A LOOMING financial crisis is affecting Worcester City Council – with warnings a budget gap could balloon to more than £1 million by 2017.

A leaked document also reveals how bosses are openly talking about creating a “survival strategy” for the next five years, which could include hiving off services to other providers in the private sector.

City councillors have been invited to a private briefing on Monday where they will be told about the scale of the woes.

The document suggests the “easier” savings have already been made and that the pain will get worse before it gets better.

A budget gap of £257,000 is forecast to open up next year, and it will grow to £842,000 by the 2016/17 financial year.

But that black hole is built on a number of assumptions – including a 2.5 per cent increase in council tax every year.

The council’s Medium Term Financial Strategy, a blueprint which spells out the situation over the next five years, is currently being re-drafted and revised figures are due out as soon as next week.

A source said: “It’s pretty grim stuff – if the council was a private company, the current position would be completely unsustainable.”

The document, a series of slideshows, mentions a number of other financial pressures which are upsetting the balance sheet, including £40,000 for inflation, £70,000 less than expected on racecourse rents and a £70,000 drop in car parking fees.

Unless revenue improves a total of £300,000 could be added to the deficit, taking the gap to well over £1 million.

Handing over services to new providers, known as commissioning, has become increasingly common at other authorities, including Worcestershire County Council .

Councillor Andy Roberts , cabinet member for finance in the city, said: “We’ll look at commissioning if it maintains a service, is more efficient and protects employees.

“I don’t underestimate the financial challenge ahead of us, but it’s exactly the same for councils up and down the country at the moment.

“Our pledge is still to freeze council tax.”

There are three reserve pots with a total of £4.6 million in.