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Council given stark warning on spending

PUBLISHED: 17:58 04 August 2008 | UPDATED: 07:34 01 August 2010

WAVENEY District Council is facing the prospect of an enforced spending freeze and having to raid its reserves to the tune of nearly £1m unless it can turn its financial predicament around.

WAVENEY District Council is facing the prospect of an enforced spending freeze and having to raid its reserves to the tune of nearly £1m unless it can turn its financial predicament around.

The stark warning about the state of the council's accounts was made by the authority's finance chiefs as the fight to make savings continues.

Current forecasts estimate the Conservative-led council will be overspent by £1.29m at the end of the financial year, leaving it with no option but to virtually clear its reserves out.

A report to members of the council's cabinet by director of resources Alan McFarlane laid bare the authority's current plight and said he would be legally forced to issue a report, known as a section 114, which would stop expenditure for a period.

In May, the EDP revealed the council faced potential overspend risks to its budget totalling

about £5m, of which a major slice was linked to the potential overpayment of benefits.

A worst-case scenario could see the council forced to repay £3m in subsidies to the Department of Work and Pensions (DWP), but Mr McFarlane said negotiations were continuing with government officials to try to reduce these figures.

His report to Thursday night's meeting said: “The seriousness of the council's position cannot be underestimated and, unless support is forthcoming from the government, the director will have to issue a section 114 report that will effectively stop all spending.”

The Local Government Finance Act 1988 says a council's chief finance officer must issue a section 114 report when it appears expenditure is likely to exceed an authority's resources.

In a bid to make vital savings, reviews have been launched in areas such as staffing, non-essential expenditure, and fees and charges. Managers have also been told to step up the collection of council tax debt and consider the sale of council assets.

In the meantime, major projects such as the £52.7m Waveney Campus building for council and science staff have been suspended.

Figures show the council may have to move £915,000 from its general reserves, leaving just £75,000 in the bank. It is also proposed that a further £375,000 of government money given under the Local Authority Business Growth Incentive (LABGI) be moved to the general fund.

Chris Punt, the council's portfolio holder for finance, said: “It is a concern to me if we are left with £75,000 in reserves, which is an unacceptable position to be in for a council of this size. If we can mitigate the risks and make more savings that won't happen, but this is where we are at the moment.”

Other costs pressures on the council include a projected budget overspend by the Marina Theatre of £75,000 and a shortfall in car park income of £200,000.

Speaking after the meeting, council leader Mark Bee said: “We are looking at this now and there is an awful lot of water to pass under the bridge. We are trying to be as open and transparent as we possibly can.”

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