GERRY BRAIDEN and STEWART PATERSON

Scotland's councils are hurtling towards an unprecedented financial crisis, with severe cutbacks forecast next year now being revised upwards again - by as much as 50%.

In an address to his staff today the chief executive of Scotland's largest authority, Glasgow's George Black, warns that "the circumstances we face just now are like nothing we have ever experienced before" and said projected savings of £25m for next year are now more likely to be in excess of £40m.

Citing the global economic crisis and the Scottish Government's call for £500m savings across 2010-11, he has also cautioned that unless Glasgow City Council deals with the effects of the financial crisis in the next few months the authority's reserves will "be completely wiped out" and said it would be taking direct action in the coming weeks to reduce expenditure.

Severe budget pressure, as a result of higher costs and lower income from the downturn in construction, is affecting other councils across the country, fuelling fears among unions that job losses may be on the horizon.

In the capital, a reduction of almost 50% (£20m) from land sales is predicted and costs are expected to rise by £10m, while in East Renfrewshire savings targets are expected to more than double, from £2m to £4.8m in the next two years.

An East Renfrewshire spokesman said: "Next year we have to make some demanding decisions. With the recession our capital programme has changed out of all recognition."

North Lanarkshire has a commitment to achieving £10m in savings this year, but last night leader Jim McCabe said: "This may not be enough to meet the increased costs we are facing."

Fife's forecasted savings of £38.6m between 2009 and 2011 are being revised upwards by 2% although the authority said it expected to make further efficiencies when the local government financial settlement for 2010-11 is unveiled.

The grim revision of the financial picture comes two months after The Herald revealed that Glasgow, Edinburgh and Aberdeen faced a combined deficit in the current financial year alone of more than £150m, with Glasgow admitting that unless it spent its capital "rainy day" savings major projects, including Commonwealth Games venues, would be in jeopardy.

Several senior officials are also being made redundant, but the council insists no-one will be forced out. Although there are no details as yet as to where Glasgow will make the savings, its senior management team will now meet weekly rather than fortnightly to address the impending crisis.

In an article in the council's inhouse publication, The Insider, Mr Black said: "I am concerned that some members of staff do not fully realise the effect that this is already having on the council.

"While I don't want to worry anyone unnecessarily, it is vital that I am clear with you about how bad the current situation is and how much worse it could become in the future. We are a very long way away from things picking up and I expect them to become substantially more difficult before they do.

"In December the Scottish Government announced it would be looking for £500m of savings in 2010-11 and while it is too early to say exactly what our share of the savings will be I expect it to be somewhere in the order of well over £10m. So instead of saving £25m or even £28m in 2010-11 we could now be faced with saving well in excess of £40m.

"I understand that this will be frightening for some people. However, it would be wrong of me to expect the sort of action from you which will be required in the coming years without being totally honest with you about the reasons why we need to take that action.

"In the coming weeks services will be taking action to reduce expenditure. If we do not all do what we can to deliver those savings then the effect on the council, and on the services we provide to the people of Glasgow, will be dire."

Mike Kirby, Unison's Glasgow secretary, said: "Is Mr Black lining us up for worse to come as users, carers and workers in the public services? Unison will work with the council to secure operational efficiencies but any reneging on the council leader's commitment to avoid compulsory redundancies will be resisted with industrial action if necessary."

A Scottish Government spokesman said that "despite the worst settlement for Scotland since devolution" it had been discussing with councils what was required to assist recovery, slashed business rates for small business and provided an extra £70m to enable councils to freeze council tax.

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