CASH-STRAPPED York council could save almost £1 million by abandoning a lengthy public inquiry - but its hopes of receiving £800,000 towards flooding costs have been sunk.

Councillors were today being urged not to reconvene an inquiry into the city's draft Local Plan, amid warnings that it could last 15 months and cost an estimated £1 million.

A report to the Green Belt Working Group said that under a new Planning Act, the council could instead start producing new planning documents known as the Local Development Framework (LDF).

This would have a much longer lifespan than a Local Plan, while being more flexible, up-to-date and locally focused.

Although the inquiry costs would be saved, the new system would need to be adequately resourced, added the report.

The public consultation already carried out, which resulted in 20,000 representations, would provide a firm evidence base for taking the framework forward.

However, there was bad news for the council in its bid to tackle serious financial difficulties after the Government said it would not write an £800,000 cheque to cover costs racked up in the 2000 floods.

This "missing" flood cash had been an important plank of the Fair Grant for York bid to secure £7 million from central government and help bridge a £10 million budget shortfall. Council leader Steve Galloway has claimed that Deputy Prime Minister John Prescott said during a whistle-stop tour of the city in 2000 that the authority would be no worse off financially.

Coun Galloway claimed the council was still £770,000 poorer through resources deployed during the mammoth clean-up operation.

But now senior Whitehall finance official Tony Finnegan has told the council that the city had received the maximum amount allowed after emergency changes to the "Bellwin" flood funding scheme.

He said in a letter to the council it was "unfortunate" the impression had been gained that further funding was a possibility.

"I'm afraid that was not the intention and there is nothing we can do now to meet the expectations you report."

Coun Galloway today said the news was "extremely disappointing" - but admitted it had not come entirely out of the blue, adding: "As time went on, we became more and more sceptical about the payment we were expecting."

He suspected civil servants had intervened after the flood waters receded and argued that creating a precedent was unwise from a national perspective.

York MP Hugh Bayley recently warned that the council stood little chance of clawing back the cash, saying it had received everything it was entitled to under the Bellwin scheme.

Updated: 09:51 Tuesday, October 19, 2004