Taxpayers will see no increase this April, but forthcoming years could see hikes to compensate.

In an interview with this newspaper, finance chief Councillor John Drage warned: “We have to be prepared, it could be severe.”

He said the recession was starting to have an impact on the public sector and the council expected severe cuts from central Government in the years ahead.

He said the projected shortfalls for 2011-12 and 2012-13 were significantly more challenging than in recent years and indicated the need to find future savings of up to £8m a year.

Leader of the council Councillor Sean Brennan said the council would try to meet the challenge by “being even more efficient and working with our partners to deliver excellent services at a lower cost”.

Savings Coun Drage said the council intended to make £4.1m in savings next year.

He said this would protect key frontline services, particularly those for the most vulnerable.

The council will freeze social service charges for meals on wheels, home and day-care. Parking charges will also be frozen to support businesses.

Further savings planned are £250,000 in changes to waste collection routes and £150,000 by sharing a human resources service with Merton.

Another £450,000 could be saved in adult social services after “negotiations with care providers”.

Spending The council will invest almost £72m on capital projects including: q £9.4m for improvements to social housing.

q £1m on completing the new facility for adults with learning disabilities at Anton Crescent.

q £708,000 will go to the borough’s committees for residents to spend on neighbourhood projects.

q £410,000 of new money will pay for more social workers to work with children with protection plans, and an additional £300,000 will pay for transporting children with special needs to and from school.

q £20m on Stanley Park High School.

q £80,000 on improvements to Glenthorn High School, including a 25 place autism base.