MALVERN Hills District Council could be about to drop a bombshell on Council Tax payers, an increase of as much as 20 per cent just weeks after appearing to limit the rise to less than half of that.

The reason is the last minute deal over air traffic control privatisation which rescued the Government's Transport Bill and left the District Council with a bill of at least £240,000.

The Transport Bill contains a requirement that each authority should operate a concessionary fares scheme for the elderly by the summer and Malvern Hills is almost unique in the country in not doing so at present.

Funding even the basic scheme would put around 12 per cent on Council Tax bills - an average of £8.70.

Finance spokesman, Coun Paul Cumming, said there were concerns that a basic scheme would not be a lot of use to Malvern Hills residents. The long and thin shape of the district means many people would want to travel out of the area, such as to go shopping in Worcester.

Instead the Council is looking to enter talks with neighbouring authorities about operating joint schemes, allowing cheaper travel in a wider area.

Coun Cumming has also warned that the detail of the Government's grant settlement - a zero increase - had now been studied and there are fears that the 7.5 per cent increase in Council Tax previously mooted may not be enough.

He said the authority was looking to open talks with the Government in an attempt to get a better deal and to enlist support from MPs Sir Michael Spicer and Peter Temple-Morris.

But he conceded that a Council Tax increase in the region of 20 per cent, more than £14 on the average bill, could not be ruled out.

"We are not going to accept it that easily but it's the most likely outcome," he said.

Before the latest development, the Council had already made deep budget cuts as part of an attempt to bring its budget in line with its income within the next two financial years.

Coun Cumming said the scope for more cuts was not there.

"To have this on top of the Government grant situation as well, it is not a situation there is an easy answer to," he said.

"We have cut a lot of money off costs, there is not scope to have another go at it, services would be effected adversely."

County Council grapples with budget problems, P3.