PORTSMOUTH City Council is projected to have a deficit of more than £8m by next year unless drastic measures are taken.
Predicted overspends on portfolios due to rising demands could result in a gap in funding of £8,223,600.
At tomorrow’s cabinet meeting Lib Dem councillors will discuss the figures which place children and families services as the biggest drain on cash with a probable overspend of more than £5m by April 2019.
Council leader, Cllr Gerald Vernon-Jackson, explained the areas for most concern. He said: 'It is very worrying.
'The biggest issue is children's social care which is a growing problem this year as we have more children in care. The same happened last year. The second is adult social care where demand is up.
'We will work to reduce the problem. There's £7m contingency put aside in the council's budget to address this because quite a lot of problems we expected. It's similar to last year.'
Nationally children's services is the fastest growing expense with rising numbers of children needing to go into care. Last year 80 per cent of authorities in the UK overspent on social services as a result.
Cllr Vernon-Jackson said: 'We ran out of local foster placements and were having to locate children as far away as York. A place in a children's home costs over £100,000 a year. If we could fund more local foster parents for that it would save a lot of money because it costs about a quarter of that.'
Former leader, Tory Cllr Donna Jones, believed the evacuation of Leamington and Horatia House in Somerstown would exacerbate the council's financial problems.
She said: 'Horatia and Leamington are just another area in which Cllr Vernon-Jackson is making the financial situation worse and creating issues he really didn't need to.
'The only way to fix Horatia and Leamington is by borrowing money to either rebuild or repair them. To repair them would cost between £40m and £45m and to rebuild them would cost £70m. The council doesn't have the cash for that. Therefore, this will have an impact on the deficit.
'It was crazy to make that decision without knowing where the money would come from.'
But Cllr Vernon-Jackson added: 'The cost of moving people out of Leamington and Horatia House will come out of the housing revenue account which is a separate to these other funds. And even if it did we can't leave people in unsafe houses.'
Earlier this year Northamptonshire County Council went bust after it overspent by £10m a year for two years. Councillors cited the main reason as a rise in demand for adult social services.
Children and Families – Overspend £5,078,000
Education – Overspend £413,800
Health, Wellbeing and Social Care – Overspend £3,084,500
Housing – Overspend £253,400
Port – Overspend £213,400
Environment and Community Safety – Underspend £294,800