COUNCIL tax bill could rise sharply again after this year's relatively low increases, according to a county council report.

The report says council tax increases of 7.1 per cent in 2005 and 7.9 per cent in 2006 would be needed to fund Lancashire's spending plans.

That is more than double the rise imposed by the county council this year, when its tax increase was set at 3.5 per cent in February.

County finance bosses and Blackburn with Darwen Council's resources team are waiting to hear what Chancellor Gordon Brown's 2004 spending review contains.

However, a report written by county council director of resources Tony Martin said the Budget on March 17 did give a few clues about the government's intentions.

Public spending is likely to be lower this year than in 2002 and Gordon Brown is set to push for greater efficiency in public organisations.

Although many Labour party figures believe the Chancellor is unlikely to cut grants to councils during the run-up to a General Election Mr Martin said budgets were already being looked at again.

"We have to do this now because the money we get from the Treasury is so important. We are reliant on government money because it fills a third of the money available to me", he said.

At a meeting of the county council cabinet committee Mr Martin said he was determined to keep his tax rise at around the 3.5 per cent mark for the next two years.

To achieve his goal the county council would be forced to make savings of £12.2million in its next budget and £15.5million the year after.

The biggest loser was likely to be social services where Mr Martin has earmarked £5.5million of savings. Despite the finance chief's intentions to keep bills down he admitted to being powerless to influence the Treasury's decision.

Mr Martin added: "If Gordon Brown does find there is a black hole in the economy and he has to cut public spending I cannot be held responsible for that."

County Hall opposition leader Michael Welsh said a much more disciplined approach to the budget process was needed.

He said: "The county council is committing itself to a council tax rise of no more than 3.5 per cent over the next two years, which is purely speculation because we do not know what settlement we are going to get.

"We need a much more disciplined approach to how budgets are put together."