Massive job and pay cuts as Southampton City Council faces cash shortfall

The authority has now planned how the reduced grant from the government will affect the city's budget until 2013 - and it leaves the council with £5m less than expected.

However, Civic Centre bosses had already planned for a worst-case scenario of a £25m shortfall, meaning they can make up the difference - but only by implementing the harshest cuts and savings.

Today, staff have been told that the cuts and cost savings outlined back in early November will now have to be enacted, meaning the loss of 250 jobs, a 5.4 per cent pay cut for all staff, as well as a number of other austerity measures.

However a further 400 jobs that could have been at risk will not now be lost, due to the pay cut for all staff.

The leader of the council, Cllr Royston Smith, said: "We now understand that we will need to find savings of £25million next year to meet the funding shortfall. This is really tough but the proposals we have put forward will meet this shortfall as long as all of them are adopted.

"We have been planning for this for more than a year and our priority has been to protect as many core services as we can. Job losses are always awful for those affected and we will do all we can to keep them to an absolute minimum. But when we need to save such vast amounts of money they are unavoidable.

"The proposed changes to terms and conditions will allow us to save some £8.6 million next year and £12 million in 2012/13. If we were not to introduce these changes we would risk losing at least a further 400 jobs in that period. By protecting frontline jobs we protect public services.

"We simply can't do everything we have done in the past. We will have to make difficult decisions and we will have to focus on services that are valued most by residents and businesses.

"This will mean our focus will be on protecting services that support the economic development of Southampton, creating new jobs for local people. We will support the continued improvement in our schools, ensuring young people have the qualifications and skills to take advantage of new opportunities."

The government grants make up as much as 70 per cent of the money spent by Southampton City Council, meaning the reduction in the money coming from Whitehall is a massive blow to the city.

The council's austerity measures are the initial proposals of the Council's Executive, which will finalise and formally the final budget to Full Council at a meeting on 16 February.

They will then be considered by the Full Council at the budget meeting along with any other proposals, when the Full Council will make its decision and set the Council's budget and the Council Tax.

Cllr Smith added: "In all of this, we must not lose sight of the fact that, even after these significant reductions, we will remain very much in business. Southampton City Council will still deliver hundreds of services that benefit residents and businesses in the city. We will still be spending hundreds of millions directly into Southampton's economy. Despite the recession Southampton has continued to develop and I am confident that with the right focus the city council will continue to lead our city in the right direction."

Council savings and cuts

The proposals to change staff terms and conditions include:

- a package of measures to reduce pay of all staff by an average of 5.4%;
- no pay increments for all employees for two years (2011/12 and 2012/13);
- no expected cost of living pay award for two years in line with whatever is agreed nationally;
- measures to reduce sickness absence in the workplace;
- restructure essential and contractual car user entitlements;
- payment of mileage rates at the government approved rate;
- removal of all market supplements;
- removal of the leased car scheme.
- Savings of £4.2 million in 2011/12 rising to £4.7 million in 2014/15 have already been realised as part of the mini budget approved by Council in July this year.

The council is currently considering measures that would ensure that those staff on lower pay are not disproportionately affected. This might include a package of reductions that seek to provide some protection to staff on the lowest pay grades.

Residents invited to comment

The council is currently engaged in a range of budget consultation activity. An online budget calculator that allows Southampton residents set their own budget is available until 7 January 2011. The YouChoose tool can be found via the council's homepage southampton.gov.uk.