We'll all have to pay

But when he proudly boasted of "generous" increases in the handouts to local authorities through the Standard Spending Assessment (SSA) this week, he touched a few raw nerves among the town's leaders.

Mr Byers insisted there would be no complaints from councils and that there was no need for large-scale council tax increases.

But taxpayers in Swindon are now facing a possible council tax hike of 9.5 per cent, plus a range of cuts to services that could hit some of the most vulnerable people in the community.

Swindon Council has been left reeling by its SSA settlement, which appears to be about £300,000 less than it had been hoping for.

It was already struggling to balance the budget, with directors of each council department desperately trying to find ways of making savings.

It had also promised headteachers that it will give millions more to schools following its dreadful Ofsted report in September. And every councillor has known for months that the social services department is also in crisis, with millions more needed to revive services to the elderly and infirm.

As they ploughed through the figures to try to come up with proposals to produce a viable budget, all their calculations were based on receiving £6.1m in revenue support from the Government.

There was talk of a council tax increase then of between five and 10 per cent if services were not to be cut.

But following Mr Byers's announcement on Tuesday, the final figure for Swindon is likely to end up being less than £5.8m.

Technically at this stage the settlement is £6.2m, but Swindon is likely to have £445,000 taken away in January. That is the amount earmarked as the council's borrowing allowance but under new Government rules, the town is viewed as having enough capital money and should not need to borrow anything.

The £300,000 shortfall means that the dire situation the town was facing has just got an awful lot worse.

Council leader Mike Bawden today summed up the feeling of the council, admitting: "We are in one hell of a mess."

The crisis all stems from the fact that since its inception as a unitary authority in 1997, the council has been one of the worst funded councils in the country.

Becoming a unitary authority meant taking on the responsibilities of running education and social services from Wiltshire County Council. Meanwhile, the town has been expanding rapidly and the costs of serving the growing population are increasing.

But the money from Government has never met the demands of the extra responsibilities or been tailored to Swindon's unique circumstances.

Coun Bawden (Con, Old Town and Lawn) said that his group may have been left with the difficult task of putting forward a proposed budget but any criticism should be directed at Swindon's two Labour MPs, Julia Drown and Michael Wills.

"We will propose a tax rise of 9.5 per cent and cuts will also have to be made. If people have got concerns about that, I suggest they ask their local MPs to explain why their Government consistently refuses to give us the money we need to run services in Swindon adequately."

Labour leader Sue Bates (Gorse Hill and Pinehurst) said: "The settlement could change, as the council is still awaiting some specific grants. But we are underfunded as a council and as the former ruling group, we have always known that tough choices have had to be made."

Liberal Democrat deputy leader Wendy Johnson (Eastcott) said: "I think this settlement is really quite irresponsible of the Govern-ment.

"They know what difficulties we have in trying to provide quality services and they have ignored them.

The council's finance director Ian Thompson said: "The settlement is closely in line with our own forecasts.

"Although it is pleasing that our research and intelligence was accurate, the settlement still offers difficult choices for Swindon residents and elected members.

"Swindon's settlement will seem particularly unjust in the light of Wiltshire council's increase of 6.3 per cent overall."