GOVERNMENT red tape will see more than £140m needlessly cut from councils, Newcastle’s spending chief has warned.

Treasurer Paul Woods is leading lobbying efforts to secure a rethink on a Treasury accounting method which will take £800,000 a year from Newcastle alone.

It is claimed that if the Chancellor George Osborne rethought the move, it would free up more cash than is currently needed to fund libraries or arts services.

The threat comes from accounting policies which see, for example, councils pay for job losses themselves then lose the same amount of money in another council cut – effectively billing them twice.

Mr Woods said: “It is a bizarre system in which the money from Government disappears even though we have the chance to pay for redundancies out of our own costs.

“We pay through our capital programme for job losses but then the Government says you don’t need this extra £100m. This is money which on my counting would see 5,000 jobs needlessly go or 1,000 libraries close down just because of a technical accounting process.”

Mr Woods said permission to pay for council redundancies from the money set aside for major projects was granted by the Government. But at the same time the Government decided it would take £100m from day to day spending costs to cover the change.

The problem repeated in two other accounting methods – potentially adding up to £140m.

“We have been lobbying to prevent this,” Mr Woods said, “but you speak to people and it is just a case of ‘The computer says no’ as far as the Treasury is concerned.

“You would think that in the current situation the Treasury would be keen to clean up its process and prevent job losses. It really needs someone to be pushing this case directly with the Chancellor.”