Page last updated at 10:00 GMT, Wednesday, 21 October 2009 11:00 UK

Council's spending under review

Cornwall Council
The council's corporate director said the 500m debt was "not a concern"

Cornwall Council has launched a "health check" into its finances just weeks after it emerged it is £500m in debt.

An action plan is being drawn up to identify where cuts could be made without reducing front line services.

Council leader Alec Robertson said the measures would include re-negotiating existing contracts and reviewing the need to take on new staff.

He promised "rapid and robust" action to avoid increasing the debt and going over budget this year.

Mr Robertson said "unsustainable spending habits" had led to the council's reserves being depleted while borrowing had increased.

He said the authority's first major problem was the predicted budget overspend during the current financial year.

He added: "It is imperative that the budget is balanced. It will be necessary to change historic culture spending attitudes, good intentions are simply not enough."

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The council added that spending on capital projects needed to be kept under control and it should take advantage of the financial benefits of becoming a unitary authority.

Mr Robertson warned that the current economic climate would inevitably lead to major cuts in public sector spending over the coming years.

He said: "We need to tighten our belts and ensure that we spend money wisely."

It all comes just weeks after the news that the council's current debt stands at £500m.

Last month, the council's corporate director, Peter Lewis, said: "We have outstanding borrowings of about £500m. That's not a matter of concern to ourselves at this time."

He said the debt was not excessive in comparison to the unitary authority's annual budget of about £1bn and the council's assets, worth £1.3bn, which enabled them to repay the debt and interest.

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