KENNET District Council is being urged to cut £100,000 of subsidies to rural bus services and a similar sum from its wage bill to avoid the "nightmare" of capping by central government.

The Devizes-based council was already looking for major savings in its budget for next year when they found out that the Government is giving them £145,000 less than anticipated in their support grant.

They had calculated a three per cent increase, or an extra £153,000, in the cash sum they get from the Treasury and were investigating how to shave £535,000 from next year's budget to keep the increase in council tax below 15 per cent.

By cutting £100,000 from the council's subsidy to scheduled bus services in the countryside and £130,000 from the salary bill, as well as hiking charges at district leisure centres and fees for parking season tickets, council officers are confident of finding £342,810 savings in the budget for the year 2004/05.

That would result in a tax hike from April of 12.36 per cent, a considerable improvement on the 14.5 per cent rise in the current financial year, but not enough to prevent the Government making life awkward for Kennet.

A report to this week's budget reduction sub-committee by chief executive Mark Boden and finance director Frank Marshall says: "Our view is that Kennet's council tax increase at 12.36 per cent exposes the council to the threat of capping, following on, as it does, a 14.5 per cent increase for 2003/04.

"Capping would lead to bills having to be re-issued and, in the meantime, on past experience, the taxpayers hold back payment because of the invalidity of the original bills.

"Computer systems would have to be rewritten to cope with the cancellation of existing bills and their replacement with amended bills, and all the cost of producing and despatching bills would be duplicated.

"In short, capping is a financial and administrative nightmare which the council should avoid if at all possible."

So Mr Marshall and his team have lined up a series of extra cuts that could be made to next year's budgets to bring the rise in council tax below the critical ten per cent level.

They include suspension of holiday activities for 2004/05, including an outreach scheme involving temporary staff travelling out to villages to provide recreational activities for children. Last summer's scheme, called Activate, was immensely popular but Kennet will save £17,650 by giving it the chop next summer.

The council could save an extra £25,000 from its wage bill by not filling vacant posts and could lose £10,000 from its discretionary grants budget without hurting the local good causes it already supports.

In total, the recommended cuts amount to £79,650.

Kennet's financial crisis is not likely to improve in succeeding years, as rising costs like insurance and falling income from stock market investments continue to plague them.

The feasibility of introducing charges for parking in Devizes Market Place, bringing it into line with

Marlborough High Street, is to be investigated.

The recommendations of the report will be put before a full council meeting on February 24, when the district council tax precept will be decided.