STEEP council tax rises could be on the horizon after senior councillors accused central government of short-changing local authorities.

Both Salisbury district and Wiltshire county councils said they were disappointed with the grants they had received to help pay for vital services.

They are warning that their budgets will be under strain because they have been given less than they hoped to spend next year which could result in more costs being passed on to council taxpayers.

Salisbury cabinet members are upset that the government has slashed the district council's grant from the £6.89m they received this year to £6.34m.

Plans to increase the subsidy for housing and council tax benefits will save Salisbury £500,000 but councillors are concerned that there will still be a serious funding gap.

We had expected an inflation rise in the government grant of about 2.8 per cent, said resources portfolio holder Sheila Warrander.

To make good the loss of grant, we would need to receive an extra subsidy of the order of £700,000. That seems unlikely at the moment.

Council leader Kevin Wren is angry that Salisbury has been left cash-strapped by the cuts.

I am very disappointed, he said. The district councils have been hit hard this year.

The prime minister said no local authority would receive less than an inflation rise - we could be facing that.

It is too early to say how this will affect council tax next year but we shall be endeavouring to keep any rise as low as possible.

Wiltshire county council is warning of similar cash shortages, after it was told it would have to allocate £11.6m of its £12.8m increase to schools, leaving only an extra £1.2m to spend on social services, roads and other key services.

County Hall is again missing out on £6m because of changes in the way grants are distributed, which has already pushed up council tax in Wiltshire by five per cent.

There will be pressure on the budget, said Conservative leader of the Local Government Association and Wiltshire councillor Peter Chalke.

We appealed to the government but it appears they have not listened councils will be expecting a backlash if taxes rise.

Older people will be among those hardest hit by any increase. Don Harper, secretary of the Wessex Pensioners' Convention, said many were already struggling to pay.

It is very possible that the council tax will go up more than the pension, he said.

Pensioners are having to go without certain things to pay the council tax.

If it's between heating and food, they go for heating, and by buying the cheapest foods, they don't get a balanced diet.

But the government said it was spending more than ever before on funding councils, which now had extra freedom to decide how to spend their grants.

This is a good settlement for local government - it gives increased flexibility to people who make front-line decisions, said local government minister Nick Raynsford, in a statement.

This settlement will enable councils to deliver improved services at reasonable council tax levels - there really should be no need for excessive increases.