CHEAPER bus fares in North Yorkshire could feel the brunt of Government funding cuts after council chiefs admitted the spending squeeze was worse than feared.

Local authorities are facing up to losing millions of pounds in funding after their formula grants from Westminster for the next two years were reduced this week.

North Yorkshire County Council said the outcome was “worse than anticipated” and has left it having to deal with a shortfall of more than £30 million over the next 15 months.

Council leader John Weighell said: “These are extremely complex grants and require a considerable amount of financial analysis before we can say exactly how severe the underfunding is. But it is clear already that a number of grants, in particular the funding for concessionary bus fares, have been seriously underestimated.

“In the case of concessionary fares, we believe that underfunding to the amount to some £5 million.”

Cost-cutting proposals already revealed by the council include closing old people’s homes and libraries and putting road repairs on hold, as well as shedding jobs.

Richard Flinton, chief executive, said: “The important point is that we are doing what the public would expect us to do and looking at management tiers, back office costs and so on before looking at frontline services.”

East Riding of Yorkshire Council is preparing to lose about £30 million over four years, but has forecast it will underspend its 2010/11 budget by £7.8 million, beating its original target by £300,000.

Council leader Stephen Parnaby said: “Although it will be challenging, I am confident that with the financial strategy we have in place and the savings already made and on course to be achieved, we can deliver the required savings and weather the storm.”

Ryedale District Council said almost £1 million must be immediately saved after a 15.8 per cent grant loss.

Corporate director Paul Cresswell said: “We have a good platform to hopefully avoid service cuts in light of this announcement, but the grant reduction for 2012/13 is higher than predicted and will need further savings identifying over the coming year.”