effective and equitable solutions. But it also advises that there is a balance to be struck between redundancy programmes and the benefits that can flow from retraining, redeploying, or sharing staff with other organisations.

“Local government is the most efficient and trusted part of the public sector,” Sir Merrick Cockell, chairman of the LGA. “Every day, local authorities deliver vital services that people rely on and they do the best job they can within their means. Unfortunately, in the current climate, councils have had to take some tough decisions in order to bring their workforce costs down, continue to provide essential services and minimise job losses. This is part and parcel of sound and responsible financial management.

“Funding cuts have meant workforce costs must come down. Councils have been ahead of the game in making savings and have already started to reduce workforce costs. Unfortunately, job losses are inevitable given the scale of cuts. Where these are necessary, councils are working hard to minimise disruption to staff and services through restructuring, shared services and outsourcing. They are also looking at how they invest in and reward people to ensure they continue to deliver the most efficient public services possible.”

The report says they are trying hard to avoid redundancies and adversely affecting local economies by: freezing recruitment to unfilled posts; cutting overtime, bonuses and out-of-hours payments; reducing their spend on agency workers and consultants; and extending part-time hours.

But job losses will be unavoidable, as part of a cost-cutting mix likely to include organisational change, reduced management numbers and outsourcing, the report says.