COUNCIL tax could rise in Rossendale after bosses were left with a funding black hole of £1.2million over government changes to grants paid out for approving housing developments.

Until December, when New Homes Bonus (NHB) payments were curtailed, the budget for the valley authority was on course to be balanced, according to council leader Cllr Alyson Barnes.

But Whitehall signalled that NHB funding would be reduced from six to four years, for new homes, and would be cancelled if homes projects were only allowed on appeal, and town halls without a housing Local Plan would be penalised.

Councillors have been told the switch could cost Rossendale around £900,000 per year.

For the past six years council tax rates for the borough have been frozen but it was now feared an increase was inevitable.

Cllr Barnes said: “The change in direction by government has driven a coach and horses through our plans.

“For a number of years, it seemed, we had to find around £1m in savings annually so now we will be back to counting the pennies.”

One major decision which could affect the borough’s coffers is whether planning permission is eventually granted, following an inquiry, for the Scout Moor wind farm.

Resources head Phil Seddon said in a report that around £670,000 per year, in renewable energy tariffs, was dependent on the outcome. The total income from the deal should top £20m eventually.

Several recommendations have been drawn up by finance officials, to balance the books, which will be debated by the council’s scrutiny committee on Monday, February 6.

Mr Seddon has advised that £700,000 could be transferred from the authority’s business rates retention reserve, and £199,000 from a transitional reserve, to plug the expected gap.

Councillors will also be asked to authorise the transfer of a £220,000 pension surplus from Rossendale Transport to the council. The final scheme was closed to new members some time ago and only three current workers are signed up.

The authority could also impose a 1.99 per cent council tax rise.

The council has managed to make some minor savings, with the Rossendale Leisure Trust grant dropping by £84,000.