THE credit crunch and resulting economic downturn is beginning to have a significant impact on the finances of Waverley Council.

An anticipated £700,000 shortfall in income from fees and charges this financial year - representing an almost 10 per cent reduction - was reported to the council's executive on Monday.

The council expects to be £250,000 worse off under the heading of land charges alone, thanks to the slowdown in the housing market and householders paying for personal searches rather than full searches for the HIPs pack.

A reduction in the level of planning applications has likewise meant a projected £188,000 shortfall in fees.

Car park income could be down by as much as £55,000, while reduced bookings and a lost car park rental contract at the Memorial Hall in Farnham add a further £13,500 dent to Waverley's finances.

Whereas as recently as the end of July the council had expected to underspend on its budget by £140,000, it now predicts an £80,000 overspend, despite staff savings in the planning and land charges department.

Finance portfolio holder Mike Band said officers would be reporting on the situation on a month by month basis.

"It is extremely important that we manage our financial affairs on a prudent basis. At this point officers believe they can contain this cutback without significantly affecting services," he said.

"These are very different times than we have had in the past."

One bright spot in the equation was the projected additional interest of £400,000 earned from investments and Mr Band said the finance director and his team had performed well by any standards.

The executive heard that Northern Rock caused a couple of sleepless nights in August 2007 and that the financial team had had the foresight to remove the council's money from Icelandic banks earlier this year.

The length of investments meant they were not completely clear until September. "There by the grace of God did we go!" said Mr Band.

"The way that we managed to avoid it completely was very much due to the way our treasury group do work."

"With restrictions on what our officers are free to invest in there is always a risk that something will go wrong," said Denise Le Gal.

"What will happen in the next six months is anyone's guess because there are so many questions in terms of toxic debt and insolvency that still have to come to the surface. We're going to face a bumpy ride."