Bradford Council balanced its financial books last year despite a massive overspend by its social services department.

The department forked out £3.4 million more than it should have done during the year 2003-04.

Most of the cash was spent on paying for children in its care to be looked after outside the district.

But savings made through interest paid on borrowing, interest on bank accounts and money which was set aside but wasn't needed, more than made up for the deficit.

Social services bosses had budgeted for 785 children to be looked after by foster parents or in care homes during the financial year, but the figure ended up being higher than 850.

Many of the youngsters are looked after outside the district because the authority does not have the capacity to look after them.

When the Council became aware of the problem in 2001, it set up a programme to build more children's homes with three now open.

Kath Tunstall, head of children's services, said: "The numbers of children in care have levelled out over recent months.

"There are still about 850, but a substantial number have been placed with their extended families and some have returned to their parents and carers.

"We are also working to bring children back to the district."

A report monitoring the Council's finances, which goes before the executive committee next week, has again warned all departments to keep spending in line with budgets

But Councillor Kris Hopkins, executive member for corporate matters, welcomed the fact the accounts showed the Council's finances to be in overall good health.

He said: "It is very encouraging that the Council's finance remains sound and we are in the black, this is despite continuing pressures on budgets. Staff have worked hard and I congratulate them."