WORCESTER City Council has less than a month to slash more than £3 million from its £16 million budget after the full extent of the city's bleak financial crisis was revealed.

All non-essential council services are now under threat after a devastating independent study concluded Guildhall bosses must slash more than £3 million from their coming year’s budget.

While council leaders are keeping tight-lipped for now about where the axe will fall, community centres, museums, art galleries, park services and youth support are among the areas likely to be threatened, as they are services the council is not obliged to provide.

Council tax looks certain to rise by the maximum amount allowed, 4.9 per cent, equating to an extra £7.50 a year for Band D households.

Major capital projects planned by the city could be scaled back, while Guildhall jobs are under real threat after being identified as a potential area for savings.

Fees and charges for services such as car parking are also likely to be raised.

Tory council leader Simon Geraghty and his team now have less than a month to finalise how they intend to cut back 20 per cent, or one fifth, of the council’s entire £16 million spending plan for 2009/10.

Speaking at a press conference yesterday, a grim-faced Coun Geraghty said the council’s cash crisis has worsened over the past 12 months.

“Clearly this is a serious situation,” he said. “The council will have to make some serious decisions in its budget. The package [of cuts and savings] we will have to announce will be a significant one.”

The council’s financial woes began last year when it received a real-terms cut in Government funding.

As the crisis deepened throughout 2008, the city commissioned an in-depth financial study by consultants Mouchel to advise on the best way forward.

The council had already announced it would have to find £3.5 million in savings by 2012 – but Mouchel’s report, published yesterday, makes clear much more dramatic cutbacks are required.

Coun Geraghty said: “We need to be aiming for at least £3 million next year, and a minimum of £4.5 million over the (five-year) period.

“And yes, that is a significant element of the services that we do. We need a significant re-correction.”

Coun Geraghty’s ruling group will announce next month where the cuts will be made, with a final decision due from the full council in February.

Yesterday’s report from the consultants suggests reducing staff numbers is one likely outcome.

“Employee costs are by far the largest variable,” it states. “This is where attention must be focused to achieve service efficiencies and reduce the financial burden.”

HOW DID THE CITY'S CASH CRISIS COME ABOUT?

GOVERNMENT FUNDING CUT
Last year the Government said the city’s funding would rise by just one per cent this year, and by 0.5 per cent for each of the next two years – a cut in real terms.

BUS FARES
The council has been significantly under-funded for the Government’s free pensioners’ bus travel.

COLLAPSE OF MERGER
Malvern Hills District Council pulled out of a merger earlier this year.

LOW COUNCIL TAX
The city council charges a relatively low council tax fee. Opposition councillors say if rises had been higher in the past, the city would have more money.

EFFICIENCY FAILINGS
The council has failed to achieve the efficiency savings it had budgeted for.

FEES AND CHARGES
Planning services can no longer be charged for.