A BLACK hole in Uttoxeter Town Council's finances can now be plugged – by using money from a capital receipts account earmarked to renovate the town hall.

The High Street authority is about £35,000 short of what it needs to meet obligations in the remainder of the current financial year which runs until March 31.

The cash crisis has now been considered by Barbara Follett, parliamentary under secretary of state at the Department for Communities and Local Government.

Her officials have contacted staff at the council – which has approved a 90 per cent increase in its precept to help overcome cash shortages – to discuss the problems.

She said in a letter to Uttoxeter MP Janet Dean: "Although the council's revenue budget is almost exhausted it does have capital receipts that it would like to use, for a temporary period, to cover the shortfall.

"There seems to be nothing unlawful or irregular about making temporary use of the capital receipts to pay salaries and other revenue items within the current financial year. It is entirely normal for cash resources of a local authority to be pooled in this way.

"The council has a duty to resolve the deficit in the revenue account and it has confirmed that the precept for council tax for 2010/2011 has been set and will include an increase to meet this requirement."

Acting clerk Lynne Brown and RFO (responsible financial officer) Tina Jefferies recommended taking the measure at an extraordinary meeting of the town council on Thursday last week. Members agreed to a temporary switch of £35,000 from its town hall account to its current account.

They agreed that once they had banked the next precept payment it would be transferred back.

Councillor Peter Ball, a former chairman of the finance committee, said: "We have to do this, but no one is accepting responsibility for what has happened."

Howard Grigg, the town's mayor, said: "I understand all that but the point of fact is that we are not the only council in a position like this."

The town council is still reeling from a damning Audit Commission report.

The report heavily criticised the authority's financial management and compliance with its legal obligations.

Mrs Dean said: "This is a disgraceful state of affairs.

"We must do everything we can to protect the reputation of the town and to fix this situation as quickly as possible."

The town council agreed last month to a 90 per cent increase in its precept - from £208,000 to £398,491 - to help cover debts such as the repayment of a £33,000 VAT overspend and the £10,000 cost of the investigation by the Audit Commission.