Cash-strapped Sandwell Council is facing a multi-million pound bill for redundancy payouts, it emerged today.

Bosses have set aside a £4 million cash pot and have been given permission to borrow a further £5.7m from the Government.

The council has said 800 jobs could be at risk next year as it battles to save £75m over the next four years following budget cuts. It is now preparing to spend millions of pounds covering the cost of payouts to axed staff. The full costs of redundancies is not yet known as a definitive number of jobs losses has not been confirmed.

Councillor Steve Eling, cabinet member for strategic resources, today admitted: “We don’t know what we are going to need yet.

“We don’t know how many people are going to be made redundant as a result of the cuts, and even then it’s not a standard figure for each post.

“I created a specific reserve to contribute towards redundancy costs without having any idea of what they were likely to be at all.

“We have got the £4m in cash, then the Government invited councils to apply for capitalisation of redundancy costs.

“It means we can borrow money to pay for redundancy costs and spread the cost over a number of years rather than finding all the money at once. Normally you cannot borrow money to pay for redundancy costs, but we can borrow up to £5.7m.”

A report to the borough’s finance and resources scrutiny panel, which meets on Thursday, states it is forecast to meet a “substantial amount of redundancy costs by the end of the financial year to meet the budget reductions required for 2011/12.”

The council has already announced plans to cut 150 jobs from children’s services with those to lose their jobs including staff working in children’s social care, the youth offending team as well as primary and secondary school consultants,.