THE worst is yet to come, Canterbury City Council chief executive Colin Carmichael has warned.

The council's executive meets tonight to begin the first round of setting next year's budget.

But Mr Carmichael, speaking to the Times, predicted: "I don't see any way out of losing more staff."

The council has already axed more than 100 posts through natural wastage, bringing the number of people it employs down to 750.

But tough new plans by the Government to reduce grants and peg council tax means councillors could be £6 million adrift over the next four years.

Mr Carmichael gave his bleak warning alongside council leader John Gilbey and Herne Bay's Peter Lee, who handles the finance portfolio.

The news is likely to anger opposition leaders, because in the past year the council has turned a £522,000 deficit into a £877,000 surplus, giving it a fund of £2.5 million

Mr Gilbey admitted: "It is a big swing round and we haven't closed anything yet. But I think the public realise we are still faced with continuing severe restrictions.

"It is too deep and too serious to be political about this."

Mr Carmichael added: "Things are going to change and some will get tougher. There will not be enough money to do the things we have always done.

"Hitting the under-spend was a desperate necessity. It will help us withstand what will hit us in the future."

The Government announced in the Budget that it will be cutting most departments' budgets, including local government, by 25 per cent.

The city council gets two-thirds of its £25 million budget – £18 million – from central Government.

Council bosses believe they could see a third of that – £6 million – wiped out.

They had budgeted for a two per cent increase in council tax but have been told the Government wants no increase at all. Income from car parking is also down.

Meanwhile, council bosses are setting up "shared services" with neighbouring districts like Dover and Thanet from next April, to combine building control, housing benefits, call centres and computers to save costs. That is predicted to lead to another 200 job losses across the three authorities and save each council at least ten per cent a year in spending on those services.

The city council won't know how much money it will get from central government until the end of November.

Mr Gilbey said: "This is the most uncertainty we have ever had in setting budgets. We have been through agony this year and now we will probably have to go through it all again."