VULNERABLE elderly people traumatised by more home closures, children working in crumbling classrooms, pro-tests at leisure centre cutbacks.

This is the grim picture local authorities are desperately trying to stave off as they struggle to balance the books for this year's budgets.

According to Durham County Council leader Ken Manton, the authority is facing a budget crisis and is in its worst position for 20 years. And Durham is not alone.

Across the region, hikes in council tax bills of more than ten per cent are being thrown about as authorities accuse central government of failing to stump up the cash they need.

Durham says it needs £22m additional funding, including £10m for social services and £3.5m to make up for the loss of education grants.

Just to cover essential services, members are looking at a council tax precept of 26 per cent, which would push a Band A property up by £124.95 a year to £605.55. But they are more likely to opt for a rise of 12-17.5 per cent - along with cuts in services.

Said Councillor Manton: "Our spending plans include nothing far-fetched or fancy. Most critically of all, our demands upon social services continue to increase alarmingly, but without an appropriate increase in Government funding."

The increase in most authorities' social services bill is being put down to the demand in children's services and support services for older people.

Durham has been able to meet this year's £4.9m social services overspend through its cash reserves, but says it cannot repeat that in 2002/3.

In education, the authority has been left with £800,000 after looking after costs such as home-to-school transport. It does not include £3m needed to meet additional initiatives, such as the drive to raise educational standards in secondary schools or cash to meet teacher pay increases.

The proposed 1.1 per cent increase in the fire service standard spending assessment (ssa) has been attacked as "woefully inadequate" when firefighters are expecting a pay boost of 3.9 per cent. The national ssa for the fire service is four per cent.

Said Coun Manton: "This is my first budget as leader, and we are in the most difficult position we have been in for at least 20 years."

But the Government says councils have already seen a 20 per cent increase in funds since Labour came to power.

Government Chief Whip and North West Durham MP Hilary Armstrong, a former Durham county councillor, said yesterday: "I know Durham will say they should have got more money but show me a council that doesn't say they should have more.

"I understand they've got particular pressure in social services and they are talking to the Government about that, but local government has had substantial levels of increase over the past five years."

Coun Bob Gibson, vice-chairman of the North-East Regional Assembly, said that authorities in the South were still getting more cash than those in the North.

"There are significant differences and they haven't really been addressed by the Government," he said.

He said about 15 per cent of the money handed to local authorities was "ring fenced", which meant it could not be spent on anything else.

Authorities in the South also gleaned more council tax because many of the properties are in higher tax bands.

Local Government Secretary Stephen Byers is due to carry out a review of the way councils are funded in the summer. It is hoped it will take into account funding based on economic factors, rather than population alone.

The regional assembly will be among those appealing for a fairer funding system.

"There are huge problems. If we want first class services they have to be properly funded," said Coun Gibson.