Who will pay the price?

IT might be you.

That was the message to Suffolk's most vulnerable people today as officials started working out who would pay for Gordon Brown's latest budget statement.

Council tax payers look set to escape the brunt of increases - the government has warned local authorities they face capping if they put bills up by more than five pc.

But county council leaders in Suffolk have warned there could be a “devastating” effect on services after the announcement from the chancellor of the exchequer.

Mr Brown said the county council will see its grant increased by 2.9 per cent - and officials have been told to expect a five pc increase this time next year.

However the accounting system has changed and officials in Suffolk have still been unable to come up with a direct comparison with last year's grant.

The county has been told it will get £128 million in direct grant from the government next year - which council accountants feel is lower than it needs.

The new Conservative administration in Suffolk immediately accused the government of forcing local authorities to axe services to keep their spending within reason.

The council's largest single expense is education - but government rules prevent it from cutting here.

Therefore the services most at risk are the next most expensive: social services, roads and transport, and public safety including the fire service.

Jane Storey, Suffolk County Council's portfolio holder for Resources, Finance and Performance, said: “It is devastating news for the council taxpayers of Suffolk. The settlement is much lower than central government has given us in previous years.”

She warned that services to the most vulnerable people could be at risk: “We want to do as much as we can, but there are going to be some very difficult choices.”

The government was likely to use capping powers to prevent a major increase in council tax - which would leave the council with no alternative but to cut services.

Labour group leader Bryony Rudkin felt it was too early to make a judgement on what the cuts would mean for the council.

She said: “When we were forming the administration there were often years when we saw cuts in government support. That is not the situation being faced by the county today.”

Tory MP Tim Yeo was concerned that cuts could hit social services just as health cuts were assuming that more vulnerable people would be helped in the community.

He said: “I don't know the exact implications, but I would be very concerned if there were cuts to social services at this time just as more people were being referred to them as a result of cuts in the health service.”

But Ipswich MP Chris Mole said the settlement was fair and that there should be no need for wholesale cuts.

Mr Mole, who is Parliamentary Private Secretary to Local Government Minister Phil Woolas, said the increase that Suffolk had received was twice the rate of inflation.

“I think it is absolutely a fair settlement in the economic circumstance. The five pc the following year is very generous.”

He added: “I don't think it does any credit to the current leadership of the council to worry people when they don't know what the settlement actually means.”

But council leader Jeremy Pembroke was unrepentant about making the warning.

He said: “I've looked at these figures with officials and it might be an increase of 2.9 pc - but public sector inflation is running at 8pc, largely because of increased wage costs.

“We cannot deal with this gap without introducing some very painful cuts to services.”

The figures were being scrutinised today as The Commons Public Accounts Committee accused the government was wasting billions of pounds through failing to learn the lessons of the past.

Just a two per cent improvement in the way money is spent would save £8 billion a year, the spending watchdog said.