Watford Borough Council’s portion of council tax will be frozen for next year, councillors have decided.

However as the year’s budget was being voted through last night, councillors clashed over plans to spend £4.3m on revamping the top of the town centre as to whether this was the right time for the council to undertake large projects.

In a speech to the council, Liberal Democrat elected mayor Dorothy Thornhill said the council was facing a challenging financial situation where it had made all the efficiency savings it could and now had to look at outsourcing some services to make more savings.

However she said projects such as the revamp of The Parade were important to ensure Watford was in a good position to attract investment when the economic situation picked up again.

Mayor Thornhill said: “As politicians, the challenge is to keep things positive and remain ambitious for our town. And we are.

“Some of you might argue we should keep our heads down and spend nothing, but I would argue right back that it is our responsibility to drive growth. We can’t expect others to invest in our town if we are not committed to doing so ourselves.”

Earlier in the meeting, Mayor Thornhill made the point that the money for The Parade project was coming from a ring-fenced budget and could only be used for building or capital projects.

Watford Borough Council only commands a relatively small section of the county’s council tax intake, getting around 16p in every £1 collected. Hertfordshire County Council receives the bulk of the council tax, with around 74p in ever pound. The police getting the final 10p.

The county council will set its share of the council tax next month.

At last night's meeting, Labour leader Jagtar Singh Dhindsa argued that the council was hitting residents in the pocket with increases for charges for services such as the removal of graffiti and that the borough should use some of its £5m reserves to ease the impact.

He also attacked plans to revamp The Parade saying: “As shops are going bust in the town centre, such as Peacocks, Millets and La Senza, the council is going to spend £4.5m changing the pavements around the pond.”

The leader of the Green group, Steve Rackett called on the council to focus on a more detailed investigation into how it could increase its income as well as cut costs.

Responding to the mayor’s speech, Conservative leader Steve Johnson said his party broadly supported the Liberal Democrat budget. However he criticised the amount spent on the mayoral office and managing director, Manny Lewis, saying the leadership costs dwarfed those of other authorities.

Councillor Johnson said: “Our electoral mayoral system costs £291,000 more than the system they have in Three Rivers. When you add on top the managing director’s salary and associated costs, we [pay] well over £400,000, if not closer to half a million, for the two positions.

“Watford local taxpayers can’t continue to fund both.”

The mayor responded to the criticism saying the two jobs represented an important separation of the political and bureaucratic arms of the council and mimicked the national government set-up.