North Tyneside council is to slash management costs after finding its housing revenue account will go into the red in two years' time.
The council says it must cut management costs 6.5% across the board to avoid a £1m deficit. Even then, it can only balance the books for five years.

The council says the culprit is the government's withdrawal of subsidy for its 20,000 homes. Rents must go up 5% each year under rent restructuring. But that will add to problems of lost subsidy, resulting in the council making payments back to the government from 2004.

The repayments rise to £6m in 2006 and over £16m by 2011.

The council is embarking on a round of cost-cutting that will see repair costs trimmed by £40 a home and maintenance by £15 a home. Speeding up re-lettings should also bring extra revenue.

The number of area teams will be cut from seven to four.

The council's situation echoes the complaints of others struggling to balance the Housing Revenue Account (HT 22 August, page 12). It is appraising its options for the long-term future of the stock.

North Tyneside elected a Conservative mayor last May, although Labour maintains its long-held control of the council.

Mayor Chris Morgan said it was clear the council was facing major issues that were pertinent to other councils too. He refused to speculate on the future of the stock before the options appraisal is completed.