The Bermuda Government will look to consolidate schools, cap financial assistance and suspend the Agricultural Exhibition for a year to cut public sector spending by $6.4 million.

The cost-cutting measures were backed by the Bermuda Trade Union Congress (BTUC) after the two sides got back around the negotiating table in the wake of three days of industrial action.

Premier Michael Dunkley told The Royal Gazette that the potential $1 million savings from consolidating schools would not hinder improvements to the quality of education and that a general review of financial assistance would look into the existing annual cellphone allowance of $324,000.

He admitted that the decision to cancel this year’s “Ag Show” was painful, but would result in savings of $400,000.

“Capping financial assistance at $45 million is a workable option and would save $5 million,” Mr Dunkley said.

“Government will continue to help people in need, but going forward we believe the economy will continue to improve, which will be able to take some of the pressure off financial assistance. We can get more people off financial assistance as more jobs become available.

“One area we will look for potential savings is cellphone allowances.

“At present, the cellphone allowance for the year is $324,000. There is a feeling that this is inappropriate and we will review it for the Budget.

“We have conservatively estimated that school consolidation will result in $1 million of savings, but there will have to be discussions on what schools will be affected and how we will do it.

“We are in the middle of the school year, so this is something that cannot be done until September.

“A number of schools have dwindling numbers and the birth rate has dropped, so we believe there is the ability to consolidate them without impairing the quality of education.”

Referring to the decision to cancel this year’s Agricultural Exhibition, he added: “It’s a painful decision and, personally, I am very supportive of the Ag Show.

“But it involves a lot of overtime and we need to look at ways of saving.

“We looked at whether we could do it over one or two days, but in the end decided that we would suspend it for this year with a view to bringing it back next year.”

Yesterday Mr Dunkley, together with Finance Minister Bob Richards, outlined a series of cost-cutting measures that had been agreed to during Wednesday night’s negotiations with the BTUC.

The meeting ended with unions claiming the Budget Reduction Working Group had reached agreement and the BTUC had hit its savings target of an extra $22 million, enabling furlough days to be taken off the table.

But Mr Dunkley said that reduction targets had not been fully reached and that the Government would continue to look at “all options” as it puts together the next Budget.

He also rejected the assertion of Chris Furbert, the Bermuda Industrial Union president, that he had been invited to attend Wednesday’s 11pm BTUC press conference at the Bermuda Public Services Union.

“The public should know that I never received an invitation to attend the press briefing, which in Government’s view was entirely premature,” he said.

“It is very important to stress that the required reductions in expenditure just have not been fully reached, contrary to the BTUC’s declaration.

“We maintain that we must consider all options. If the unions cannot agree to a furlough, and to be clear a furlough cannot be implemented without their agreement, then Government would need to consider reductions in service levels and programmes.”

Mr Dunkley explained that the Government would now move forward with producing a National Budget for 2015-16, while Mr Richards outlined a raft of other cost-cutting proposals that had been discussed with the unions.

He said the BTUC had agreed to reduce the travel budget by $1 million as well as to raise the GEHI contribution that employees pay for uninsured spouses from 50 per cent to 75 per cent, saving $1.6 million.

Mr Richards added: “Some of our proposals which were not agreed to by the BTUC included a cost sharing of employee pensions, increasing the rate paid by employees and decreasing that paid by the Government by 1 per cent, realising savings of $3.5 million.

“Another proposal not agreed to was a payment of all overtime at straight time. Instead, the unions agreed to accept overtime that is normally paid at double time, at time-and-a-half.

“They did not agree to any changes to overtime that is currently paid at time-and-a-half.”