FIRE service chiefs could face major budget problems next year after a long-awaited Government ruling went against them.

The County Durham and Darlington Fire and Rescue Service was told earlier this year that it would not have its spending capped for breaking the Government's order for local authorities to keep council tax rises low.

However, the brigade was "nominated" over next year's spending plans, meaning it will be under close scrutiny from ministers determined to ensure that council tax rises are kept down to low single figures.

The fire service appealed against the nomination to the Office of the Deputy Prime Minister (ODPM).

But The Northern Echo has learned that the ODPM has rejected the appeal and is eager to ensure that the service complies with Government spending policies next year.

Senior brigade officials are now awaiting their cash settlement from central Government for next year's budget.

An announcement could be made next month.

A poor grant could lead to the fire service having to identify a series of cutbacks.

Brigade head of corporate services, Dennis Bradley, said: "It's a key issue for us.

"It really will make the difference between whether we have a comfortable budget or whether we have a very difficult one, which could involve making some savings.

"Nomination means the Government will be keeping a close eye on us and looking for us to conform with the policy of council tax rises being in low single figures.

"If we are thought to have misbehaved, we'll be capped the following year.

"Essentially, we've been given a yellow card."

The service faced a major dilemma this year after agreeing a budget of £29m, but only receiving a central grant of £13.5m.

The authority later reduced its budget to £26.8m and insisted it would have to meet the shortfall with a large council tax rise.

Until April, the fire service's spending was included in the overall budget for Durham County Council but the figure now appears as a separate item on council tax bills.

Its share of the bill increased by 20 per cent this year.