City workers face pay freeze in £13 million black hole battle

A planned 500m cut in the UK Government budget for Scotland is expected to result in a loss of around 13m for the Capital in 2010/11.

City finance leader Gordon Mackenzie refused to rule out a pay freeze, warning of dark times ahead for the local authority.

Unions today said any such move would be resisted by its members, who this month pocketed a 2.5 per cent increase in their basic wage thanks to a deal negotiated last year.

Cllr Mackenzie said: "These are incredibly pressured times for local authorities and we are looking right across the board, from pay and conditions to how we run our services, for savings.

"We are not, as far as I am aware, actively considering a pay freeze but it is not something I can rule out.

"There is no point in burying our heads in the sand, (chancellor] Alistair Darling's cuts are likely to fall next year and we have to be ready for them.

"We are very conscious of what is happening in the private sector with regards to pay freezes and the like, but we have our own significant challenges.

"The 13m is on top of the usual two per cent efficiencies expected so we need to take big decisions.

"We've steadied the ship since we came to office but there is a huge challenge ahead."

Cllr Mackenzie confirmed that the Lib Dem/SNP administration is still pressing ahead with plans to put the council's customer service functions out to tender.

Council chiefs are to invite private firms to submit ideas on how they could improve the customer facing areas of the council, such as council tax collection or its call centre.

The initiative would see companies come in and manage or reorganise council departments with them splitting the money saved with city leaders.

John Stevenson, Unison branch president at the city council, said: "I don't think anyone can accuse our members of not being realistic.

"Pay rises over the last few years of 1.1, 1.2 or two per cent are clearly that and were certainly not in line with the private sector.

"We will have to see what is proposed but they are unlikely to be happy with the prospect of a pay freeze."

After last year's public service strikes, the city council's 17,500 staff eventually received a pay increase of three per cent, backeddated for seven months, in November.

A further 2.5 per cent increase came in from this month and talks over next year's pay deal are due to get under way after the summer.

Tory finance spokesman Cameron Rose said: "We are in a new world now financially and we need to look at things we have been reluctant to in the past.

"There is an increasing divide between public and private sector pay but I think people realise that there is pain coming."