CRITICS have hit out at Swindon Council's plans to force bus operator Thamesdown Transport to pay a £250,000 dividend as part of its budget proposals.

The council will be discussing the proposal tonight and Labour councillor Barrie Thompson believes it could mean fare rises for the people of Swindon, or even cuts in services.

This comes after the town's other bus firm Stagecoach condemned proposals to cut back on half fares for children, saying it too could lead to fare rises or service reductions.

Tonight's meeting of the Cabinet will make the final decision on cuts to services, including libraries and highway maintenance, with the aim of saving money.

The town's beleaguered bus firms have already warned that there could be trouble ahead as rising diesel prices hit their profits.

As the sole shareholder in Thamesdown Transport Limited, the council is entitled to ask for a financial dividend, but until last year had never done so opting for the money to be pumped back into improvements in the bus service.

Coun Thompson (Lab, Parks and Walcot) said: "This is disgraceful. Before this the council has always let the dividend be invested in the company.

"This £250,000 is a lot of money for the company and I expect we will see fares rising and services cut as the firm has to find that money from somewhere else.

"The only people that will suffer in the end are the passengers whether it is because of fewer services or having to pay bigger fares."

But Nick Martin (Con, Shaw and Nine Elms), who is the council's cabinet member for resources, believes that the dividend money will be beneficial for the people of the town.

He said: "Thamesdown is an asset of the council and is worth about £6m a year.

"This money is taken from profit and it should be used for the benefit of the people of the town.

"This money will be used for the good of the people. It's good economic sense."

The cabinet meeting will be held at the Civic Offices at 6.30pm.