THIS year the Government trumpeted plans for enhanced investment in public services, promising extra grants for local authorities.

This promise, against the background of the lowest rate of inflation for a generation, ought to have meant good news for both council tax payers and recipients of council services.

Yet we have witnessed the most arduous and difficult of spending rounds for local authorities, typified by cuts in services and council tax rises well above inflation, often in double percentage figures.

And yesterday the Government had to resort to the threat of capping to force some local authorities into line.

With so many authorities struggling to hold down council tax rises, the only logical conclusion is that the Government's promise of largess has been misleading.

Use of the heavy-handed weapon of capping is a means of switching blame away from ministers to councillors.

The reality is that our system of funding local government services is inadequate. A system based on an inflexible property tax is incapable of keeping pace with the demand for services and the increase in other revenues generated by economic growth.

Rather than meting out threats to the likes of County Durham and Darlington Fire Authority, which has repeatedly warned us of its funding concerns, ministers would be better advised looking at their own judgements of how central funds are allocated to local authorities.

A fire authority, battling in extremely difficult financial circumstances to maintain its effective public duties, does not deserve to be penalised.

The time has surely come for a bold and imaginative examination of how local authority finance can be raised.

It is clear that the present system is wholly inadequate and that there must be fairer and more transparent alternatives.