BURY Council is looking at making £1.7 million of savings and possibly increasing next year's council tax by 6.7 per cent.

Bosses are wrestling to bring the budget into line while faced with a double whammy of a poor financial settlement and Government threats to cap council tax rises.

They are working on this scenario until details of grants and outside financial demands are known in the New Year.

Although they say it is too early to tell what the outcome will be, departmental heads have been told to draw up options to meet that shortfall.

Initial forecasts are that, after allowing for increased pay, prices and costs, Bury will have a budget of £207 million for 2005/06. Towards that, the borough will receive £144 million in Government grant and business rates, and nearly £61 million in council tax, assuming a rise of 6.7 per cent. This leaves the council with a shortfall of £1.7 million.

An increase of 6.7 per cent would increase the council tax by £50 for a Band A house (taking it to £794) and by £75 for a Band D house (to £1,191).

Bury has not yet been told how much it will have to pay in precepts for non-council services such as the police, fire service, waste disposal and passenger transport.

The Government has warned local authorities to limit tax rises to five per cent. Bury will have to look for even more savings if that five per cent limit applies to the total bill, rather than five per cent for council services plus the precepts.

Mr Mike Owen, director of finance, said: "It was a disappointing settlement and it is going to make balancing the budget difficult once again. We will be doing our best to protect services."