YORK'S council leader has moved to reassure residents concerned about service cuts, as the authority looks to bridge a £10 million budget gap.

Speaking at a City of York Council executive meeting, Councillor Steve Galloway vowed to meet the biggest financial challenge in the Guildhall's history.

Confirming his intention to meet Local Government Minister Nick Raynsford next month, he warned the funding dilemma meant the speed and quality of services taxpayers were used to may diminish slightly.

But he said vital services "people count on", like schools and nursing homes, would not be affected. And he pledged there would not be a savage £10 million services cull.

However, he warned even if there was a favourable response to Fair Grant for York - a council campaign aiming to secure an extra £7 million from government - there would still be "sacrifices" to balance the budget.

Finding five per cent savings in all department spending plans marks the first stage of the financial fight-back.

"We will try to limit costs on street level services," he told councillors. "If that means improvements to services have to be delayed we will take that decision."

Coun Galloway said people "might not get their letters answered so quickly", but education and social services would not suffer.

When those saving options have been exhausted, the council will then look at discretionary service cutbacks. These may include grants for voluntary groups, leisure and library services, ward committees, youth clubs, pensioner travel concessions and some home care services for the elderly.

Meanwhile, the council leader said he would welcome suggestions from residents and Guildhall staff on how central government was short-changing the authority, or examples of occasions when the council was being asked to carry out the same task for more than one Whitehall department.

Coun Galloway said audit inspectors may have to be told the council does not have the resources to co-operate if "discriminatory" funding problems continue.

Updated: 09:59 Wednesday, October 13, 2004