York's council chief claims the city is getting a raw funding deal from the Government

Local authorities across the country are expected to see a four per cent rise in the money they receive from Whitehall next year under the formula grant system.

This means York is set to receive £44.571 million – £1.108 million more than in 2009/10. But this would only represent a 2.5 per cent increase due to the so-called “damping effect”, under which the Government holds back money from councils which are better off under the system to compensate those authorities who do less well.

City of York Council leader Andrew Waller fears the city is being short-changed under the formula. He said: “Our increase in Government grant is 1.5 per cent less than what is being claimed in the four per cent (at a national level) by ministers.

“The York increase is only 2.5 per cent and we are still working through all the additional responsibilities which the Government has transferred to us without fully funding them.

“We already get £1.155 million less than the Government formula says we should get for the services we provide, due to the “damping effect”. Last year, we got £1.128 million less and the Government grant per head is £224 per York resident, against an average of £378 for other unitary authorities.

“While the Government has finally brought to a close the gap in funding between the running costs of the concessionary fares scheme and the Government grant, there are other pressures such as the number of children in care and demands on elderly care services.

“We are working with the Local Government Association to lobby for increased funding.

“Even though we exceed our Government-set recycling target by recycling 45 per cent of waste, we will still be hit by the £8 per tonne increase in landfill tax, which for us will be £440,000.”

The Government formula aims to ensure council tax rises are capped at three per cent next year, with York’s likely bills forming part of the council’s 2010/11 budget consultation.

Meanwhile, Coun James Alexander, Labour’s candidate for the York Outer seat at the next General Election, said he was concerned the increase would be used to “help bail out” the ruling Lib Dems following controversies such as the one over the new council headquarters and the Barbican saga.

“We would always welcome more money to York from the Government, but I am concerned about the competence of the Lib Dem council to use it wisely,” he said.

Selby District Council is forecast to receive an extra £90,000 (1.3 per cent) in funding, with North Yorkshire County Council getting £5.121 million more. Ryedale District Council will receive an additional £135,000 and East Riding of Yorkshire Council seeing its funding rise by £4.504 million.