PRIME Minister Tony Blair last night moved to avoid the nightmare of damaging tax rises only weeks before the next General Election.

The Government unveiled its "best-ever" cash settlement for local authorities and police forces in a bid to see off big council tax rises next April - one month before the expected May 3 date of the next election.

Local Government Minister Hilary Armstrong hailed the overall funding rise of 6.7 per cent - three times the underlying rate of inflation - as the "most generous since council tax was introduced".

And she immediately forecast that £2.8bn of extra funds through the Revenue Support Grant, the cash the Government gives to councils to help pay for services, "could and should deliver lower council tax increases than last year".

But the Durham North-West MP, unveiling the Standard Spending Assessment - the amount the Government reckons each council should spend next year - backed up the promise with a stiff warning that authorities failing to behave "responsibly" could still see their budgets capped.

Last night, one Labour-run North-East council made an early prediction that the council tax would be frozen next April.

David Walsh, leader of Redcar and Cleveland, told The Northern Echo: "We hope to have no increase."

But Tory-run North Yorkshire appears to be on collision course with the Government. Council leader David Ashton suggested the announcement could lead to above average tax rises in the county.

He said: "I think this is really bad news for us. We have got serious funding problems, especially in social services, as has almost every other local authority. Once again, we are going to be faced with asking our council taxpayers to pay significantly above the rate of inflation just to maintain existing services."

He said Government claims that it was a generous settlement ignored the extra demands of performance-related pay for teachers and increases in landfill tax.

Arthur Preece, Liberal Democrat leader of Hartlepool Borough Council, said: "I would be surprised if it was not a reasonably favourable settlement, with a General Election in the offing."

Darlington Borough Council leader John Williams said the authority was still examining the effect of the grant increase on services and council taxes.

In the Commons, the Conservatives raised fears that some councils would have to increase council tax by ten per cent and blasted Labour's record since 1997. "Over those three years, the council tax has risen by 23 per cent or £150 for a Band D figure," claimed local government spokesman Nigel Waterson.

"Voters will see through this Government's spin and wake up to Labour's smash-and-grab on their hard-earned income."

Yesterday's announcement included special measures to prevent individual councils losing huge amounts of grant because of declining population.

Ms Armstrong unveiled a "floors and ceilings" system, ensuring that no major council delivering education and social services got less than a 3.2 per cent rise and none got more than 6.5 per cent.

Middlesbrough netted nearly £1m more under the new system, with Darlington benefiting by £342,000.

Sir Jeremy Beecham, chairman of the Local Government Association, welcomed Ms Armstrong's announcement.

"Local authorities operate under enormous financial pressures. There is a high demand for personal social services and district services, which could benefit from today's boost."

Among the extra money announced yesterday was an extra £20m earmarked specifically for police in the North-East and North Yorkshire.

The biggest winners in yesterday's announcement was North Yorkshire Police, which receives an extra £4.3m next year, up by 5.4 per cent on the previous 12 months.

The Cleveland force will receive a £4.1m increase in its allocation, up by 4.8 per cent on this financial year, and Durham Constabulary receives a £3.6m increase, up by 4.3 per cent. The larger Northumbria Police gets an extra £9.3m next year, up by 4.2 per cent.

Health Secretary and Darlington MP Alan Milburn will soon back up yesterday's package by sharing out £100m of extra social services funding to boost the care and rehabilitation of the elderly.

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