Sandwell Council is facing a £1.5 million funding shortfall in its urban regeneration department as the credit crunch worsens.

The number of building developments and planning applications have dropped as businesses tighten their belts, meaning the associated fees and land charges have all but dried up.

Councillors are being asked to approve a three-year recovery plan for the council’s corporate property division at a meeting on Wednesday. It aims to cut budgets for basic office equipment such as stationery and a £580 rise in planning fees over the next five years. The fees would go up from £920 to £1,500.

In a report to the council’s strategic recourse committee, finance manager Graham Quinton says: “Over the last 12 months the global issue created by the credit crunch, the lack of confidence in the banking and lending sections coupled with the continued rise in fuel and energy costs have had a huge impact on the property and construction sectors of the economy.

Last month the Express & Star revealed that jobs could be in danger at the council’s planning department because of the drop in applications.

The number of applications received is down 16 per cent in the borough.