TroubledWaveneyDChas warned ministers they might have to take over the council unless it can negotiate withWhitehallover a possible£5m overspend.
The crisis has arisen only weeks after it approved this year’s£17m budget.
A forensic audit by new chief executive Stephen Baker and resources director Alan McFarlane found “serious and substantial risks” totalling some£5m. They described the position as extremely serious but added: “It can potentially be managed within a year if assistance from central government departments is forthcoming.”
They warned councillors that the authority’s position would be precarious without this help and that Mr McFarlane might issue a s114 notice, preventing new spending commitments.
That “could lead to statutory intervention in the running of the council’s affairs,” he said.
Waveney fears it owes the Department for Work & Pensions up to£3m in overpaid benefits. It will ask the Department for Communities & Local Government to allow£2m of borrowing to cover redundancy costs, pension strain and other commitments. This permission is rare, though other troubled councils have received it.
Leader Mark Bee (Con) said: “These risks pose a genuine threat to this authority and the report leaves us in absolutely no doubt about the possible consequences.”
A council spokesman said there had been a hiring freeze since December and job losses would be a last resort.
Former Westminster City Council chief executive Bill Roots, now a local government troubleshooter, said Waveney will have strengthened its hand by raising direct ministerial intervention.
He said: “There is no case where the government has sent in commissioners to run a council because it would drag ministers into everything that happens there. They would rather not intervene.”
Waveney’s former chief Glen Garrod left after two years following damning Audit Commission reports on use of resources, planning and housing (LGC, 13 December 2007).
Mr Bee said then that the problems dated back decades, adding: “The more we find out, the worse it becomes.”