Energy price hits budgets; POWER AND FUEL BILLS ROCK COUNCILS

Byline: By PETER YOUNG Political Editor

CASH-STRAPPED council bosses will use money saved when staff went on strike to help plug a pounds 3m budget black hole.

Newcastle City Council saved around pounds 580,000 in wages when workers joined a two-day national stoppage by Unison over pay in July.

The money will now be ploughed back into the budget to help offset cash problems including rising energy and fuel bills. Some departments including children's services are also facing budget deficits.

City treasurer Paul Woods says the council could be faced with additional costs of around pounds 3m this year and will need to dip into reserves and make extra savings.

Ministers have been asked by the Local Government Association to help councils such as Newcastle, which received a poor grant settlement, but they have made it clear there is no more money.

The council is also concerned about people facing debt and even the loss of their homes because of the credit crunch and up to pounds 430,000 will be set aside over the next three years to provide help and advice. Measures are being taken by council leaders to resolve the budget problems.

Members of the council's controlling Liberal Democrat executive will consider the budget problems when they meet on Wednesday.

In a report to the executive, Mr. Woods reveals that higher gas and electricity charges in council premises including schools have added around pounds 1.9m to bills this year. The increase in fuel costs has led to an increase of around pounds 55,000 in running the council's vehicle fleet.

A Northumberland County Council spokeswoman said: "An analysis of the higher fuel and energy costs being experienced at present suggest that the implications for the county council could be of the order of pounds 1.6m in total."

This figure is the extra amount required in the budget over and above the pounds 400k already assumed for inflation this year. In the previous financial year the council budgeted for an increase of pounds 600k.

A spokeswoman for North Tyneside Council said: "The council made a contingency for increased energy costs in setting its budget."

A spokeswoman for South Tyneside Council said: "We are facing pressures but expect to come in within budget by the end of the year."

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