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North Tyneside's £14m black hole

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North Tyneside Council is facing a £14m black hole in its capital expenditure budget and may have to hike its council tax to cover the shortfall.

Mayor Linda Arkley (Con) said the report proved the council – which is already £320m in the red – could end up on the “brink of bankruptcy”. 

The report to the council said the authority had budgeted for £14.4m from land sales to help with expenditure but had managed to generate just £162,000.

If income from land and asset sales is not received, the only way to cover a shortfall will be to increase the council’s already significant debt, the report said.

Mayor Arkley, who took over from John Harrison (Lab) in June, blamed the previous Labour administration and called for a review of “all non-essential spending”.

“Quite clearly there are some tough decision to be taken. The council cannot spend money it does not have otherwise we will be taken to the brink of bankruptcy yet again and that is something I am determined will not happen,” she said.

A council statement said the cost of paying for council debt is set to rise from £9m in 2007-08 to £19.5m by 2013-14.

If unchecked the effect of the debt will also see a dramatic rise in council tax bills, with an increase of £104 per household on Band D by 2013-14 to cover the cost of paying the interest. This is before any extra borrowing to cover the shortfall.

Labour reacted furiously, disputing the figure quoted by the council for total debt and accused the mayor of a politically motivated attack.

More in next week’s LGC for more.

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