Herefordshire Council could commit £1.5 million of its cash reserves to cutting the county's Council Tax rise. A plan put to members meeting tomorrow (Friday) will slash the increase from 17 per cent to 14.5 per cent - a Band D average of £924.

The cabinet approved plan is expected to pass at a vote when the only alternatives are setting that 17 per cent or 'decimating' budgets for the likes of roads and leisure.

None of the recommended rises will improve services beyond last year's level, to do so would take a politically volatile percentage increase in the twenties.

"Reserves are rainy day money, and its pouring right now," said council leader Terry James.

A new government funding formula wipes £8 million from Herefordshire Council's 2003/2004 spending plans under the guise of an increase.

At face value, the £169.5 million spending assessment Government has given the council is £25 million more than 2002/2003.

Around £107 million is available as spending support grants with Council Tax making up much of the difference.

This has to be set against an increase in the level of Council Tax the government assesses as reasonable for Herefordshire Council to charge - £948 at Band D.

Deeper cuts

Where this figure goes up, sums the council can claim as financial support come down.

With the transfer of specific grants to mainstream funding channels what appears a substantial extra in fact costs £8 million.

So the council was faced with further, deeper, cuts to cash-strapped services or a Council Tax increase of a least 17 per cent.

The plan pitched when members meet to set the rate tomorrow sees that rise arrive in phases, with 14.5 per cent the first.

It means taking £1.5 million out of the council's £5.5 million reserve and allows much needed investment in social care (£300,000 to tackle bed blocking) and environment (£100,000 to break the backlog in road repairs).

But it does take the reserve below a recommended £3 million minimum, a factor that the 2004/2005 budget will have to account for.

"We recognise that a system of phasing in the tax rises will not satisfy everyone, but it is as far as we are able to go with limited reserves," said Mr James.

The new funding formula has been attacked for diverting cash from rural authorities - when many of which, Herefordshire included, are already arguing that they don't get enough - toward councils in the north and inner cities.