THE city council's spendthrift budget policy has proved successful, councillors are claiming in new figures due to be presented to the Cabinet.

The latest accounts show a £45,000 underspend on the projected £10.79m budget for the past year.

The figures, which have yet to be audited, show the council's reserves are up to £2.25m and between March 2002 and March 2003 borrowing fell by £1m to £27.24m.

Over the same period, staff cut-backs have saved Worcester City Council £468,000.

Operational services, which includes litter collection and recycling, reduced costs to £101,000.

"It's definitely an on-target result," said deputy leader Simon Geraghty.

"Overall, the figures give weight to our claim that, as an administration, we are safeguarding the city's purse with the proper degree of responsibility.

"That can only represent good news for the city and its citizens."

Coun Geraghty said there was no specific target of savings to be made after the council's budget was balanced in March, which effectively gave it a clean slate.

When the figures are presented to the cabinet tonight, Coun Geraghty is expected to add the immediate priority will be to continue to crack down on "bad debt".

In order to do this, new monitoring measures have been implemented including new revenues and benefits systems to keep track of council tax payments and benefits claims.

Coun Geraghty has warned of another tough year ahead.

"We're under no illusions that there won't be more tough measures put in place," he said.

"We're faced with the need either to save £750,000 or increase revenue by the same amount, or a combination of both next year."