FYLDE Council could be forced to push council tax levels up by as much as 26 per cent to close a growing budget gap, it emerged this week.

The council's Corporate Police Committee learnt on Monday that a massive tax increase or big spending cuts will be needed to balance the books in 2004/05.

The council is expected to need £938,00 to bridge the gap between income and expenditure next year -- because it has been relying on its reserves to fund services.

A report to councillors said: "On the face of it the gap to be made up next year looks high and the question arises as to why. The main reason is that, in the past, Fylde has used it reserves for expenditure and balance the budget."

The report reveals that, over the last three years, the council has spent more than £1.5 million pounds from its reserves on funding services.

That leaves the council with just £823,300 in the bank. The Government has advised the council to keep a minimum of £470,000 in the bank for emergencies.

"For the council to have a sustainable long term financial policy, reliance should not be placed on the use of reserves to balance the budget, which is purely a short term measure," the report adds.

"It effectively means that the council is spending more than it can afford on a year by year basis and is using its savings to survive."