CHESHIRE West and Chester Council faces significant financial pressures but is well positioned to respond to the challenges, according to auditors.

District auditor Judith Tench points out that cost savings of £35m were achieved in the Tory controlled council's first year with a target of a further £7m for 2010/11.

The council is facing an overspend this year “which could be as much as £9m" although director of resources Julie Gill is leading action to reduce this to £2m.

Expected balances of £22.5m will provide the council with flexibility to manage a difficult budget.

“The impact of the recession and the comprehensive spending review will present a challenge for the council in preserving services to local people, keeping a strong financial position and delivering value for money," believes the auditor.

And she says the authority, led by Cllr Mike Jones (Con, Broxton), “is also facing local pressures resulting from the prevailing economic conditions and changes in demand for services”.

These include reduced numbers of planning applications, increased benefits applications, lower returns on investments and growth in demand for adult care services and the safeguarding of vulnerable children.

The council has set a “challenging" £246m budget for 2010/11 in the knowledge that this will require an ongoing transformation of services and good financial management, says the auditor.

She points out the authority's medium term financial strategy has been developed assuming “significant reductions" in public expenditure with a gap between expenditure and funding over the next three years of about £30m.

The council wishes to develop a modern and efficient authority, she says, which reflects the best possible value for money, delivers local regeneration programmes which make a difference to residents' lives and delivers excellent facilities and services for communities.

“The council is as well prepared as could be expected to enable it to cope with the pressures and the challenges ahead," suggests the auditor.

And she adds: “I am confident that the council will continue to respond positively to the major changes and will take effective action to mitigate the impact of spending reductions.”