Councils Face Crisis over New Budgets; Authorities Warn Government

Article excerpt

Byline: Adrian Pearson

SEVERAL North East councils have warned the Government they may not be able to set a legal budget for next year as a result of spending cuts.

The fear has been sparked by the Government's refusal to allow councils to borrow enough money to cover massive redundancy costs.

More than 5,000 redundancies have been announced across the region's councils, police forces and fire bridges since the coalition Government came to power, with more to follow.

The budget threat, if carried out, could see the Government intervene and set a budget for the councils in order to ensure staff are still paid.

Because Ministers want the bad news out of the way before the next General Election councils have been told to rush through job losses, meaning many more people will lose their jobs than would be the case under more gradual cuts.

But the cost of this "frontloading", running into several hundreds of millions of pounds, will have to come mainly from day to day revenue funds - the money behind bin collections and social care.

Last night the Local Government Association confirmed it had received representation from some North East councils, as well as others nationally, stressing concerns that without permission to fund redundancy costs through other means they risked not being able to set a legal budget.

City spending chiefs are believed to be concerned that they will not be able to balance the books without withdrawing services, some of which they are legally obliged to carry out.

A private assessment of the cutbacks made to council leaders in the North East revealed the impact is expected to range from "too damaging" to "undeliverable".

When Newcastle Council reduced its workforce by 510 under the last Government, it had to find around pounds 20m to meet redundancy costs.

Now it is feared councils already looking at cuts of up to pounds 100m each will be forced to drop some services as they look to cover the cost of the changes. …