Plunging interest rates helped Bradford Council stay in the black - and could increase spending on services next year.

The Council spent £3.5 million less than it budgeted for last year, mainly thanks to the falling interest rates reducing the amount it had to borrow.

Now £3.3 million is available to be ploughed back into priority Council services this year. The money has gone into the Council's Change Programme Reserve, designed for urgent needs on top of the authority's general budget.

Finance director Steve Morris, who revealed the encouraging figures, said it showed the Council's finances were in a relatively strong, healthy position.

But he said the Council must continue to be prudent and warned that the social services department continued to have a worrying overspend on providing places for children at risk.

Mr Morris said: "It is something of a windfall. The councillors could spend it on various issues this year, or they could keep some or all of it for future years or to support next year's budget."

Campaigners fighting to keep homes for the elderly open urged the Council to spend the pot of cash at once.

Christine Shepherd, who helped stop the closure of Woodward Court care home said: "Along with children and the disabled, the elderly are the most deserving. Why should they live out their lives where they do not want to be?"

Mr Morris's report revealed that the underspend included £1.3 million of Government funding which was paid by mistake but is not being clawed back.

And the city's schools had an overall budget surplus of nearly £11 million, although some schools still had deficits.

The Council had budgeted to spend more than £128 million on capital projects but used £17 million less. Mr Morris said that money would be spent this year on specified projects.

Social services went £4.1 million over budget last year and this year already has a £2 million projected overspend, most of it going on placing children at risk in care homes with other authorities.

"We are looking at building a new children's home within the district," said Mr Morris.

Conservative group deputy leader Coun Simon Cooke said the accounts showed a council on top of its finances.

"We are trying to be more efficient and invest in delivering better services," he added.

Labour group leader Ian Greenwood said it was a "scandal" that council tax had increased by more than seven per cent when so much money was in reserve.

"We have said all along that the Tories and Lib Dems are creating a situation where they can use this money as a political slush fund to bribe the public with their own cash before next year's elections and these figures prove the point," said Coun Greenwood.