A COUNCIL that serves Prime Minister Tony Blair's 'backyard' faces the smallest funding rise in the country.

Durham County Council, the region's largest council, has been given a standard spending assessment increase of just 2.8 per cent.

This compares with an average of 4.7 per cent for England's 33 shire county councils and a 6.4 per cent increase awarded to Oxfordshire.

Councils in the more affluent South have fared well. The increase for Surrey and West Sussex county councils is 6.2 per cent, Essex's is 5.8 per cent and Hertfordshire's is 5.6 per cent.

The standard spending assessment (SSA) is the figure the Government believes a council should spend on services.

The Labour-run council's executive committee has agreed to press ministers for a better settlement.

The SSAs and grants for the financial year beginning in April have been hailed by Local Government Minister Hilary Armstrong, MP for North-West Durham, as 'the most generous since council tax was introduced.'

The Government will allow Durham to spend £381.9m, compared with the £371.5m it is spending this financial year.

Officials are concerned that the rise in education spending - up from £212.2m to £217.8m - is three per cent lower than the shire county average.

One reason is that adult education will be funded by the new Learning and Skills Councils, which has meant a £1.2m cut from the council's SSA, even though it only spends £55,000 on the service.

County treasurer John Kirkby said: "It is clearly disappointing that the county council looks set to receive an increase significantly below the shire county average. The likely settlement for the education service is particularly disappointing.''

Mr Kirkby said the extra £5.6m for education "is unlikely to be sufficient to satisfy the requirements of the teachers' pay award, the Standards Fund grants, and the on-going pressures on education, transport and special educational needs.

"Determining the education budget is likely to be the crucial component of the council's deliberations for 2001-02.''

A council spokesman said: "We will be making representations. We have until January 9 to do it."