SOME borough council services may be cut and charges increased for others to help plug future budget deficits, Basingstoke council leaders have warned.

Rising inflation, lower returns on investments, caused by falling interest rates, and new service pressures mean the borough council is forecast to be spending £2million more than it receives by 2008/9.

The deficit is set to begin in the year 2004/5 and, as a result, the council is reviewing and reorganising its financial policies.

Council leader Cllr Rob Donnelly said: "We are not in a serious position financially but we have been looking at it. We will make other provisions and find ways of plugging the gaps.

"We will be looking at a number of things to generate income, such as cutting unnecessary services.

"Low interest rates are good for most councils because they're borrowing money. However, we are very efficient, so they're not so good for Basingstoke council. We have several investments - a one per cent fall in interest rates costs us £1million."

Deputy council leader Cllr Brian Gurden said: "We will be more careful with spending plans and will have to rethink them. This is about taking sensible steps to improve arrangements. We need to generate revenue. This might also impact on some services. It might impact on charges."

Cllr Donnelly suggested the bulk collection service - where residents can phone the council and ask staff to remove items such as sofas or refrigerators with no charge - would be an area to be looked at. However, he said nothing had been decided yet.

Last night, the council's Cabinet was presented with a review of the financial policies, plus some budget strategy options to combat the forecast deficit.

A report for the meeting stated the review was to "identify simpler financial policies that are transparent, provide for the identified financial risks and contribute to meeting the future expenditure requirements of the council plan".

The longer term options include: setting a global savings target for services and departments setting a capacity funding target to be met by existing budget savings/service changes to support new revenue policies reviewing the council's use of its property portfolio and investigating options for the generation of future capital receipts.

Cllr Donnelly told The Basingstoke Extra that the council is "committed to not raising council tax beyond inflation".

This year, Basingstoke residents were hit with a 15 per cent council tax increase.

However, this was fixed by Hampshire County Council. The borough council's contribution went up by 2.5 per cent - the first time it had increased in four years.