Residents have been assured that the tax freeze they have been promised is not under threat from the credit crunch.

Council expenditure has shot up over the past year thanks to the soaring rate of inflation, but a Cabinet meeting on September 25 heard that the council has sufficient funds to deal with any problems.

The £4million grant the council was recently awarded to deal with asylum seekers entering the country at Heathrow has got the council out of a sticky situation after rising fuel and rent costs led to a large budget overspend.

Council Leader Ray Puddifoot, said: "Overall we are under budget, it is an encouraging position to find ourselves in, but we will have to realign receipts due to expenditure.

"The net effect of fuel and land charges would be a £611,000 over-spend, but given our financial position it is not a problem.

"We will not be making people redundant and we are in a relatively strong position: jobs are safe."

The council also blamed the changing financial conditions on a reduction in golf course income, because of an agreed reduction in rent with the new course operators, as well as the general downturn in the economy.

Councillors insisted all available action is being looked into in terms of mitigating the exceptional costs of fuel and credit crunch related costs.

Across the country, councils have been hit by the credit crunch, with budgets being based on inflation at 2.7 per cent rather than the current 4.7 per cent.

The Local Government Association said that members have had to spend £374 million more than expected in fuel costs and the rise in repossessions was putting pressure on social housing.

Margaret Eaton, chair of the LGA, said: "As the hard financial times bite, local councils are having to tighten their belts in the same way that hard-pressed families are."