Croydon Council's entire workforce has been offered voluntary redundancy in a bid to plug a £100m hole in the authority’s budget.

Thousands of staff have been invited to apply for severance payouts as the council looks to slash its spending and cope with Government funding cuts.

The offer was sent yesterday to the authority's 10,000-plus employees, with only school workers ineligible for the deal.

The council has also frozen recruitment and will review its use of agency workers to save cash during what it called a "hugely challenging time".

Bosses believe they must cut the annual budget by £100m over the next three years, and are struggling to rein in a predicted overspend of £3.5m this year.

In an email sent to staff yesterday, Richard Simpson, the council's deputy chief executive, said: "As you know, we are facing a hugely challenging time as a council with cuts to our grant from government and increasing demand for our services

"This alongside continued increases in demand has led to a position where we are forecasting an overspend of £3.5m

"Despite a number of actions put in place earlier in the year this is not improving. This means that further measures are being put in place to ensure that the overspend is reduced as much as possible."

Staff have also been invited to permanently reduce their working hours or take early retirement.

An adult social care worker, employed by the council for more than a decade, told the Croydon Guardian she feared job losses would pile stress on remaining staff.

The employee, who did not want to be named, said: "I am tempted [by voluntary redundancy] because, to be honest, of the stress of the job.

"Workload has tripled in the past five years. We have had a one per cent pay rise. It is ridiculous."

She said staff feared compulsory redundancies would follow the voluntary scheme, adding: "Apparently the council are skint."

Councillor Simon Hall, cabinet member for finance, confirmed the authority could be forced to wield the axe if too few staff asked to leave.

He said: "There are a range of options - which includes compulsory, which includes looking at the range and level of services we can provide - that would have to be looked at.

"You can't take out £100m from the annual spending of the council without that also including a reduction in staff members."

"But what we are keen to do is to avoid wherever possible any significant compulsory redundancies."

Coun Hall declined to estimate how many jobs the council needed to shed or say which departments would hit hardest.

He said: "When we've got all the requests in, we will look at the various schemes and it will be for the directors of different parts of the council to look at whether they can reorganise things and do things different so those people can be allowed to leave. I'm not going to pre-empt the process."

The council blamed unexpected cuts to funding for public health, adult learning and the care of asylum-seeking children - all announced by the Government since July - for increasing the financial pressure already caused by dwindling local government budgets.

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