THE county council tax precept will have to rise by 14.5 per cent by 2012 just to meet the costs of a £2billion waste disposal contract.

That means Band D residents paying the Lancashire County Council precept face paying £156 extra over the next five years.

And an opposition councillor has warned that the county council face a major financial headache over the issue.

The government has pledged to cap council tax rises to no more than five per cent.

Therefore, once other services are taken into account, the county council could face cuts to keep the rate below the desired level.

Coun Tony Martin, cabinet member for sustainable develop-ment, said the costs of the work under the Public Finance Initiative (PFI) were huge, but cheaper than continuing to throw everything in the ground because of rising landfill tax.

The PFI agreement was signed earlier this year with Global Renewables, the UK arm of Austr-alian engineering group, GRD Limited and contractor Bovis Land Lease.

It will see two waste stations built in Leyland and Thornton at a cost of £283million to process the county's waste.

In the main waste will be converted into compost.

But under the terms of the PFI deal the cost of dealing with waste will rise from £39million to £101million per annum by 2013 - about a sixth of the council's current budget.

The cost will rise year on year to £175million in 2035, the end of the 25-year PFI deal.

In total these figures amount to £2billion. Landfill tax would rise to £56 per tonne by 2010. It is currently £32.

And from 2010 the penalty per tonne for exceeding allowances is £150.

So Coun Martin said landfill was going to end up costing more than the waste contract.

He added: "I would love to have paid for it through traditional finance, but PFI is the only show in town and we got the best deal we could."

Coun David Whipp, leader of the Liberal Democrat group of the county council, said that because council tax rises were capped at five per cent something would have to give.

He said: "My big concern is that the waste issue is going to gobble up resources and lots of other services are going to be squeezed.

"The solution has to involve national government changing the whole waste management regime so an adequate level of funding comes from national taxation."