A BUDGET crisis for Waverley Borough Council could mean drastic measures to avoid overspending in the new financial year.

The council has hard decisions to make over the council tax increase for next year, already expected to be around eight per cent, possible cuts to planned spending and the option of dipping into council reserves.

Last week council tenants were warned that they could face a massive 12 per cent increase in rents to help make up a shortfall and balance the books.

Leader of the council David Harmer told The Herald that to avoid overspending by £800,000, the council may also need to reduce its planned spending on "wish list" services.

"Clearly something has to give. We cannot spend money on every service and every item we choose," he added.

He said that council taxes would increase by the rate of inflation plus the amount required by Waverley to finance new costs.

These includes funds required to put government initiatives into action, such as improvements to Waverley's recycling rates and changes to the funding allocated for the homeless.

But Mr Harmer said he was unable to give an expected percentage increase for council tax until after the executive committee had met to discuss the budget on February 5.

Another way for Waverley to reduce its potential overspend, explained Mr Harmer, was to use up some of its reserves.

An inspection by the district auditor, he said, showed the council had significantly higher reserves than the average in this country.

But he acknowledged that a certain level of reserves must be retained in a prudent budget to avoid more problems in the future.

This week local MP Virginia Bottomley referred to a refusal to increase the 2.3 per cent grant from central government to Waverley as "cold comfort".

Speaking after receiving a letter from the Secretary of State, Stephen Byers, she said: "The Standard Spending Assessment has risen by 14 per cent in this period, but the central government grant has increased by a meagre seven per cent.

"This is part of a regular pattern in the shire districts, where the high cost of living and labour shortages already make the provision of public services especially problematic," she said.