by political editor Paul Francis

Kent County Council revealed today it needs to save £25 million more than it forecast just one month ago.

The authority now has to shave £161m over the next two years because of the government's spending squeeze.

The latest prediction comes just weeks before the council is due to learn exactly how much it will get from the government in the form of grants to run its 300 different services.

Finance chiefs say the outlook has worsened since predicting in October that the council would need to save £136m in two years as part of a £340m shortfall over the next four years.

A report due to be presented to KCC's cabinet next week says savings of £161m will now be needed and the authority is facing an estimated £44m of spending pressures just to stand still, coping with factors such as a growing elderly population.

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Other factors putting pressure on County Hall's finances include the higher cost of borrowing, meaning more money will be needed to support its capital building schemes.

Describing the latest forecasts as "a significant challenge" the report says the council will do what it can to avoid cuts in frontline services, stating "as a last resort, we may have to make decisions on what we may have to stop doing or do to a lesser extent."

KCC - along with all councils - has been told by the government to expect a 7 per cent cut in grants every year for the next four years.

Audio: Cllr John Simmonds on the extra cuts needed to balance the budget

Cllr John Simmonds (Con) KCC cabinet member for finance, said the council "would try to keep the cuts down to a minumum" and was examining a range of options to save money.

"A lot is happening around the re-structuring of the organisation which will bring savings and there may be some changes around how we charge people for services," he said.

He added it was too early to say precisely what the impact of the spending squeeze would be, as full details of the government's finance settlement for councils was not expected until next month.

Amid the gloomy outlook, there is one piece of better news. KCC will spare council taxpayers higher bills next year, using a government grant to peg the council tax to this year's levels.