Council to sack all staff in pay cut manoeuvre

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Labour Editor

The drive to cut costs in local government has reached a new intensity with Labour-controlled Coventry City Council threatening to dismiss its 17,000 staff and re-employ them on reduced terms and conditions.

Unions have been told that the West Midlands authority wants to achieve more than pounds 20m of savings over the next three years by cutting pay and holiday entitlement rather than services or jobs. The lowest paid will be hit hardest with many losing around pounds 500 a year, according to union officials.

The news follows the Prime Minister's pledge to the Conservative Party conference that the Government would be "ruthless" in seeking future savings in public expenditure.

Officials at Unison, the public service union, said yesterday that while tight restrictions on budgets had caused serious problems for councils throughout Britain, Coventry was the first to threaten to impose new contracts on employees by first dismissing them.

Local authorities have been told by ministers to restrict expenditure increases this year to 0.5 per cent at a time when inflation is nearly 4 per cent.

Coventry has given its employees three months' notice from 31 December of the new pay and conditions. Hugh Robertson, national official of Unison, described the decision as "outrageous". He said a 12-point plan from management had "come out of the blue" and council representatives had said it was not up for negotiation.

Tricia Davis, head of local government for Unison in the West Midlands, called for an independent report on the council's finances. She said the union planned to make a series of proposals for reducing spending which would avoid the need to undermine pay and conditions.

John McNicholas, the Labour councillor responsible for human resources at the council, said that the lowest rates earned by council employees - pounds 3.71 an hour - compared favourably with the private sector. He said the council would not be reducing pay and conditions below nationally agreed levels and hoped to arrive at a negotiated settlement.

He said the threat of dismissal was a "technicality". Management could only introduce new contracts of employment by giving due notice, dismissing employees and then immediately reinstating them.

Mr Robertson said other local authorities had faced serious financial problems but none had so far reacted with such "draconian" measures.

Paul Marwood of the Association of Metropolitan Authorities, said that strict government financial policies had forced cutbacks on local authorities. Savings had been made in many areas, but some councils were now being forced to look at pay and conditions.