A gap in the town’s finances over the next four years stands in the millions - despite a council tax rise.

Watford Borough Council has admitted to a £10.6 million budget gap over the next four years, and even after a proposed 2.2per cent rise in council tax the gap still stands at £7.9 million.

In a budget setting document published this week, a breakdown of the council’s finances revealed the state of the council’s coffers.

The cost of borrowing year on year doubles next year from £800,000 to £1.6 million the year after, then £2.1 million and then to £2.4 million totalling to £6.9 million after the four-year period – more than half of the council’s £10.6 million gap.

Explaining the loans, the council says they support the council’s Capital Programme to act as investments in new projects for Watford that will provide income further down the line.

To close the gap, the document recommends a combination of service expenditure reviews, a reduction in discretionary schemes, reviewing joint ventures and disposing of some assets to generate improved rental returns.

According to revenue figures, the money Watford makes is slowly growing, with the council set to make £3.6 million over the next four years, however, the revenue cost, which essentially means paying off the interest, is expected to balance out to be £2.4 million.

Asif Khan, the Labour Councillor for Leggatts Ward said: “The high borrowing costs has been as a result of bad decisions made by a Conservative Government, although saying that the Lib Dems didn’t help when they were in the coalition.

"It’s not bad to take out small loans as investments but we need to be more careful about placing the burden on the taxpayer.”

Elected Mayor of Watford Peter Taylor said: “I’m pleased that at a time when central government are making massive cuts to our funding, we are still able to keep council tax rises low and not make the drastic cuts to services that other councils have been forced to make.

“This is not by accident but because of careful financial management and sometimes tough decisions made by this council.

“Our local leadership means that we are able to invest in better services for our town, including delivering a new cycle hire scheme and an on-demand bus service, which will be delivered this year.”