Council set for huge shortfall in funding (From Warrington Guardian)

Council set for huge shortfall in funding

VALE Royal Borough Council could be facing a budget deficit of hundreds of thousands of pounds over the next two years.

The council is set to receive an additional £193,000 from central Government next year but this still leaves the council short of £165,000 - and a report says that this could increase by a further £400,000 by 2006 unless action is taken.

Conservative Clr Keith Musgrave, leader of the council, believes that the £400,000 revenue budget deficit is forecast because of pension problems linked to the stock market and ruled out any job cuts at the council.

He said: "The reason we are faced with a £400,000 deficit is because of the downturn in the stock market over the past two to three years and that is necessitating companies - and the council is a company - to put increased contributions into the superannuation fund.

"It means that we have got to find £400,000 extra next year. Our aim is to try to split it between two years - half this year and half next year."

Clr Musgrave also said that a hike in Council Tax was not the answer to the problem, adding: "We are in the second year of a three year commitment to keep Council Tax rises at five per cent or below. So this has to be achieved by savings. All the various committees are meeting up with council management to discuss areas where savings can be made.

"We are not looking at massive savings in any particular area and we are not looking at job cuts at this point in time."

Clr Musgrave said the £400,000 deficit figure could come down if the stock market continued to rise and pension deficits fell accordingly and that a portion of this year's Council Tax would go to heading off 'the big hit' the council anticipates in 2005/2006.

Noel O'Neill, director of corporate and economic affairs at the council, said Vale Royal's budget position was 'broadly in line with its current medium term financial strategy'.

He said that the only change was that the council was set to receive a 'significantly reduced' central Government grant because of changes to the system - meaning Vale Royal was effectively paying to protect other councils with spending problems.

Mr O'Neill added: "Proposals currently being assessed will have limited impact on the residents of Vale Royal, both in terms of service delivery and Council Tax increases."

rfraser@guardiangrp.co.uk