Council cutbacks cost pounds 27m; AUTHORITY ACCUSED OF WASTING MONEY WHILE CUTTING 510 JOBS.

Byline: WILLIAM GREEN 

CLAIMS of waste were levelled at a Tyneside council today as it emerged it spent pounds 27m to save money. Newcastle City Council splashed the cash on its "corporate transformation programme", which aims to save pounds 169m over the next five years by axing 510 posts.

The bill includes pounds 13m in redundancy payments and pounds 9.5m in associated pension costs, pounds 3.9m more than expected, after 285 staff agreed to leave voluntarily. The average redundancy payout was pounds 45,600.

The bill for hiring consultants was pounds 2.3m while pounds 2.2m of cash spent related to the council's corporate transformation team, according to minutes of a recent meeting of the council's executive committee.

Coun Peter Allen, executive member for resources, told the meeting pounds 18m of savings would be realised in 2009-10 - with the higher severance costs being met through raiding reserve funds. And the "payback" on the initial outlay would start to be seen within two years.

But Coun Allen claimed it was difficult to make forecasts because of potential public spending cuts.

Nick Brown, Labour MP for Newcastle East and Wallsend, claimed the Liberal Democrat-run council was spending large amounts of public money to "buy" their way out of problems.

"There isn't any national decision that will affect the local budget of Newcastle City Council at least as far as this exercise is concerned. It is a mess of their own making," claimed Mr Brown, Minister for the North East.

Coun Allen said: "When you get rid of staff, you have got a lot of years' services. That's what it costs. What distorts it is what goes into the pension fund."

He added the programme would produce savings of pounds 18m this year and pounds 169m over five years, protecting council services and local taxpayers amid uncertainty about funding from central Government.

Kenny Bell, the Unison union branch secretary at the council, said: "We are not happy but we are having to live within a very strict financial regime."

He added the bill for consultants was unacceptable and Unison would continue to challenge it.

"But there are times when the private sector can bring something to the table," said Mr Bell.

He also warned the public sector faced the "most vicious" cuts programme after the general election next year whoever came to power and that Unison was mounting a national campaign to fight that danger.

Paul Woods, the council''s director of finance and resources, said severance costs amounted to pounds 13m in redundancy bills and pounds 9.5m having to go into its pension fund to make up for departing staff no longer paying into it.

CAPTION(S):

WASTE CLAIMS: Left, Coun Peter Allen and Newcastle East and Wallsend MP Nick Brown POLITICAL ROW: The Civic Centre in Newcastle