Council hit by financial crisis

8:09pm Monday 6th October 2008

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By Jim Entwistle »

DARLINGTON Borough Council is struggling to sell £10m of assets as it attempts to settle long-standing debts.

Six months into the financial year, the authority has so far raised just £86,000 of its eight-figure target.

Officers are blaming the credit crunch for the collapse of two significant deals as they look to balance the books.

The sites of the former Beaumont Hill and Springfield primary schools remain unsold and make up the majority of the £10m.

With little likelihood of the deals being resurrected before March 2009, the council is already planning for life without the money.

Every proposed project will be scrutinised by council officers to see if savings can be made.

One of those is the University Centre in Central Park.

The council had planned to spend £500,000 on securing a £11m funding package to build the facility, but the funding crisis could threaten the project.

At the councils cabinet meeting tonight (TUES), members will also discuss a report which warns that the authority is expected to be £1.8m worse-off at the end of the financial year than had been expected.

Three out of the four council departments have projected significant overspends for the year 2008/09.

Community Services has predicted an £651,000 overspend, Corporate Services £178,000 and Childrens' Services £150,000.

Only the Chief Executive's department is predicting an underspend, with job vacancies contributing to a £94,000 improvement.

The reasons given by the councils director of corporate services Paul Wildmith, in his report to cabinet, include: * Delays on the Oval leisure and shopping development * Parking revenue being lower than expected * The collapse of several unspecified major transport projects A council spokeswoman said: "The credit crunch has hit us.

"We have also been adversely affected by higher than expected increases in the cost of items such as fuel which means we are having to spend much more to buy these goods."

In his report Mr Wildsmith said: "At this stage it is prudent to anticipate that sales during the year will be negligible.

"Due to the potential shortfall in resources officers are reviewing options to mitigate the impact and will report options to members at a future date."

The council spokesman added: "We are managing the situation but, like many councils across the country, we will be facing some tough budgetary decisions in the months ahead."