Pay rise deal could cost £94m and force councils to cut jobs

Council HR jobs could be at risk following a pay settlement that leaves local authorities struggling to find an extra £94m.

Conciliation and arbitration service Acas has agreed that the 2008 pay award of 2.45% offered to council workers should be increased by 0.3%, even though local council funds are already tightly stretched.

Chairman of the Local Government Association (LGA), Margaret Eaton, said: “Councils are extremely surprised and disappointed by this result, which runs counter to all the evidence. The additional pay award defies common sense and will be a devastating blow to council workers who will see jobs shed to balance the books. She estimated the decision would cost local authorities an extra £94m in wages this year.

“We are not prepared to pass this cost on to council taxpayers, so it will be jobs that have to go,” Eaton said.

“Councils, like everyone else, have tightened their belts to weather the recession and the news that the arbitrators have awarded an additional 0.3% increase is an extremely bitter blow.”

A spokesman for the LGA added that since council tax rates for 2009 had already been set, councils could be forced to cut jobs.

“One option could be to merge back office functions. There is a possibility that HR and communication functions could be stream lined. It’s going to become even tighter for next year,” he said.

Acas was called in to resolve the pay dispute after council workers went on a two-day strike in July. Workers were eventually paid the 2.45% increase late last year while a deal on extra pay was being thrashed out.

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