IN past years there has been precious little logic in the allocation of central government funds to local councils.

The money promised to authorities used to be determined by a formula linked to past performance and tradition. No significant account was taken of contemporary factors.

This formula created the ludicrous situation where it was possible for an authority in the affluent Home Counties to strike a better deal than a deprived area of the North-East.

It was an injustice highlighted earlier this year by local authorities in the region, complaining about the repercussions of an outdated system which failed to reflect the state of their communities, economies and environment.

It compounded the unfairness of the allocation of central government funds to our region, dictated by the 23-year-old Barnett Formula which has consistently offered more help to Scotland and Wales than to the North-East.

The reform outlined yesterday by the Government signals a significant step in redressing the balance. And we ask the Government to extend this guiding principle in the near future to a reform of the Barnett Formula

Ministers have promised a system based on need, and we sincerely hope they deliver that promise.

However, we are wary of any promises made on local government finance.

In recent years the Government has assured us that settlements would not lead to big increases in council tax bills. But these promises have rarely been matched with reality when the brown envelopes were sent out from the town hall.

We remain to be convinced that anything will change.

We will hold to account Local Government Minister Nick Raynsford, who yesterday told the Commons that there should be no reason why councils cannot continue to improve services while sticking to reasonable council tax increases under the settlement.

And if he lives up to his end of the bargain, we will hold to account our local authorities as they strive to maintain services and keep council tax rises to the bare minimum.