STROUD District Council has approved a 1.9 per cent rise for its services next financial year – expected to be the lowest hike of any major local authority in Gloucestershire. The below-inflation increase, which compares to last year’s 3.5 per cent, means the annual district levy for a band D household will rise by £3.49 to £186.93.

SDC plans to maintain services in the recession through savings and other measures, including reducing staff costs, cutting grants and increasing car parking charges.

Speaking during a full council meeting at Ebley Mill on Thursday, leader Frances Roden said: "We have to balance our budget needs with the tax demand on hard-pressed council taxpayers.

"We are managing to invest in what the district needs while still keeping the council tax increase to less than two per cent."

The tax rise will fund work on homelessness prevention, household energy efficiency and climate change.

Existing funds and savings will pay for the continuation of an officer for young people and also set up a joint financial system with seven other councils to save money.

SDC has continued to face increased expenditure in benefits, housing advice, council housing and pensions.

The authority also expects reduced income from the government, land charges, planning applications, recycling materials and deposits.

Senior officers have identified possible efficiency and budget savings of £720,600 each financial year until April 2014.

SDC could also shave off a further £170,000 over three years by handing back three sports facilities to their owners, including Wotton Pool.

However some councillors said SDC should investigate ways of generating additional funding to improve services during this period of low interest rates.

Sarah Lunnon (Green, Valley) said one option could be borrowing, including ‘internal borrowing’ – which means using reserves, balances and cash from the sale of assets.

"What we actually need at this moment is to take a brave decision like we did on the canal and borrow some money so we can fund some of our initiatives," she said.

Dennis Andrewartha (Lib Dem, Cam West) said SDC should look at ‘self-financing’, where authorities spend money now to produce savings in the longer-term which repay the upfront costs.

"It is a very effective way of investing money," he said.

"Far better to invest in our own district than to invest in a bank and get less than two per cent."

Nigel Cooper, cabinet member for finance, said: "I am not totally adverse to taking on debt but just at the moment we are in a very uncertain time economically."

However, he said SDC would end up in a lot of debt if councillors took the option to self-finance housing, which would essentially mean buying their way out of the current system.

He added he would look at internal borrowing for any project.

Councillors voted 25 in favour of the tax rise and 10 against, with six abstaining.