HYNDBURN'S council leader has launched a review of members' expenses and capped next year's budget after revealing it was likely to go £36,000 into the red.

The move was announced by Tory Peter Britcliffe as the council struggles to balance its books.

But he denied the review was anything to do with the predicted overspend.

Instead he said Labour had under-budgeted last year and intended to use a Government rebate on business rates to cover any over-spend.

And he insisted the expenses spending by the Tories after they took control in May reflected the work done.

Last May Labour councillors complained when Coun Britcliffe introduced two extra cabinet members and an extra scrutiny committee, adding £15,000 to the budget.

The council announced a potential £1.8million overspend in December, with £500,000 attributed to losses made by the former works department.

A further £305,000 was attributed to increases in cost for recycling, refuse and ground maintenance; and £300,000 was paid to workers taking early retirement or redundancy.

So far the council has saved £1million, with up to £700,000 expected to come from the sale of the former Brook Bond Oxo mill, at Premier Mill, Great Harwood.

The mill is jointly owned by the council and Nelson-based Barnfield Construction.

The allowance budget was set at £150,000 by the Labour group but looks likely to end up at £186,000. Coun Britcliffe said the budget would be set at around £186,000 next year.

Labour leader Jean Battle said: "When we set the budget last year it was verified by the finance people and we would never set a budget we knew we would overspend on, that's crazy."

Labour Coun Tim O'Kane said: "They have increased the number of cabinet positions by two and therefore the number of special responsibility payments, none of which has been budgeted for.

" They should be merging the portfolios."

Coun Britcliffe said: "At the time the budget was set it was acknowledged by the controlling Labour group while there was not enough in that budget they would be able to take monies out of the £500,000 they were going to get to correct it.

"The current spend reflects the work that has been done.

"I have also asked an independent remuneration panel to look at the allowance system.

"The review has nothing to do with the overspend.

"It's to investigate whether levels are appropriate."