WORCESTER City Council is facing a £1.6 million budget gap next year - and local people are to be asked their views on how to plug it.

City chiefs today revealed the potential deficit as they launched their budget review for the 2008/09 financial period.

And they warned that the total budget gap over the next five years is likely to top £3.5 million.

The gap is being blamed on freezes or reductions in funding from central government for services like free bus travel for the elderly.

As part of the preparations for the budget, which will be finalised next February, the city council is planning to consult 1,000 Worcester people about how best to close the £1.6m gap expected next year.

The gap represents the difference between the council's expected outgoings and its income from its share of the council tax, other charges such as for car parking and funding from Westminster.

Council leader Simon Geraghty warned yesterday that keeping council tax increases low would be difficult next year. And he made it clear that the £1.6 million needed could not just be met from cutting services.

"Efficiencies - which we will always look for - will not be enough to deal with this budget gap," he said.

"We have to look at how we can address the gap by both reducing our spending and increasing our income.

"We are not just going to tell people that this is the gap and this is what we are going to do about it.

"We want residents to tell us how they want their money spent."

The city's 1,000-strong Citizens' Panel will be asked for its views on council spending, along with all the city's councillors.

Agreeing a budget will be the first major test for Councillor Geraghty's ruling Conservative group since it lost overall control of the council last week.

Concerns over fortnightly bin collections were cited as a reason for the Tories' defeat to Labour in the St Clements ward.

And Councillor Geraghty warned that, while bin collections were under review, any increase in the frequency of services would increase the predicted budget gap.