Almost entirely unreported in the British media, there's a revolution taking place in working practices in the public sector in this country.

The location is the rural county of Shropshire, near the English border with Wales. Over the summer, every one of the council's 6,500 workers was sent a letter from the chief executive.

Entitled 'Changes to Shropshire Council Staff Terms and Conditions of Employment', it explains that the authority has decided to terminate the contracts of all current staff, instead making everyone an offer of immediate re-employment on new terms and conditions.

In other words, the council told every single employee that it was sacking them. But they could get their job back if they agreed to a pay cut of more than five per cent over two years.

If they didn't reply by the start of October, it would be assumed that they accepted.

Why? The council receives funding from central government, which told it to cut about $120m from its budget.

The cuts were 'front loaded', in council-speak, meaning they had to come from staff pay. The choice, according to the authority, was either this new deal or large-scale compulsory redundancies. Not much of a choice.

'The old models don't work'

Doing this is unheard of in the public sector in Britain. It's been done now and then in big corporations, but the leadership of the council says openly that such is the new economic reality that they had to tear up the rule book on working practises.

'The old models don't work', said the council leader Keith Barrow. Employers in the public sector, he argues, are having to find new and 'imaginative' ways of dealing with the brutality of the cuts.

This winter is due to see a massive stand-off between the public sector union here, called UNISON, and the government, over the cuts.

Lots of big strikes are being planned. So the response to this from UNISON in Shropshire is really significant.

But they're faced with a dilemma. Don't fight this, and the union looks weak. Fight it, or don't sign the new contract, and you lose your job. And in Shropshire, like everywhere else, unemployment is rocketing.

So people are frightened. Most are eventually signing.

The local union leader acknowledges that the authority "has them over a barrel," another way of saying that the council must have decided that they would win this game of poker with the union because workers would rather take a pay cut than risk long-term unemployment.

In the coming weeks, UNISON members in Shropshire will decide whether to strike and fight, or comply. But meanwhile, several other local authorities elsewhere have said they want to follow Shropshire's example themselves.

New working practices?

The implication is that Shropshire is being seen as a test case for employers to see whether they too can rip up the rule book on working practices and undermine UNISON across the country.

All to save money on instruction from central government.

The other point is to do with what the effects of this will be on local communities. Councils in counties or cities are often the biggest employer. It's true in Shropshire.

So if inflation is running at four or five per cent, and people are receiving a pay cut of five per cent, then the impact on their spending power is obvious.

In one small town in Shropshire, the main square has no fewer than 18 boarded-up shops.

Some European countries have had to be dragged kicking and screaming into austerity. Here, the Conservative administration has embraced it and people have, by and large, complied meekly.

Yet the government also needs people to keep spending, which is clearly not happening as people openly express their fear about what the future holds.

If local authorities around Britain start to do what Shropshire has done, that could mean pay cuts for millions of public sector workers.

With Christmas coming, appealing to them to spend, spend, spend will go down like the proverbial lead balloon.