City's £700m cash crisis revealed

Council tax bills in Wolverhampton are set to soar and £700 million needs to be borrowed because of the city's "enormous" financial problems.

The finances of the city council have been described by its new leaders as "a mess".

The state of the authority's books were laid bare during a heated meeting last night, when Councillor Wendy Thompson, new Tory-Liberal Democrat Alliance finance chief, hit out at the previous Labour administration's "gross irresponsibility".

Councillor Thompson said the authority had to borrow an extra £290 million between now and 2011, and council tax was forecast to rise by 4.9 per cent next May to balance the books.

This would add a further £70 a year to average Band D bills.

"The council has very large debts indeed - in fact we would consider them enormous," she said.

"The council was forecast to borrow £700 million between now and 2011. That's a £209 million increase on what was originally forecast and a prudent administration would not have let it get into this mess.

"It has arisen because of gross irresponsibility. We are in a very, very serious position."

Labour councillor Andrew Johnson, former finance boss, said over £5.5 million was being saved this year.