The council tax freeze announced in the Emergency Budget could lead to more job losses in local government, HR directors have warned.
Chancellor George Osborne revealed the government would help local authorities to freeze council tax from April 2011.
He said: “We will offer a deal to local authorities in England. If you can keep your cost increases low, then we will help you to freeze council tax for one year from next April.”
But local government HR chiefs told Personnel Today a freeze in council tax could force authorities to cut more jobs than planned as they would have less money to create the necessary reforms and provide services.
Stephen Moir, corporate director of people, policy and law at Cambridgeshire County Council, said: “A council tax freeze will likely lead to further cuts in jobs and services within local authorities, because councils will have to balance the books without being able to raise revenue through local taxation.
“The freeze in council tax means that more cuts and reforms will be required. It means accelerating change and reductions for some councils, which means that citizens will lose out in some shape or form.”
The Chartered Institute of Personnel and Development (CIPD) has already warned up to 725,000 public sector jobs could be lost by 2015 due to the cuts.
Dean Shoesmith, president of the Public Sector People Managers’ Association, agreed with Moir and said: “Freezing council tax does mean less revenue for local authorities, and it follows this is likely to cause some job reduction.”
But he added council tax represented a minority of local authorities’ income, so the freeze would be “unlikely to have a significant impact on reform and the work of transforming public sector services”.
Leatham Green, assistant director of personnel and training at East Sussex County Council, warned that for some councils, the freeze “could put pressure on jobs”.
“Councils have got to think about what they can afford to do with the money available. That might mean reductions in staff numbers,” he said. “If the money is not there to provide the services, that could be one of the consequences that falls out.”
But he insisted compulsory redundancies could be minimised by engaging staff on shorter-term contracts to meet specific demand, and through natural wastage.
Gerwyn Davies, public policy adviser at the CIPD, added he was sure job losses would rise as a result of the council tax freeze. He said: “It will certainly worsen what’s already a grave situation.”
But he and Moir warned “worse is probably yet to come” for local authorities, as more detail on deep cuts will be announced in the Comprehensive Spending Review due to be published on 20 October.
The Local Government Association said it was seeking clarification from the Treasury about how the council tax freeze would be funded. A spokesman said if funding came from cuts to central government budgets, as the Conservatives had previously suggested could happen, extra job losses as a result of the policy could be averted.