NORTH Yorkshire councils face seven-figure cash shortfalls after the Government announced their grant allocations for the coming year.

Whitehall has told North Yorkshire County Council it can increase spending by nearly £26 million next year.

But grants will only rise by £16.5 million, leaving a shortfall of more than £9 million.

Most of that will have to be found through increased taxes and cuts in services.

The higher spending limits need to pay for inflation, as well as improvements to services.

County council leader John Weighell said: "Rural counties are facing a difficult situation, and even more so in North Yorkshire because of the devastating effects of foot and mouth, last year's floods, and other crises.

"This settlement does not help or take account of all our problems - we still face a very difficult situation."

City of York Council's Standard Spending Assessment, which outlines how much the Government expects it to spend, is £136 million next year - £7.9 million higher than this year.

But the Government grant is only £90.7 million, an increase of £4.4 million.

The figures, announced last night by Stephen Byers, the Secretary of State for Transport, Local Government and the Regions, are being studied by local authorities.

A spokesman for City of York Council said: "This year's settlement may result in us seeking some £4 million worth of savings if we are to secure growth in our priority services and minimise the impact on council tax payers."

Updated: 10:55 Wednesday, December 05, 2001