THE worsening economic crisis has cut Wallingford Town Council’s income by £40,000 in lost interest — meaning a five per cent increase in council tax and a desperate bid to cut costs without killing services.

The council’s financial situation is so precarious that an emergency meeting is to be called as the authority looks at dipping into reserves to make ends meet.

Town clerk Andrew Rogers told the council’s budget meeting: “We operate on a shoestring, keeping our costs as low as possible. This loss of £40,000 because of the low rate of interest on our investments is a big blow.”

He said every percentage drop in the national interest rate meant a £10,000 cut in income — “This year we will have to look to our reserves. We are not poor and we will not be scratching around for money, but we do have to be very careful.”

Councillors decided the finance committee had to call an emergency meeting to seek ways of cutting costs as much as possible to balance the books.

That could include paying off mortgages early and reducing insurance premiums by accepting a higher initial risk.

Council member Bernard Stone said: “Cost cutting will be difficult. Staff costs mean 56 per cent of our budget and that leaves only 44 per cent where cuts can be made.”

Staff costs include salaries, wages, pensions and national insurance.

Only one member voted against the five per cent increase.

Mike Mold said: “I am unhappy about this in the current financial climate.

“Everyone is under financial pressure and we should not be increasing people’s problems with a rise in our council tax.”

Mr Stone suggested cuts could be made this year in the repair and maintenance budget on council-owned properties, but Mr Mold said: “That is building up problems in future years. Savings on repair and maintenance is a false economy and will lead to big bills in the future.”

One victim of the cutback on spending will be the showers and changing rooms in the Bullcroft park pavilion. The pitch is used by only one club — Cross Keys Sunday footballers — and the costs of repairing the showers were estimated at more than £3,000.

Mr Rogers said: “I know this will mean the club may have to play elsewhere because under the rules of their league they must have showers, but we simply cannot afford to pay out that money.”

For the Cross Keys club, Josh Nathaniels said: “We are very disappointed and it is certain we will have to move away from Wallingford — or fold altogether.”

The council is holding talks with South Oxfordshire District Council and Thames Valley Police to see if the cost of running the town’s CCTV cameras, last month described as “hideously expensive”, can be reduced.

No money will go to Wallingford youth club. In past years the council has earmarked £2,000 for the club in Clapcot Way, but there is nothing in the budget this year.

Mr Rogers said cash from previous years had not been used, so there would still be money in the kitty that could be used for the youth club.

Estimates suggest the town council tax precept for an average Band D house from April is set to rise from £88.45 a year to £92.87.