Delayed council redundancy plan could lead to “financial crisis”

Council bosses have admitted they could end up facing a “financial crisis” and major cuts to services if a delayed transformation programme involving redundancies does not spark back into action.

Prior to the coronavirus pandemic, plans to axe around 180 staff were announced as part of efforts to save the council £25million to 2023 in a programme dubbed “Right for Renfrewshire” (RfR).

RfR will see the council transform the way it works, making more use of technology and automation to handle routine requests across customer service centres, administrative support and employee services.

But as the Covid-19 outbreak struck and the country was plunged into lockdown, the scheme was put on hold, with employees due to leave in June asked to remain in their posts until next year to support the response.

Now, in a crunch update to full council, finance chiefs have insisted failure to complete the programme at “the required pace” could mean challenges already faced by the local authority could “escalate into a financial crisis over the medium term”.

Officers went on to say in a report that the council could be forced into cutting vital services if the plans do not progress.

Documents have revealed the council is facing a shortfall of up to £36million over the next two financial years, with RfR forming a “critical” part of reducing the budget gap.

Finance bosses have said raising council tax by four per cent in each of the next two years could reduce the black hole to around £19million.

The forecast, however, continues to be shrouded in uncertainty due to the ongoing response to the pandemic, and officers have said it is vital the council focuses on driving RfR forward as soon as possible to ensure financial sustainability of current services.

A report by the director of finance and resources, Alan Russell, said: “The next two to three years may represent the most critical period in the financial history of the council.

“It is now a necessity the council is highly focused on driving forward the RfR transformation programme once it is freed from Covid-19 demands.

“Should the council fail to achieve the RfR financial objectives, or fail to achieve it at the required pace, there is a severe risk the acute financial challenges faced by the council will escalate into a financial crisis over the medium term.

“Failure to achieve this transformational progress will ultimately lead the council into territory that would involve action to secure rapid reduction in costs, not delivered through managed transformation, but by cutting, downsizing or withdrawing services.

“The updated outlook [for 2021-2023] continues to consider a range of scenarios which suggest over the next two-year period, the council will be required to deliver significant savings, albeit the scale of this requirement is subject to potentially greater uncertainty than before and likely to fall within the range of £14million to £36million.

“For illustrative purposes, these lower and upper forecasts would reduce to circa £7million to £29million after adjusting for an exemplar four per cent per annum increase in council tax levels each year.

“It is probable over the two-year period, the actual outcome has a greater likelihood of falling closer to circa £26million, or circa £19million after adjusting for the illustrative council tax increase.”

The pandemic has already cost the council an additional £19million to £21million this year, with the majority of this covered by revenue grants from the Scottish Government.

However, the council still faces exhausting its £6.6million pot of unallocated reserves to plug the remaining gap.

Some of the staff who volunteered to leave in 2019/20 as part of RfR left as planned, but some offered to postpone their departure until next year.

A significant proportion of the job cuts are to come from the customer transactions department, while sectors such as school and social care catering and building standards are also set to be impacted.

It is anticipated the delivery of RfR is now likely to extend into a four-year programme – to 2023/24 – as opposed to three.

A council spokesman added: “Work has been ongoing to manage the council’s immediate financial position and ensure we continue to remain financially stable.

“Our medium term financial plans have been adjusted to take account of the impact of the pandemic and our RfR programme continues to play a major part of these plans.

“This programme is about transforming the way we work and improving outcomes, not just cost savings, and will ensure the council targets resources where they can have the most impact for local people.

“As has been the case over many years of delivering change, any associated reductions in staffing are achieved through voluntary severance arrangements and through the removal of vacant posts that emerge in service areas undergoing change.”

Daily Record – Paisley