GUILDHALL coffers are officially in robust health - the city council ended the financial year with a £29,000 underspend.

Worcester City Council managed to keep spending "just below" the right side of the black line, avoiding a budget headache.

The end report on how taxpayers' money was handled in the city has made welcome reading for bosses, who are worried about what kind of Government settlement it will get in the future.

The council underspent by £174,000 on staffing in the last year because of staff turnover and problems filling posts, but overspent in other areas.

The final forecast means the council will not have to dip into cash reserves of £875,000 to keep services running in Worcester.

Leader Councillor Simon Geraghty said: "To get our finances virtually bang on target is a credit to the financial monitoring in the city council.

"You can very easily get a situation like one we had three or four years ago, where we overspent by £340,000 by the end of it.

"The net underspend is £29,000, but there are swings and roundabouts with different spending areas such as staffing. There is always a turnover of staff because people move on in their careers, and the idea that you can staff up to full establishment is unrealistic.

"We had a situation in the past where it took us 15 to 18 months to find a new financial services manager, not because of a lack of will on our part, but because we wanted to get the right candidate.

"You've got to have a good reason for sacking someone and it's always difficult to fill posts. When you reconcile our underspends and overspends, the net underspend is very short."

The city council is planning to increase cash reserves to £961,000 by 2009 - otherwise known as money stashed away for a rainy day.