COMMUNITY leaders must slash £300,000 a year from their budget or risk financial ill health, their finance chief has warned.
Kevin Stackhouse, head of corporate services at South Derbyshire District Council, issued the alert in a report outlining the authority’s medium-term financial plan to 2018.
The document said in October the council’s finances were judged to be ‘improving and relatively strong’ but had since ‘weakened’ since details of the authority’s Government grant settlement were revealed last month.
Mr Stackhouse explained that the cumulative £2 million cut in funding and effect of a potential council tax freeze would largely be responsible for leaving the authority’s general fund £575,000 in the red - well above the £1 million minimum contingency.
“Consequently, this creates an increasing budget deficit which is not sustainable beyond 2013-14 without corrective action being taken,” he said.
“Even allowing for a margin of error, the medium to longer term financial position is not sustainable.”
The finance chief said the general fund ‘could act as a buffer for 2013-14 and possibly 2014-15, but corrective action would be required in the meantime to prevent a more critical issue by that time’.
“Consequently,” Mr Stackhouse said, “in order for a sustainable position to be achieved in the medium term and to maintain a minimum level of balances by 2017-18, ongoing budget savings of £300,000 per year from 2013-14 would be required.
“The longer the delay in taking corrective action would ultimately increase this amount each year.”
He warned the ‘corrective action’ would not eradicate the longer term budget deficit and ‘additional savings may need to be made’.
Mr Stackhouse said: “The earlier corrective action is taken, the better the longer term position becomes and a sustainable position can be maintained.
“It is important that the council maintains financial resilience ahead of the 2013 (Government) spending review and plans remedial action accordingly.”
The authority’s finance committee are likely to approve the savings at a meeting on Thursday.