Highland Council staff have been urged to take voluntary redundancy or work fewer hours in a desperate bid to bridge a £50million budget gap.
As the finance secretary announced his draft budget statement in Holyrood yesterday, the authority’s chief executive Steve Barron sent an e-mail to all staff – including teachers – offering redundancy or reduced hour packages.
And just hours later, council leader Margaret Davidson mooted for the first time that the authority may go against the SNP’s council tax freeze and set its own rate in 2016/17 to help tackle the funding shortage.
It would face a financial penalty for doing so, but it is expected that would be cancelled out with the scale of the tax rise.
Last night, one Highland union leader warned that the severity of the Scottish Government cut in council grants would have a “very, very significant impact on services.”
The redundancy bombshell emerged in an e-mail to all council staff and councillors, sent by Mr Barron moments after John Swinney delivered his figures.
According to government estimates, the council could lose £18million.
Mr Barron told colleagues in his e-mail it would take some days to analyse the full implications of a grant reduction that was, ultimately, likely to be more than 4%.
“The grant makes up 80% of our budget. It is a much bigger cut than previously expected, resulting in a gross budget gap of at least £36.5million next year,” he said.
He later amended that figure to “around £40million.”
The council, which has a £500million budget, had already found £10million of savings for next year.
The e-mail continued: “In the light of the severity of this cut and the short timescale available to implement it, I am advising all council staff of the launch of a voluntary redundancy scheme combined with an option for staff to voluntarily reduce their hours.
“These will go alongside a range of savings and service cuts, which will come to members to be considered and agreed at council in February to enable us to achieve a balanced budget.
“These are not easy times and I appreciate the uncertainty such measures bring. Voluntary redundancies and reduced hours will mean a reduced workforce and a loss of many experienced staff.
“We must recognise that this will have an impact on performance as well as an impact on staff morale. However, I believe that these measures will be required to deal with such a challenging situation.”
The offer – which runs from December 21 to January 29 – is open to all staff, except those in “NHS commissioned services.”
Mrs Davidson said: “This is the first of many unpalatable decisions we will have to make in the coming weeks and I am deeply saddened to see the council forced into this position.”
Asked if Highland might break the council’s “accord” to freeze council tax, she told the Press and Journal: “It is possible. We’re leaving nothing off the table. I believe some other independent councils across Scotland, maybe Labour ones, would come with us.”
Mr Swinney said he understood the pressures on local government budgets and would consult with councils about the terms and implementation of the settlement.
“Local government are essential partners in ensuring the reform agenda leads to the creation of sustainable public services and we will agree with them how best to deliver this realignment of resources,” he said.
The council’s opposition Liberal Democrat group leader, Alasdair Christie, said: “It’s a horrendous grant settlement. As the majority of our expenditure relates to salaries, it’s unfortunate that as a result of this settlement people are being placed in a position to consider vuluntary redundancy.”
Liz Gordon, of the GMB union, said: “Our main concern is how we protect the surviving services. People should know this is going to have a very, very significant impact on council services and that is a matter of great concern.”