COUNCIL tax in York is set to rise by more than double the rate of inflation - as city residents dig deep to fund authority budgets.

The Evening Press can reveal that City of York Council is planning a council tax increase of 5.49 per cent, or a near £49 rise on the average Band D home.

When the police authority and fire authority costs are included, the average York homeowner will fork out an extra £54.31 in 2006/07.

Council leader Steve Galloway today said this year's budget had been the most difficult he had experienced in more than 30 years of local government.

He said the council had tried to maintain essential services. He has previously attacked the Government for its "grotesque" behaviour surrounding the awarding of grant cash to the city.

The tax figure, contained in budget documents issued to councillors, will bring in an extra £3.1 million into council coffers.

York has one of the lowest council tax bills for unitary authorities in the country, but is restricted in raising cash to pay for more and more services demanded by the Government by the threat of capping. Aside from Government grants, one of the council's main sources of money comes through council tax.

A meeting of the council's ruling executive on February 17 will hear that a 5.49 per cent increase is unlikely to mean the authority will be capped by the Government.

The findings, outlined in a 30-page report, also show that the £1.25 million in funding withheld by the Government earlier in the year equated to 2.2 per cent of the council tax increase.

The report also reveals that one of the main pressures on the council budget is the deficit on the North Yorkshire pension Fund, which is the combined fund for all local authorities in the region.

York's share of the deficit was £130 million in March 2004, with the total deficit standing at £525 million.

In the budget report York council's director of resources, Simon Wiles, writes of his "serious concerns" for the future.

He says: "In the light of these pressures, and York's relatively low council tax, I would recommend that members set the council tax as high as possible, while staying below our estimates of the possible capping limits."

And Ken Green, director of human resources, has warned that with the council continuing to "face significant budget pressures" in future years, the authority should start planning now for how services can be delivered or "redesigned" if more cuts are needed.

Coun Galloway said: "This has been a very difficult budget process, the most difficult that I have been involved in during over 30 years in local government. Our priority has been to maintain essential services particularly for vulnerable people such as the frail elderly, while continuing to levy the lowest council tax level in the region."

Labour opposition group leader Dave Merrett said the hard-hitting budget was down to the "extravagances" of the ruling Liberal Democrat group.

"This (report) certainly highlights the key issues facing the council at the moment and in future years. The pressure to cut services would have been a lot less if the Liberal Democrats had not made extravagances and wasteful decisions in their first few years.

"This is another above inflation rise (in council tax) from the party which promised £100 off council tax and has done exactly the reverse."

Speaking about the pension deficit, Ben Drake, branch secretary of York Unison, said: "There is a lot of hype about supposed deficiencies, but when you look into the details you frequently find that pension funds by their nature fluctuate over time.

"I don't think there's a crisis and Unison sees no reason for council tax to increase to reflect the pension payment.

"It is perfectly possible to be sustained and continued without drastic increases and employers contributions. Some of the difficulties now arise from pension holidays which employers took in the good times in the 80s and 90s when funds were doing well.

"It is a bit rich to take holidays and then, when in difficulties, tell people they are going to have to cough up."

Coun Quentin Macdonald, the council's resources chief, said: "The pension fund is growing all the time. At the moment, the amount it receives each month is more than the amount it pays out. We are all working hard to get it back to the level of solvency."

On council tax, he said that the authority was doing all it could to avoid the prospect of capping, which could cost the authority £250,000.

The budget will need to be passed at a full council meeting in March before it can be implemented.

Inquiry shows breach of rules

A COUNCIL investigation into how contracts were awarded in a major department found "breaches" in financial regulations.

But the internal audit into City of York Council's Commercial Services directorate found no evidence of corruption, bias, or improper relationships between authority employees and external companies.

The inquiry began after a group of whistleblowers complained in August last year that, following the appointment of two new managers, systems and working practices had changed.

It was alleged that work which could have been carried out by in-house teams was awarded externally, and it was also claimed that another manager was related to someone who worked for one of the companies concerned.

The investigation found no evidence to suggest an improper relationship, but did find breaches of financial regulations related to inadequate arrangements for the ordering, supervision and checking of work performed by subcontractors.

A council statement said the quality of some of the work done was poor and there was evidence the council had been charged for work that was not done or completed. Managers and supervisors had failed to adequately check the work was done.

A report to an authority resources meeting will recommend that commercial services should identify all current suppliers and services that are expected to exceed the thresholds set out in the council's financial regulations.

Coun Charles Hall, below, the council's commercial services chief, said "A detailed review is being undertaken and any findings will be reported to the next Commercial Services Advisory Panel in March."

Updated: 10:34 Saturday, February 11, 2006