YORK'S council tax today moved a step closer to going up by nearly five per cent - as the leader hailed the achievement of bridging an estimated £17 million budget gap.

There was good news for people living in terraced homes as the authority scrapped plans to stop issuing them with free bin bags.

Liberal Democrat Steve Galloway said the authority had faced one of its most difficult budgets four months ago.

But the executive heard that a £6 million efficiency drive, raiding nearly £1 million of reserves and an extra £2.6 million from council tax, helped balance the books.

Coun Galloway said: "I believe it's the best that we were able to come up with against the background of the present Government's grant and council tax policies."

The council is the lowest spending unitary council per head of population and had the tenth lowest council tax in the United Kingdom.

The Guildhall could not keep "conjuring" up £6 million savings each year, and the leader said long-term savings were expected after major investment in e-government, waste management and council accommodation.

But concerns were raised about the proposed loss of 30 full-time jobs, including cashiers and four posts in the library and highways department.

Peter Household, of public sector union Unison, said service standards would be hit.

But Coun Galloway said the total staff affected was a small number of the council's 4,000-strong workforce. Staff caught up in cuts should get transfers.

Late budget changes included scrapping plans to stop giving free weekly bin bags to terraced homes, pumping an extra £50,000 into youth leisure services and redirecting £50,000 to boost the city centre economy.

Labour criticised the budget for hitting vulnerable York residents. They pointed to a £300,000 care cut and leader Dave Merrett said this would hit the home help service.

He said: "Some of these proposals are cutting away at human dignity. People used to bathing daily or every other day will be reduced to once a week."

But the Lib Dems said tightening eligibility would make sure people get the care they were entitled to. It would not impact on critical or moderate rated patients.

The council looks likely to avoid being capped by the Government if a 4.96 per cent hike is agreed by full council on February 22.

Ministers have warned rises of more than five per cent face Whitehall action.

Updated: 09:54 Saturday, February 12, 2005