Council warns of £2m income loss

A Surrey council has warned it faces a £2m loss in income if interest rates continue to drop.

Guildford Borough Council said it was considering the impact of the current financial climate and worldwide "credit crunch".

If interest rates fall to a predicted 1.5%, the council would lose nearly £2m a year.

But councillor Tony Rooth said he was confident they could balance the budget without a "big council tax rise".

The council's executive is meeting next week to consider the draft budget for the next financial year, which is due to be finalised in February 2009.

A £4m return on the council's investments was included in this year's budget.

'Hard choices'

Mr Tony Rooth, lead councillor for finance and resources, said: "Guildford Borough Council is not immune to the budget challenges currently faced by everyone.

"Despite [our] careful financial management and savings in the past three years of £1.8m, a reduction in our income, coupled with increasing energy costs. makes it a very difficult time for us and all other organisations.

"We are confident that we can still deliver a balanced budget without a big council tax rise for the borough.

"But it will require hard work and a willingness from everyone to recognise the need to make some very hard choices".

Funding for the council comes from several sources, of which 15% (£8.6m) is government grants and the majority of the remainder is from fees for services provided by the local authority.

Sue Sturgeon, council strategic director, said the overall state of the economy would also impact other sources of their income, including car park charges, planning fees and leisure memberships

But she added: "The council has a good track record for delivering efficiency improvements and has exceeded government targets over the past three years."

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