Fuel hikes pile costs on councils

Councils say the fuel increases are using up reserves

Services in Leicestershire may have to be cut or council tax bills rise because of the increasing cost of fuel.

The county council estimates its fuel, electricity and gas bills will cost an extra £6m this year.

Leicester City Council said its monthly fuel bill has risen 25% to £100,000, while Blaby District Council is spending £10,000 a month more.

With tax bill and government grants fixed, officials said extra income or savings would have to be generated.

According to the Local Government Association, the sharp rise in oil prices means the national annual cost of running rubbish trucks, gritters and other frontline vehicles has leapt from £541 million to £780 million over the past two years.

There is no way we could have foreseen what has happened Stephen Beard, Blaby District Council

County Councillor Brian Page underlined the seriousness of their dilemma.

"We hate the idea of having to cut services but it is either that or an increase in council tax bills," Mr Page said.

"And £6m is probably equivalent to about 3% on our council tax bills to our members of the public."

Stephen Beard from Blaby District Council said they have been caught in a similar situation.

"We are one of these organisations that have a fixed income. We fix the council tax, we get a government grant which is fixed - there is no way we can put prices up to cover these massive increases in costs.

"We factored in a rise of 15% but there is no way we could have foreseen what has happened which is nearer 50%".

Red diesel

He said the council was using reserves to make up the difference but this was only a short term solution.

"The government already give excise duty rebates to bus operators, they operate the red diesel scheme for agriculture horticulture and fisheries - all we are saying is 'let's have a similar scheme'."

The government has said it is aware of the pressure on councils and was monitoring the affect of fuel price increases on the whole economy.