Local authority shortfall to increase household charges

HOUSEHOLDERS face a significant rise in charges next year as local authorities struggle to fund the 80 million benchmarking bill.

Although an additional once-off Budget payment of 30m was yesterday added to the 38m already allocated to fund the pay hikes, local authorities are still facing a 12m shortfall next year.

City and county managers have warned that staff will be laid offof staff lay-offs and increased charges as a direct consequence.

City and County Managers Association (CCMA) chairman Willie Soffe said that while they welcomed the one-off 30m allocation it will not cover all their costs.

"We will have to cut back on staff and increase charges to pay the benchmarking bill, " Mr Soffe said.

The total cost of funding benchmarking payments to local authority staff will reach 80m next year, as 50% of the pay award is due to be handed over in January.

More than half the 1.9 billion increase in public expenditure next year will be spent on pay. That figure includes 305m in benchmarking.

In recent weeks, the Government has been adamant that local authorities must fund the benchmarking pay awards themselves. That stance had met with a chorus of disapproval.

However, in his Budget speech yesterday, Finance Minister Charlie McCreevy hinted local authorities would have to borrow to make up the difference.

"The budgetary targets announced today for 2004 include a significant provision for borrowing by the local Government sector. As we have done at Central Government level, it is important that local Government adjusts its expenditure ambitions to the resources available," he said. Mr McCreevy said he was committed to the benchmarking process but repeated warnings that payment was conditional on industrial peace. "Failure to deliver on these requirements will mean that payments will not be made," he said.

Referring to the next pay agreement, which is to be agreed in the first half of next year, Mr McCreevy warned that a repeat of the terms of Sustaining Progress would not be possible.

"We need a significantly lower outcome in pay terms than was the case the last time," he said.

SIPTU president Jack O'Connor said any move to limit wages would not be logical. "Given that actual take-home pay is being reduced and living standards are going to be reduced, there is a major fault in that logic," he said.

Mr O'Connor said the big story of yesterday's Budget was the way lower and middle-income families were being hit.

"SIPTU is particularly disappointed at the failure to increase tax credits sufficiently to assist all workers and make progress towards removing those on the minimum wage from the tax net, and the failure to adjust the standard rate band at all effectively regressively increasing the proportion of workers paying tax at the top rate which is directly at variance with the commitments in Sustaining Progress," he said.