RESIDENTS in Lancaster and Morecambe should face a 'low single figure' council tax increase, says Local Government minister Nick Raynsford.

The message follows an announcement that local authorities are to receive an extra 7.3 per cent in Government funding for 2004/05.

Nick Raynsford said this year's grant would 'further help councils to deliver improvements in the services while keeping to reasonable council tax increases'.

"Given this significant extra investment and the scope for efficiency improvements, our view is that local authorities can and should deliver council tax increases next year in low single figures.

"I hope we do not have to cap authorities. But make no mistake; we are prepared to use our capping powers on any authority if that proves necessary."

Lancaster City councillors are to decide the council tax rise for 2004/05 at a meeting next Wednesday, February 11.

It is predicted to be set at nine per cent - earlier forecasts put it at 28 per cent.

This hike has been partially blamed on the spending proposals of the council's previous Morecambe Bay Independent administration.

The finger has also been pointed at the 'severely underestimated' cost of the planned expansion of the doorstep-recycling scheme.

Losses made last year by City Contract Services - responsible for services like street cleansing, waste collection and building maintenance - have also been cited.