KENNET District Council is likely to dig into its reserves again in the next financial year to avoid having to raise its council tax precept higher than the Government will tolerate.

Because of the fourth consecutive below average increase in its grant from central government, the cash-strapped council has some difficult decisions to make before it sets its budget next month.

A report from director of resources, Frank Marshall, to be considered by tomorrow's budget reduction sub-committee, says despite efforts to cut spending, a rise in council tax of 12 per cent would be necessary to balance the books without digging into reserves.

If that was to be limited to 9.9 per cent, below the level which might attract Government capping of the budget, £62,630 would have to be from reserves.

But, as Mr Marshall points out, that would still leave the council in danger of local government minister Nick Raynsford taking action to clip its wings.

Mr Marshall said: "One could, of course, argue that an increase of 9.9 per cent carries only marginally less risk than an increase of 12 per cent, but 9.9 per cent does at least indicate a willingness to try and meet the minister half way by getting into single figures, whereas a 12 per cent increase might be seen as being deliberately defiant."

Capping is too great a risk, though, says Mr Marshall, involving all the council tax bills having to be recalculated and sent out again, delaying the time before people pay up.

But keeping the rise down to five per cent, as happened last year, will involve withdrawing an estimated £257,780 from reserves. Last year councillors agreed to take nearly £350,000 from their reserves but it looks as if they will need no more than £256,520 to balance the books for 2004/05.

For a small council, Kennet has large reserves to call on. Even after this year's withdrawal, it stands at £3.784 million. But the council cannot keep on living off its fat and there is no sign of any future improvement in government support for a council that does not include education or social services among its responsibilities.

Cuts to services are therefore inevitable. They include a proposed cut of £154,000 in the staff budget, which is to be achieved through "natural wastage" rather than redundancies.

Cuts in grants have not proved as easy to agree as first envisaged. Many of Kennet's 'client' recipients, like the Citizens' Advice Bureau and Wiltshire Heritage Museum, already operate on tight budgets and rely heavily on volunteers.

The museum's grant was trimmed by £5,000, partly ameliorated by three district councillors donating the recently agreed increase in their allowances to the organisation.

Other areas of budget reductions being looked at include closing all public conveniences except for two new ones in Devizes and Marlborough, passing responsibility for footpath lighting to parish councils, reduction in discretionary grants, and no longer providing black plastic rubbish bags to all households.

Increased parking charges throughout the district, new parking charges in Devizes Market Place and the opening of a new pay-and-display car park in New Park Street, Devizes, will add an estimated £90,000 to next year's district council income.

The council will set council tax levels at a meeting on February 22.