The leader of Worcestershire County Council has slammed the Government for leaving it with a "disgraceful" £3.5m funding gap that means even the toilet roll budget will have to be slashed to save money.

George Lord said the authority faced a severe funding headache - and it had no choice but to dip into its reserve cash to make up for the shortfall.

He accuses the Government of discriminating against Worcestershire even though the authority was awarded four-star status in the latest assessments.

The council has been handed a £69m grant for the 2006/2007 financial year - £2.5m up on last year, but he says it is not enough.

The authority said the extra three per cent in cash will not enable it to bring in the extra staff it needs, such as teachers and care workers to improve the service it offers.

The authority said it will be forced to look for additional savings to raise money, such as looking for better value on items such as computers to toilet rolls and not replacing staff members who leave.

Dr Lord said: "It is a bit like Manchester United using all their players, having their resources cut, and then being expected to improve still. We've just been rated a four-star authority, the best you can get, and we're still improving. It's not much of a Christmas present."

The authority has not ruled out selling off buildings it no longer needs or reducing maintenance costs.

Council leaders said the authority only has £125 to spend per head, compared to an average of £149 for other shire authorities.

The 2007/2008 grant is £71m, 2.7 per cent up over the previous year.

Council leaders have already identified £6.5m of savings but say they need to find another £3.5m to keep services as they are.

They have dipped into the county's £19m reserves to ease them through the year.

Dr Lord added; "The current predicament is dull, poor and disgraceful. Our grant is remarkably poor in relation to the budget."

l Funding for county schools has increased by 6.7 per cent from £239.9m in 2005/6 to £260m in 2006/7.