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Rhondda Cynon Taff CBC is in danger of running out of money. ...
Rhondda Cynon Taff CBC is in danger of running out of money.

The council has run its reserves down to zero and, even though the financial year began two months ago, still has to find£7 million of cuts to deliver the 1999-2000 budget.

Finance and IT director Steve Perry has warned members that further calls against reserves will inevitably arise during the year and the budget will have to be cut further.

One of the prime areas of concern is the fact that losses at the council's DSOs have still not been stemmed, and have now risen to£5m.

In addition, the highways and social services departments are unlikely to keep spending within agreed limits, Mr Perry said.

'As a result of this situation, there is a need to warn members of the very real potential that the council could find itself with a budget deficit during this financial year,' said a joint report from Mr Perry and chief executive Kim Ryley.

The council is to meet Welsh first secretary Alun Michael at the end of June to discuss the DSO rescue plan, put together before last month's elections to try to stave off closure.

'If the recovery plans are not satisfactory we will be facing externalisation,' Mr Perry said.

The new Plaid Cymru administration of Rhondda Cynon Taff is meeting unions and officers, looking at the potential for making staffing cuts.

'We could be talking about up to 100 job losses,' Mr Perry said.

Leader Pauline Jarman has made it clear she has no option but to go to the Welsh Office asking for help in meeting redundancy costs. The council intends to ask for special dispensation to capitalise its redundancy costs - to meet them by spending part of its capital allocation.

But capitalisation will hit repairs and maintenance budgets hard, further damaging the viability of the loss-making DSOs.

Last week members considered a district audit management letter relating to 1998-99 in which the auditor issued a clear warning that the council's balances - then running at£3m rather than the current level of zero - were unacceptable.

The Audit Commission advises that reserves should run at 3% of a council's overall budget, which would be£7.5m.

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