COUNCILS in England are to receive above-inflation rises in Government funding for each of the next two years.

Yesterday's announcement came with a warning that the Government will not hesitate to impose a cap on any authority seeking "excessive" rises in council tax bills.

Councils will receive more than £62bn in Government grant in 2006-07 and £65bn in 2007-08 - an annual increase of 4.5 per cent and five per cent respectively - said Local Government Minister Phil Woolas.

He said the settlement marked ten successive years of above-inflation grant increases for local government, bringing the total real-term increase in Government funding for town halls to 39 per cent since 1997.

Only a handful of councils in the North-East and North Yorkshire were able to give an indication of their council tax increases, none of which have yet been finalised.

In County Durham, Darlington Borough Council is likely to increase tax by 4.5 per cent, Wear Valley District Council is looking at a 2.95 per cent increase and Derwentside District Council is hoping for no increase.

In North Yorkshire, Hambleton District Council said it was predicting a three per cent increase and Richmondshire District Council a 2.7 per cent increase.

On Teesside, Middlesbrough Council said it was looking at an increase of up to five per cent.

Newcastle City Council predicted it would be increasing tax by two per cent.

It is first time the Local Government Finance Settlement has been made on a two-year basis. Mr Woolas said: "No authority should consider that it might be exempt from capping. If its increase is excessive, capping action will be taken."