Exclusive: Second damning report slams city over finances

The report, compiled by PricewaterhouseCoopers, reveals a possible 7.7m overspend, savings that are not adequate to cope with Government cuts, and those that are identified are described as "flawed" and "not achievable".

The research, seen by the Yorkshire Post, predicts the council could fail to achieve 3.2m of savings this year while also needing to use 4.8m from reserves to balance the budget.

It also identifies a further 40m of savings that will need to be made before March 2013 on top of those the council had thought it would need to make. The total savings required are estimated at around 70m.

The report also criticises the lack of leadership at the finance department, and the reliance on interim staff in key posts.

It comes after an Audit Commission report last week revealed a catalogue of errors in the council's accounting, including an unnamed asset that was listed in the 2010 accounts despite being disposed of in 2009, a potential undervaluation of assets of 21m and 184m of assets that had not been valued for five years.

The council's Liberal Democrat leader Carl Minns defended the authority's, saying changes were being made and he guaranteed there would be no overspend by the end of the financial year.

He came under fire from opposition leaders, however, amid claims the report was withheld from councillors. It was completed on September 9, but the Labour shadow cabinet said it was not sent a copy until October 19, and then only after a week of requests.

Shadow cabinet member and former finance portfolio holder Phil Webster said: "I have never encountered such problems getting to see a report prepared for the council and I am astonished to find that the failure of this administration is of monumental proportions.

"When the last Labour administration had control of the authority, the district auditors were so impressed with the budgetary controls in place he reduced the cost of the audit fee, now here we are five years on and the second damning report in a matter of weeks.

"It is a nothing short of financial mis-management and schoolyard politics – last year Coun Minns made great play on a zero per cent council tax increase, this act alone by next year will have cost the council 9m, costing services and jobs."

The report states: "Services expenditure was 7.7m higher, and 3.2m of Transformation Savings were not achieved compared to the original budget, however the council was able to report a balanced budget by utilising non recurrent measures which it cannot continue to rely on.

"The council has acknowledged pressures arising from government grant reductions of 3.9m, however there are additional pressures which increase this figure to 11.8m.

"From our high level review of current year savings we have identified 3m of cost savings that are now not forecast to be achieved – but have been built into the budget, increasing the financial pressure."

Coun Minns denied that there had been any cover-up.

"All of these issues have been aired in public, and are in public documents," he said. "The group leaders have had this – it has been circulated to them, this has been public for months."

He said the miscalculations came about because the "financial landscape had changed" since February.

He accepted the criticism of staffing levels, but would not apologise for cutting senior posts "on fat cat pay".

"This report is a snapshot in time, it says that if we do not do anything then we will overspend, we are making those changes so we won't overspend, that is financial management," he said.