Epsom council will not be cutting any services in the next financial year but will be increasing council tax by 1.97 per cent.

At a meeting to discuss the budget for 2015 to 2016 last night, Epsom’s councillors voted through the tax increase - which equates to 7p a week or £3.42 a year - to help plug a £405,000 shortfall in Government funding.

Efficiency savings to the tune of £500,000 will also be made.

Although no services are to be cut, Residents’ Association councillor Neil Dallen, chairman of the strategy and resources committee, said the council will have to make some "difficult decisions" further down the line, in 2016 to 2017, when the council will have to find £1m in savings.

"We keep finding efficiency savings," he said.

"We can only do it so much for so long and there is the law of diminishing returns."

Asked whether this would eventually mean service cuts, he said: "Either cuts or finding different ways of providing them which cost less.

"We don’t want to cut services but at one point we are going to have to make difficult decisions.

"We believe in the next four to five years there will be no Government funding.

"We are going to have to manage on funding from different revenues."

Coun Dallen said the council tax increase was "modest".

There will be no increases to charges for the borough’s car parks in the next year.

The council will also receive a £1.9m New Homes Bonus from the Government for its new developments in Horton.

Conservative councillor Darren Dale said: "We have a large surplus and if it was used constructively residents wouldn’t constantly have to have a burden put on them by increasing the council tax."

He said questions must be asked about the distinction between services which the council is obligated to provide and those it does so voluntarily.

Labour councillor Sheila Carlson said: "Our view is yet again the RA-led council is not being very innovative.

"They need to generate money but not by hitting the same sources again and again."

Julie Morris, a Liberal Democrat councillor, said the Residents’ Association group is "poorly-led" and "reactive rather than proactive".

She said: "We felt the council tax increase was excessive."