YORK could face a budget gap of more than £10 million next year unless the city council gets a better grant from the Government.

That was the grim warning today from council leader Steve Galloway, who said the city would step up its Fair Deal campaign to win improved financial support when the grant is announced in the autumn.

He hoped the efforts - which would hopefully be backed by the four MPs from the York area - would prove partially successful.

"I would be astonished if the settlement was as bad in relative terms as the one we received for this year," he said.

However, he anticipated there might still be a shortfall of £4 million to £5 million, presenting the Liberal Democrat administration with a major challenge.

Further efficiency savings would be sought, but yet another above-inflation council tax rise looked likely, and it might prove necessary to cut important services.

Asked whether another poor deal would mean further controversial hikes in parking charges, he said the council recognised all charges were affected by the law of diminishing returns.

Coun Galloway said the Government had given the council a series of extra responsibilities - ranging from the recycling of fridges to the removing of dumped vehicles -which cost hundreds of thousands of pounds.

At the same time, the ageing population was raising demand for services such as packages to enable older people to stay at home for longer.

He claimed that while extra funding was given by the Government this year, it had not been enough to meet the extra costs.

A report to a meeting of the executive member for resources and advisory panel said an estimated budget gap of £10 million plus for 2005/06, and a further £8 million gap for the following year, was one of the key issues which would be addressed by a new Corporate Finance Team.

Updated: 12:02 Saturday, July 10, 2004