Cost of Wolverhampton City Council job cuts will take 20 years to pay

Wolverhampton City Council expects to be left with a bill of £18.7 million to make more than 1,000 staff redundant over the next two years.

However, the council has this week revealed that as many as 2,000 staff could go by 2019 as it tries to save £123 million.

Today it can be revealed that the council has been given the go-ahead to borrow £1.3 million towards the redundancy costs and pay it back over 20 years, costing a further £100,000 in interest.

Councillor Andrew Johnson, finance spokesman for the ruling Labour group, said: "It's a way many organisations would use to cover one-off costs."

Leader of the council Roger Lawrence said: "We will have to borrow money to finance the project. The Government hasn't given us any commitment for next year."

The council today released a chart breaking down how it spends its £255.6 million annual budget. Almost two thirds goes on care for adults and children, leisure, youth services and libraries. Nearly £40m is for emptying the bins, maintaining and cleaning streets and buildings and the back office.

Around £31m is on 'treasury management' or gets sent straight to Centro, which oversees public transport for the West Midlands.

The rest, £1.6m and one per cent of the budget is on 'policy, scrutiny and communications', which includes paying for councillors.

Councillor Lawrence rejected suggestions that it was the fault of the management or political leaders of the council for the position it now found itself in.

"If we had got it off the blocks early would we have had more business rates? If we had got Sainsbury's and Tesco to build their supermarkets sooner there would have been more people employed."

Last month it was warned that without deep and fast cuts in spending the city council would go insolvent within a year and would not even be able to empty the bins or care for the elderly. The council's controlling Labour party has now stressed it will be able to carry on running services because it has drawn up a budget that is balanced, although it will have to get rid of hundreds of people.

Councillor Wendy Thompson, opposition Tory finance spokesman, said the use of borrowing to fund redundancy was 'typical'.

She said: "This is the story of Wolverhampton City Council. It's called living on tick. They are just piling up the debt."

Meanwhile, opposition Conservatives have accused the Labour party of allowing the council to be burdened by excessive costs over many years.

The Labour party says its financial woes are down entirely to the Coalition Government stripping it of £147m worth of grants and other funding aimed to help deprived areas.

Paul Uppal, Tory MP for Wolverhampton South West, said: "From day one, our key aim has been the protection of services and retention of the jobs associated with these. We all know that Wolverhampton City Council can find savings without the current level of cuts to frontline services. I have been and will continue to look into ways in which the council wastes money, and attempt to provide solutions."

The council is planning to dock its staff a day's pay for calling in sick and to cut full time hours from 37 to 35 a week.

Other cuts include reviewing outdoor events, stripping £10,000 from the Grand Theatre and axing hundreds of thousands of pounds from Central Baths.