THE stark financial crisis facing the North-East's local authorities is today revealed in a special investigation by The Northern Echo.

Speaking from Prime Minister Tony Blair's heartland, Durham County Council leaders warned that council tax payers were facing a 17 per cent rise and made an urgent plea for more cash to avoid cuts in vital services.

In a special two-page report, The Northern Echo today reveals the scale of the crisis facing local authorities and how homeowners will end up bearing the cost through massive increases in council tax.

The budget backlash has echoes of August 1998, when The Northern Echo made a front page plea after a tide of jobs losses threatened to plunge the North-East economy facing recession.

Now desperate council leaders are accusing the Prime Minister of turning his back on the problems of the North-East again.

In an unprecedented move, the leader of Labour-led Durham County Council, Ken Manton, last night spoke out about his authority's desperate position.

Coun Manton who represents part of the Prime Minister's Sedgefield constituency on the county council - said: "We're faced with the worst budget crisis we've had for at least 20 years and we're calling on the Government to urgently reconsider our situation before it's too late.

"The cumulative effect of a series of poor settlements has now come home to roost. This year, we've been given the lowest increase of any county council and we are in a very difficult position."

Authorities in the North-East and North Yorkshire are looking at council tax increases of between ten and 17 per cent as they set their budgets over the next few weeks.

Durham County Council, in the Prime Minister's back yard, has been awarded the lowest increase in Government funding for county councils only five per cent, compared with 7.1 in Hertfordshire.

Council bosses warn it will not cover the extra £22m needed for essential service requirements a figure which would only be met with a 26 per cent council tax increase.

As it is, the council's likely rise is expected to be about 17 per cent, made possible only by cuts to services.

Extra pressures have been placed on many authorities' social services departments following an increased demand in children's services and support for the elderly.

Cash is also needed for pension fund contributions, for the loss of education grants, and environmental and waste management issues.

Durham County Councillor John Shuttleworth, an independent, said: "If council tax goes up by 17 per cent, there will be a revolution in County Durham."

In Darlington, council leader John Williams said a council tax rise of more than 9.5 per cent was likely and warned that anything less would force the closure of the Dolphin Leisure Centre and town's Civic Theatre. "We have some difficult choices to make," he said.

Bob Gibson, leader of Stockton Borough Council and vice-chairman of the North-East Regional Assembly, said the Government had to address the fact that southern authorities received more funding.

"Despite the deprivation and low attainment in a lot of our communities, we have on average £125 per head less for services than in London. Now is the time to put it right."

Conservative Vale of York MP Anne McIntosh said: "The Government seems to be creating a North-South divide when their homelands are in the North."

Last night, Local Government Minister Nick Raynsford said: "Every year there is scare-mongering about council tax increases, and every year there are exaggerated forecasts made which are proved wrong."

Mr Raynsford said that for the first time every local authority had been given a grant increase at least in line with inflation and in many cases much higher.

County Durham's increase, which would amount to £16.1m in 2002/3m, was a significant" increase on last year's 3.2 per cent rise