But chief executive John Mothersole has revealed certain departments which depend on new developments - such as building control and planning - have been hit with income reduced by almost a million pounds since April.

And he would not rule out job losses as a last resort.

Mr Mothersole said that of Sheffield Council's £953.7m debt, £695.5m is with the Public Works Loans Board, through which the council borrows from the Government to fund major capital investments.

Large-scale public projects in recent years have included new schools, the incinerator and City Hall revamp.

Mr Mothersole said: "The council invests money in getting services for the people of Sheffield. We borrow to build, then receives money back to repay the loans as part of the business plan for each project."

He added the council has also borrowed £258 million from banks - which covers historic debt including sums left over from the World Student Games.

"We have a 15-year plan to repay this debt and we are in a good position. We are insulated from the credit crunch," Mr Mothersole said.

However, an Irish bank which Sheffield Council owes £41.5 million, Depfa ACS, is owned by Hypo Real Estate, a German bank which needed bailing out by its government.

The council also has an £113,000 loan with Barclays, one of the banks benefiting from the UK Government's £50 billion rescue plan.

Further sums of £85.5 million are owed to Belgian bank Dexia Credit Local and £18 million to Germany's Eurohypo bank. Mr Mothersole revealed the credit crunch is hitting some council departments. Planning normally has an annual income of £4.5 million in fees but this is already £700,000 lower than expected, half-way into the financial year.

"Income for building standards work, search fees and conveyancing are also down by a lesser amount, but areas like car parking are not yet showing an impact," Mr Mothersole said.

"We are talking a total of close to a million.

It's a small amount for an organisation with a £1.46 billion turnover, however, we are going to have to cut our coat to fit our cloth.

"That does not mean mass redundancies or disruption of work for hundreds of staff and we are trying to downsize in a way which is the least destructive possible."

The council is hoping to reduce jobs by not replacing staff who leave or retire - but Mr Mothersole could not rule out some redundancies.

But Sheffield Council has escaped problems faced by other councils who invested savings in failed Icelandic bank Landsbanki and one of its subsidiaries.

South Yorkshire Pension Fund, which supports former council, police and fire service staff, had invested £18million, South Yorkshire Passenger Transport Executive £5 million, Rotherham Council £3.8 million and Doncaster Council £3 million.

Mr Mothersole said Sheffield Council is repaying £16 million this year - although interest rates for the last financial year added £13 million to the bill.

He added the city has borrowed proportionately less against its assets than other cities such as Newcastle and Liverpool.

The council is owed £71.4 million in housing debt, business rates, council tax and other customer debt.




What do you think? Add your comments below

MORE:
Local News
Local Sport
Arts Guide
Listings Guide
Restaurant Guide
Letters