City leaders play for high stakes: Other local authorities are showing an interest in Sheffield's agreement. Malcolm Pithers reports

THE GAME of financial forfeits council workers in Sheffield are being forced to play has left no one in any doubt of how serious the city's monetary problems are.

The good news for the employees - for the moment at least - is that there will be no compulsory redundancies and about 1,400 jobs which were at risk have been saved. But few people in City Hall could say for how long.

'It's unpalatable. It's not what everybody wants, but at the end of the day it was either accept the deal or lose the jobs and then let the people of Sheffield suffer for the loss of the services,' one council employee said yesterday.

Sheffield's councillors have been striving to grapple with mounting financial problems. These have been brought about for a variety of reasons, such as the way government grants have been allocated and the bill left outstanding after the 1991 World Student Games.

Mike Bower, Labour leader of Sheffield City Council, told trade unions that the council was facing the worst budget crisis in its history. He stressed that despite efforts to reduce the deficit, it faced a budget gap of pounds 18m, which meant that without acceptance of the new financial deal Sheffield would not be able to produce a balanced budget required by law.

The council had put various proposals to the trade unions, but these had to be withdrawn when it learnt that the unions would ballot for immediate strike action.

The agreement reached this week means that employees will take, in effect, a pay cut of about 3.25 per cent in exchange for an extra seven days' leave, or working one hour less per week.

The agreement covers all staff, except those earning less than pounds 90 per week. Part-time employees will face a cut in working time pro-rata to their earnings.

This will result in cost savings of about pounds 8.5m and the council will not have to introduce compulsory redundancies.

Other local authorities may be interested in the deal, as staff in Sheffield's personnel department discovered yesterday, with local government officers from around the country contacting them for advice about the plan.

John Karanec, a National and Local Government Officers' Association member in Sheffield, said the plan was significant for all authorities. 'It is not something that has been gone into lightly. But I do think the scale of the problems in Sheffield are so far advanced because of the financing and the losses over the World Student Games and the fact that we have been progressively eating away at reserves, that it is something special and this was the end of the road.

'We obviously hope it does not spark a whole series of wage cuts in other authorities, but it is certainly a significant move . . .'

However, not all employees have agreed to the deal, with the voting figures showing 6,464 workers in favour with 6,178 against. The works department, with about 2,000 employees, is opposed to the plan and teachers cannot fully participate, due to their conditions of service.