Currently the council is using interim consultants from Deloitte & Touche while it searches for 21 full-time finance managers.
The embattled local authority has been served notice the DTLR is prepared to use the Local Government Act 1999 to take control of its public services.
Stephen Byers, the new transport secretary, wasted no time stepping into the row over Hackney’s financial plight.
Under the provisions of the act, Byers could be given wide-ranging powers, including the transfer of functions from the council to his department.
His action resulted from warnings by senior Hackney officials that spending was in excess of income and that as a result no new spending commitments could be entered into.
This would lead to the non-renewal of all short-term and agency contracts, affecting supply teachers, child protection workers, benefits officers and other key workers. As a consequence, the DTLR said there would be severe disruption to the delivery of front line services.
Because of Hackney’s continual failure to generate a balanced budget, Byers believes action is needed to tackle the underlying financial control problems.
In order to maintain essential services Hackney will be given permission to borrow money but will not receive additional funds from the government.
In a statement, councillor Jules Pipe, leader of Hackney Council, said: ‘We welcome the fact that the secretary of state has today confirmed that we will be given permission to borrow money.’
He added: ‘We have made significant progress in tackling the failures of Hackney Council – failures which arose under previous management during a period when there was no overall political control of the authority.’
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