VITAL rural services could face severe cuts if the Government pushes through controversial reforms to the local government finance system, it was claimed yesterday.

Officials at Richmondshire District Council fear the reforms could leave them with the stark choice of either cutting services or increasing council taxes.

And their warning comes just days after the authority said it faced a possible deficit of up to £440,000 as a result of National Census figures, which say there are 4,000 fewer people in the area than council figures.

The reforms, which could affect most rural authorities, are highlighted in a report from the Rural Services Partnership, of which Richmondshire District Council is a member.

The partnership argues that proposals for funding local authorities ignore rural deprivation and do not take enough account of the extra cost of providing services to remote rural communities.

Their report says there is a false assumption that urban areas are stricken by poverty while rural areas are more affluent.

And it points out that rural areas suffer from low levels of public service provision, poor employment prospects and lower wealth.

Access to services is also aggravated by poor transport links and dispersed communities - factors which make the cost of providing those services even greater.

The council's chief executive, Harry Tabiner, is also a member of the Rural Service Partnership.

He said: "Our main concern is that the criteria for the grants will change, leaving Richmondshire with a financial deficit which would either result in a cut in public services or a rise in council tax.

"Any proposed changes to our funding levels is a matter of concern, especially when we are still trying to resolve the issues thrown up by the census."

The review of council financing was launched in 1999. Local authorities' comments on proposed changes were requested by September this year, and authorities expect the reforms to be announced by the Government in the next few weeks.