Credit Crunch hits Rossendale Council income plans

Date published: 04 August 2008

A gaping hole could be created in Rossendale Council’s finances as a result of the ongoing credit crunch gripping East Lancashire and beyond.

Latest figures show that the number of tenants exercising their right to buy former council houses, now owned by the borough landlord has slowed significantly, mirroring the national slowdown in the housing market.

Council finance bosses could expect to reap about £3.1million from the combined receipts from land and property sales, the right-to-buy scheme and VAT proceeds from social landlord Green Vale Housing.

The funding can then be used to finance the council’s capital spending programme for the coming year.

But following the announcement of results for the first financial quarter, a warning has been issued that the payout could fall well below expectations.

No returns have been registered so far under right-to-buy, against an estimate of nearly £1.5million for the year. A further £560,000 is expected through VAT but none of that total has materialised to date.

And another £1million needs to be generated from land and property sales, which have so far realised £100,000.

Coun Brian Essex, the council’s executive finance member, says that annually it was expected that 200 homes would be involved in the right-to-buy scheme.

“That will not be the case this year. I am not prepared to go any further than that. That will have an effect on our capital programme,” he said.

Coun Jason Gledhill said: “Will the capital expenditure budget be reduced in line with the expected reduction in capital receipts?”

Coun Essex said it did not take “a financial wizard” to determine that there would need to be changes.

But he added: “Frontline services, and the enhancement of existing services, must be a priority of this Conservative administration.”

The authority must also pay an additional £120,000, as the result of the council’s job evaluation scheme, designed to equalise pay levels among male and female staff, and the council’s pension requirements have also risen.