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The future of Haverhill Arts Centre could be threatened by new Government proposals to allow a cap on large council tax increases.

Town and parish councils like Haverhill Town Council, which runs the Arts Centre, are not currently subject to limits on the amount by which they can increase their council tax - which is a minor percentage of the overall figure, most of which goes to county and borough councils and police authorities.

However, the Government is consulting on a proposal to allow local referendums of council tax payers to be called if an increase is above a certain level, yet to be identified.

Haverhill Town Council is part-way through an agreed programme of phased council tax increases being implemented to replace potential loss of funding from St Edmundsbury Borough Council for the Arts Centre.

When the town council took over management of the Arts Centre from St Edmundsbury, a level of grant was agreed, on a reducing basis.

As the borough council is re-assessing its financial position in the light of the proposed public sector funding review in October, and there is no certainty it will continue its grant,
the town council agreed a minimum increase in council tax for 2011/12 and 2012/13 of £68,500 each year to prepare for potential loss of funding for the Arts Centre.

This represents a 9.7 per cent increase in its council tax levy each year - about 16p a week to the town's council tax payers - irrespective of other financial demands, and is crucial to the council's long-term financial planning.

If the borough council grant is not renewed, and if new legislation sets a limit on increases which is lower than the town council requirements, members will have to choose whether to set a stand-still budget under the limit, or set one over the limit and risk a referendum.

Options in preparing a stand-still budget are outlined to members in a report by town clerk Gordon Mussett to an extraordinary meeting of the town council on Wednesday next week, warning them they will have to decide on them at their September meeting.

These include reducing the offer of the Arts Centre, either by cutting opening times or turning it into a community centre, both of which would incur staff redundancies.

They also include axing Christmas lights and flower planters, axing entertainment events such as market square dances, axing pensioners' coach trips and discontinuing grants to local organisations.

In the meantime the council is considering its response to the consultation and Mr Mussett has drafted a letter, mentioning possible closure of the Arts Centre and 60 per cent redundancy among the council's workforce.

He points out the council tax increase of £68,000, which the town council proposes, compares with St Edmundsbury's spending in 2009/10 of £124,000 on civic ceremonials and £323,000 on councillors' allowances.