HOUSEHOLDS in the Cherwell area will pay an extra 2.9 per cent for district council services this year.

It means residents in average Band D properties will pay £123.50 to the authority in 2009-10 — up by £3.50 from the current financial year.

The council had pledged to keep any rise under the rate of inflation — currently at three per cent — and not to dip into cash reserves.

James Macnamara, the council’s executive member for finance and resources said: “We’re aware of the financial problems Cherwell residents are facing, which is why we’ve done everything we can to keep our tax increase below the national average and below the rate of inflation.”

Cherwell said it had not escaped the economic downturn and had seen planning and land registry fees fall significantly, while investments had also suffered.

In 2007-8 the council earned £6.8m in bank interest, but it is predicted to get just £2.8m this financial year, with the figure almost halving next year to an estimated £1.1m.

It also had to write off £500,000 in interest after the Icelandic banking crisis last year, but the council is still optimistic it will get back a £6.5m investment.

It has already made £2.2m in efficiency savings and plans to make a further £1m in cuts.

Council leader Barry Wood said no jobs would be lost, but future voluntary redundancies were still a possibility.

He said: “It’s not easy to save £1m but we’re realistic about that target.

“We have to review the way we provide services from time to time and that does include voluntary redundancies from time to time. I’m not going to rule that out.”

Full tax bills which will soon be sent out to residents will also include charges for county council and police services, and parish and town council precepts.