Council to spend £2m to cut costs

OLDHAM Council has called for help to manage its finances from accountancy giant KPMG — at a cost of £2 million.

But it expects the move will save tens of millions of pounds from its budgets.

The council is already warning of a £17.3 million hole in the finances next year, and is considering axing 850 jobs.

KPMG will become the council’s efficiency partner for two years, and is expected to make substantial savings in 2009-10.

The firm’s preparations will cost £227,000 for an initial report in November. Work will start the following month.

KPMG will take a root-and-branch look at the council’s finances, efficiency and productivity opportunities, and its regeneration plans.

But it will only be paid by rewards. The council will only pay up from savings found by KPMG. The company estimates these could be between 8 and 15 per cent of the council’s £195 million budget.

Last year, the council’s finances were criticised by the Audit Commission for its use of resources, financial reporting, internal controls and financial efficiency.

The leader of Oldham Council, Howard Sykes, said calling in KPMG was a brave move.
KPMG has previously advised the London boroughs of Camden and Hounslow, Edinburgh City Council, Bristol City Council and Trafford and Salford councils.

Councillor Sykes said: “This is recognition that challenging times are before us.

“It’s best that we bring in experts to support and help us plan the way forward. The council and our officer team will be working closely with KPMG.

But the leader of the council’s Labour group, Councillor Jim McMahon, said: “This is criminal. Last year we had a deficit of £14 million and only 30 job losses.

We reduced agency staff and consultants, which we found were costing us £12 million the year before.

“This seems to be a knee-jerk reaction. If they were so concerned about the budget, why did they ask for another £2.5 million at their additional budget in July?

“Why did they let the Unity Partnership (which looks after council back-office functions) out of a £500,000 contractual obligation, and why are they spending £750,000 on Christmas trees and plants.”

Anna Mitchell, the secretary of the main council union, Unison, said: “I haven’t had any details about this but it is something I will bring up at our regular weekly meetings. I will be asking questions.”

l Prime Minister Gordon Brown gave assurance to Oldham’s 850 public-sector workers whose jobs are in jeopardy while on a visit to Gorton on Friday.

He said: “The important thing is that we’ve raised the (government) grant to Oldham by 6 per cent this year. It’s a higher raise in grant than for most councils.”