AN EXTRA £1 million could help to ease York council's budget crisis - if Government Treasury chiefs agree.

York MP Hugh Bayley says the Government is considering spreading the Area Cost Adjustment (ACA) to the city, in a move which could bridge part of the council's £10 million budget shortfall.

Mr Bayley says he has written to the Local Government Minister, David Miliband to argue that the council should receive the adjustment - a cost of living increase awarded to authorities that have higher costs of providing services, such as high salary and housing costs.

Mr Bayley, who has campaigned for five years for a separate ACA, says the Government is proposing to give an ACA to all "upper-tier" local authorities, including York.

Coun Steve Galloway, leader of City of York Council, said any moves in this direction would be "very welcome". But he urged caution, arguing the scheme was one of just a number being proposed by the Government.

Last week, the Evening Press reported how the city council was in line to overspend in this year's budget by almost £1 million and had a projecting funding gap of £9.7 million for next year.

Then, Coun Galloway said residents should expect a council tax rise of less than five per cent.

Mr Bayley said: "This year, as always, I am lobbying the Government for more money for York, and once again it looks like we will get more money.

"The council's officers have helped me with facts and figures to argue the case. I would like to work more closely with the council.

"If Steve Galloway wants my help he only has to lift the phone to fix a time to see me.

"I have always made it clear I'm ready to meet him and the Labour leader David Merrett. All parties should work together to get a good deal for York."

Mr Bayley is a consistent critic of Liberal Democrat spending and claims that the leading group has spent too much money on administration and not enough on front line services.

Coun Galloway said that low council tax and balanced budgets made York one of the most efficient councils in the country.

He said: "It is an exaggeration to say this is a Government proposal. It is one of a series of options being discussed.

"It would be worth about £1 million which would be very welcome, and it is an area we have felt very strongly about in the past."

Updated: 09:33 Thursday, October 13, 2005