COUNCIL tax bills are going up by 4.95 per cent as town hall leaders found extra savings to keep the rise below the five per cent "capping" level.

Residents who live in Band A houses will pay £781 in 2005/06, up £37 from last year, while those in Band D will have to fork out £1,172, a rise of £56.

More than £3 million will also be cut from budgets to met the shortfall between income and expenditure, which has risen due to inflation, pay and prices. Schools will receive the full £4.3 million increase proposed by the Government.

Labour councillor Wayne Campbell, executive member for resource, told Wednesday's council meeting that it was a fine balance between providing services people want against the amount of council tax they could pay.

Bury was warned that it could be "capped" if the tax rise exceeded five per cent. The fire service added 4.9 per cent to the bill, while the police upped their precept by 6.99 per cent. If Bury wanted five per cent for its own services, the bill would increase by 5.17 per cent.

Coun Campbell said he was not prepared to take this gamble: capping would cost Bury £250,000 in re-billing costs, he said. Instead, he found a further £142,000 of savings to bring Bury's own spending increase to 4.7 per cent, bringing overall bills below the danger line.

All departments drew up options to bring in £700,000 in on-going savings, mainly through cost-cutting and re-jigging services. Another £600,000 will be found by leaving posts vacant, and voluntary early retirements will be offered.

Coun Campbell outlined just how much the council was spending - the budget is around £205 million - on schools, roads, housing, and the environment. This year it would also spend £30 million on the capital programme, up from £10.5 million since 1997.

"This is investing in the future of the borough," he said. "We have listened to what people have said. People want the best services, but they can only afford a certain amount of council tax.

"We are a council that keeps its promises, we are a prudent council, with the third-lowest council tax in Greater Manchester. That's an achievement, especially given the low amount of money we receive from the Government."

Coun Roy Walker, Tory group leader, proposed a list of savings which could be invested in the Re:d Centre and social services care packages. These included job advertising, the council's free newspaper, cycling strategy and a new "pedestrian skills" post.

"We note the difficult budgetary position which partly results from the capping regime," he said. "It would be a major problem, whoever was in charge. But last year, you kept the council tax artificially low because of all-out local elections. We've now paid the dividend, and had cuts all year, particularly in social services.

"You're spending £256,000 on the publicity budget, banners and yellow signs, when you're cutting £235,000 from people with disabilities. The council tax has gone up by 58 per cent in the last few years, and people are getting less and less services."

The Liberal Democrats also moved an amendment, which would restore the Re:d Centre's funding, give more money to area boards, and remove charges for home care. Party leader Tim Pickstone said these proposals, to be funded from borrowing and reserves, would help some of the neediest people in the borough. But both opposition party amendments were defeated.

What you will pay:

Band A: £781.51

Band B: £911.77

Band C: £1,042.02

Band D: £1,172.27

Band E: £1,432.77

Band F: £1,693.28

Band G: £1,953.78

Band H: £2,344.54