LOCAL authorities in the region are facing a £3bn pensions blackhole that could take up to 30 years to clear, The Northern Echo can reveal.

Economic experts and union chiefs say authorities will have to take drastic action to avoid a looming financial crisis.

Financial chiefs admit the massive deficit will impact on local authority spending plans for decades.

Although authorities have grappled with the problem of pensions for several years, the gap between what is available and what is needed has soared in recent years.

pension funds were hit hard by the stock market collapse after the September 11 attacks in the US, with local authorities among the worst affected.

In the good times, many councils took "spending holidays" - diverting pension cash to other areas - and used the money that would have otherwise gone into the pension pot.

Figures obtained by The Northern Echo reveal how the combined council pension fund in County Durham was plunged deep into the red. In 2001, the deficit was £184.7m. It now stands at more than £0.5bn.

During the same period, the combined pension fund for local government workers in Teesside climbed from a £76m debt to £295m. In North Yorkshire, a £186m shortfall is now £524m.

Although the Government says councils can manage "short-term fluctuations", local finance chiefs acknowledge that authorities will have to increase council tax or cut services.

Stewart Crowe, treasurer of the County Durham Local Government Pension Scheme, said councils had already budgeted for increases in pension contributions to reduce the deficit.

He said: "It will have an impact on the amount of money the council will need to spend, but there is a separate decision about how you find that.

"You can't say council tax will rise as a result of the pensions deficit, but you can say that costs will increase and local authorities will have to decide how to deal with that. They could make efficiency savings and work out a way to deliver front-line services without increasing council tax."

Current forecasts estimate it will take 22 years for the County Durham fund to recover. In total, it will take 30 years for the crisis in the North-East to be resolved.

Unison regional officer Howard Pink said: "We don't want to see meeting the deficit being at the cost of jobs and services or an increase in tax on the public."

Attempts to change the pensions scheme for council workers almost resulted in a national strike last month.

The Government wanted to increase contributions, change the ability to retire early and change the age at which people can get a pension when made redundant.