Clouds are brewing as Teesside's town halls gear up for cash crisis.

Byline: SANDY McKENZIE

COUNCILS on Teesside are bracing themselves to face the Perfect Storm in their financial fortunes.

Cash cuts combined with increasing demand for services will put local authorities across the country under intense pressure.

The councils on Teesside are already gearing up to make savings running into millions of pounds.

Posts will be shed in the local councils which are the largest employers in each of the boroughs.

But Town Hall bosses hope the job cuts will be achieved without the need for compulsory redundancies.

And they say vital front-line services will be protected.

Demand for services in a number of areas is increasing. More children are being looked after by the local authority and an increasingly ageing population is putting pressure on social care services.

Income to councils is also being hit be the recession. There is less cash coming into council coffers from car parking charges and the economic downturn means fewer planning applications being made with a resultant drop in application fees.

Low interest rates also hit investment income for councils.

Over the next few years councils also expect to be hit by the Government -whatever the result of the next general election -putting a firm grip on public spending.

Revenue support from central Government to local authorities is firmly expected to be among public spending cuts.

And councils could be expected to keep any council tax rises to less than 2.5% or 3%.

Local authorities can also expect support for specific projects from agencies to be curtailed as well.

Stockton Council is facing up to the testing financial times ahead with a solid financial background.

It was among the first local authorities in the country to introduce a medium term financial plan on a three-year rolling basis. It provided greater financial stability to the authority and has been adopted by councils across the country.

Stockton was one of only two councils in the country to be given top marks by the Audit Commission for the way it uses its resources.

A sign of the impact the economic climate is having is the action taken in Stockton Council's planning department.

Last year the council received 1,428 applications for planning consent. This year it is projected the number will fall to 1,100. That means a fall in income to the authority of up to pounds 300,000.

As a result of the downturn 12 posts have been lost in the department -two officers have retired and not been replaced, six members of staff have transferred into other vacant posts in the council's tech services department, one has transferred to the Contact Centre, and three members of staff who left have not been replaced.

Neil Schneider, the council's chief executive, said the authority had embarked on an Efficiency, Improvement and Transformation Review.

"It challenges what we do, why we do it and how we do it. It is about doing things differently and more efficiently.

Stockton and Darlington councils have also linked up to jointly provide some back office services. That joint working is expected to produce savings of pounds 7m over 10 years to the authority.

It is also looking to make savings in the way it buys goods and services.

Mr Schneider said: "Our priority is to protect front-line services.

"And we cannot let slip our ambition or lose our momentum in bringing improvements for business and residents in the borough," he said.

He pointed out significant investment would continue to be made in the borough through schemes such as pounds 180m on Building Schools for the Future, pounds 5m on the myplace project, and pounds 7m from the Working Neighbourhoods Fund.

Cuts in the number of posts at Middlesbrough Council are also in the pipeline as the authority seeks to find pounds 8m in savings over the next two years.

Middlesbrough mayor Ray Mallon said: "When this country comes out of the present recession this Government will still have a huge public deficit. A proportion of that public borrowing will have to be paid back over the next five or six years.

"There are a number of initiatives the Government can take to pay back this debt and one of them is to cut public services in the region of 10%.

"I do not believe this local authority will be cut so savagely but cuts will come our way which will run into millions of pounds."

He said over the past year he and the council had been taking measures so the authority could deal with the financial problems which were clearly coming its way.

"I believe we are in a good position to deal with the problems before us.

"Over the next two years we must reduce our spending by pounds 8m and it is also my wish to have increases in council tax of no more than 3% over the next two years."

He said part of the process would be a thorough review of services and it would be inevitable that certain jobs would go.

"That would be achieved by some voluntary redundancies as well as natural wastage where people who retire or leave are not replaced.

"I am very hopeful there will be very few -if any -compulsory redundancies as this is something I do not wish to subscribe to," said the mayor.

At Redcar and Cleveland a three-strand strategy is being adopted to enable the authority to face the difficult financial future.

A major review is under way across the authority which employs more than 6,300 people. The review aims to produce annual savings of pounds 4m a year.

Some posts in the authority will disappear by natural wastage, some vacant posts will not be filled, people will be redeployed and voluntary redundancy packages could be offered.

The council also spends tens of millions of pounds each year on goods and services and it is looking to save money in this area as well as buying locally as much as possible to support local businesses and contribute to its green agenda.

A major consultation exercise has also been embarked on by the council. It is inviting local residents to put forward their money saving ideas to the council.

Councillor Peter Scott, the council's Cabinet member for resources stressed the council's aim to maintain frontline services.

He pointed out local authorities provided around 600 different services.

"We cover the whole alphabet -from arboreal services to zoo registrations," he said.

Your say HOW do you think the council could save pounds 1m.

Martin Hall, 54, of Grove Hill, Middlesbrough: "I have heard on the news about cutbacks but when it comes to the likes of closing care homes I disagree."

Kevin Ball, 58, of Coatham, Redcar: "Councils should stop taking legal action against staff who are campaigning for equal rights. Legal costs are very high."

Russell Sneaton, 38, an online learning support officer at Teesside University: "Things need to be improved as it is. There may be some administrative savings but overall I think councils work pretty efficiently."

Rebekah Jenkins, 34, of Marske: "We could just have policemen rather than spending extra money on street wardens who do not have the same powers as police officers."

Terry Clements, 60, of Coulby Newham: "Why does Middlesbrough Council need to have a partner (Mouchel) to run things? Money could be saved by getting rid of the partner."

CAPTION(S):

CASH CUTS: The town halls of Middlesbrough, Redcar and Cleveland and Stockton PROTECTING SERVICES: From left are Neil Schneider, Stockton Council's chief executive, Middlesbrough mayor Ray Mallon, and Cllr Peter Scott from Redcar and Cleveland Council