FIRE services in the region were on the brink of financial collapse last night after a new report showed the scale of a funding crisis.

Senior fire officers across the country are pleading for the Government to help meet budget shortfalls running into millions of pounds.

But the threat of job losses and service cuts was increased at the weekend after one North-East fire authority admitted that it may not be able to fulfil basic duties over the coming months.

Last week, The Northern Echo revealed how changes to the Government's methods of funding fire services had left the County Durham and Darlington authority with a likely shortfall of almost £16m in next year's budget.

Last night, a new report fully highlighted the perilous state of the authority's finances. It shows a provisional budget of £29.2m, but the authority has been told it is only likely to receive a central Government grant of £13.5m.

The remainder would usually have been met through a precept on council tax, but the Government has warned that it will not permit large rises from any local authorities.

A joint report from Durham and Darlington's chief fire officer, George Herbert, and treasurer Stuart Crowe warns of the problems ahead.

It says: "Due to the scale of the challenge facing the fire authority, the potential for service cuts is substantial.

"Indeed, dependent upon the outcome of the financial settlement and the capping process, the chief fire officer considers there to be real potential for the doubt as to whether the fire authority could continue to meet its statutory duties."

However, a spokeswoman for the Office of the Deputy Prime Minister (ODPM) said: "The fire service has actually received a 3.5 per cent increase and the ODPM feels that is sufficient funding to offer quality services."

In addition to normal budget pressures, Durham and Darlington officials are struggling to cope with several new financial issues.

The cost of implementing a new pay structure - salaries will rise by 4.2 per cent in July - is estimated at £1.3m.

A further £1.3m is needed to cope with a rise in the number of officers expected to retire next year.

The authority also needs to establish reserves in the region of £2m and Mr Herbert wants to introduce "essential service developments" totalling £800,000.