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Mercy mission over cash crisis

PUBLISHED: 13:20 08 September 2008 | UPDATED: 21:13 05 July 2010

A council chief will travel to London to plead with government officials to avert a public spending crisis in Waveney by withdrawing a multi-million-pound cash demand.

A council chief will travel to London to plead with government officials to avert a public spending crisis in Waveney by withdrawing a multi-million-pound cash demand.

The Department for Work and Pensions (DWP) could order Waveney to repay up to £3m after it emerged the council had overpaid benefits dating back several years.

The council does not have the funds to meet such a bill and its new director of resources Alan McFarlane has revealed he will attend meetings in the capital later this month in an effort to resolve the issue.

However, if the DWP refuses to back down, Mr McFarlane could be legally forced to order a spending freeze at Waveney District Council.

Details of Mr McFarlane's mercy mission came during a meeting of the authority's overview and scrutiny committee on Thursday, when counc-illors asked about the potential financial meltdown.

Mr McFarlane said: “The reason there is a £3m potential clawback is because of a number of errors in processing and data transfer that took place in the past.

“They [the DWP] are saying 'you've paid out £3m more than you should have done… and, unless you can prove us wrong, we would like our money back'.

“It is not unusual for councils to be in a position where they have made overpayments… The issue for Waveney District Council is the scale of the position we are in and, against that, the fact we haven't got sufficient resources should the department decide it wants its money back.”

Mr McFarlane said changes in the software used by benefits' officers had played a large part in the problems and revealed staff were undergoing retraining to ensure the problem was not repeated.

If the DWP does demand a repayment of £3m, Mr McFarlane said he would be forced to ask for permission from the Department of Communities and Local Government to seek loans or use council investments to pay the debt.

The full extent of the overpayments, dating back over several years, has yet to be calculated, but in May the council revealed it was facing the risk of a total overspend to its budget of nearly £5m. The current prediction is for the budget to be overspent by £760,000 by the end of this financial year, but this does not include the possible benefits' repayments.

A major savings' drive was launched, which has included a freeze on replacing 39 vacancies at the council, with a further 29 jobs cuts to find through natural wastage or redundancy.

The scrutiny committee asked why Waveney had voted through a council tax increase of just 1.8pc in February when there was a potential cash crisis, but officials insisted the full extent of the problems was not known then.

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