COUNCIL leaders are pinning hopes on a fairer funding system to avoid a repeat of this year's average ten per cent tax increase.

Leaders are hoping the Government's review of local authority spending, which is to take place this summer, will see more money allocated on the basis of deprivation and need.

One of the highest increases for 2002/3 is at Durham County Council, whose leader, Councillor Ken Manton made a public plea to Prime Minister Tony Blair for more funds in January.

Coun Manton said the council was facing the worst budget crisis for 20 years and was looking at a possible increase of 17 per cent.

The council eventually settled on a rise of 14.8 per cent.

Coun Manton met Local Government Secretary Stephen Byers for talks about the council's plight earlier this year, when he was told a new system would take into account the needs of the North-East.

"The minister clearly understands the difficulties we face and accepts that our concerns are genuine," he said.

"He acknowledged that the present system of allocating Revenue Support Grant through the Standard Spending Assessment is flawed, in that it is based on a formula rather than the real needs of specific parts of the coun- try."

The Government maintains that more money has been pumped into local authority budgets than ever before.

But council leaders say it does not account for the rising cost of public services, in particular social services.

Stockton Borough Council is angered by a huge 38 per cent increase in Cleveland Police's precept - compared with a 4.5 per cent increase by the council.

Together, those have resulted in a council tax increase of about seven per cent.

The council is planning to join Hartlepool Borough Council in writing to Home Secretary David Blunkett for an independent inquiry into the financial administration of Cleveland Police.

Stockton Council leader Bob Gibson said: "I find it extremely disappointing that, while Stockton council can achieve so much by carefully managing our finances and planning ahead, our residents still have to face a hefty rise because of this disproportionate increase in police costs."

The lowest increase is at Redcar and Cleveland Borough Council, which has managed to freeze bills for the second year running.

Councillor David Walsh, leader of the council, said: "Like every other council in the area we have been under pressure.

"At the same time, we have treated every day as a budget preparation day and we have managed to make enough savings to be able to produce both zero level this year and growth in real services.

"Hopefully we can repeat the performance next year.