COUNCIL building projects must be stopped, assets sold, or money borrowed to plug an unexpected gap of nearly £1million in the capital finances of North Dorset District Council, cabinet bosses have been warned.

Councillors are now facing a £974,000 shortfall in the authority’s capital programme after an accounting error, on top of savings of £260,000 needed from day-to-day spending in the current financial year.

And this year’s economies look set to be dwarfed by savings required next year, when councillors have been warned to trim £600,000 from an annual revenue budget of £8.9m.

Council leader Peter Webb said the capital shortfall had come as an unpleasant surprise but insisted that cuts to frontline services and compulsory redundancies were not being considered.

"It was a nasty shock, but none of the accounts were wrong and nor was any money lost. Unfortunately an error was made in the amount we were entitled to spend.

"It brings forward by one year the time at which we would need to take out a loan to cover our capital programme," said Coun Webb.

Savings needed this year of £260,000 would be managed through partnerships with other public bodies, restructuring arrangements, and 'natural wastage' among supervisory positions, he added.

Changes needed to realise £600,000 of savings from next year’s budget would become more apparent after the government’s comprehensive spending review in October, he added.