HAMPSHIRE County Council is seeking an early meeting with MPs in a fierce challenge over the governmentÕs overhaul of funding for local councils.

Faced with the worst case of a loss of £80 million from its budget over the coming years and 23 per cent council tax rises, Hampshire County Council will also join forces with leaders of county councils across the South-East to argue the devastating impact on services that the governmentÕs new funding formula could have.

Under the governmentÕs proposed changes, money it gives to councils in the South East would be redistributed under Òresource redistributionÓ into urban and metropolitan areas in the North and Midlands to support deprived areas.

If the plans came in, Hampshire County Council would be forced into tough decisions to strike a balance between service needs and council tax rises.

ItÕs estimated that the plans could force it to raise council tax by the equivalent of 23 per cent over the next few years - with a possible impact of at least 15 per cent next year, and high rises for subsequent years.

Council tax payers in Hampshire would end up paying more towards services such as free bus travel for the elderly and computers for schools to benefit young and old in the North.

Hampshire council tax payers would be contributing 47 per cent towards the county councilÕs budget, while in the north, people are paying only 20-25 per cent.

While it is too early for the council to be making firm decisions, Cabinet members are already starting to identify pressures and priorities, which will have to be offset by using existing resources.

They are also preparing contingency plans for one per cent and 1.5 per cent savings - from efficiency/cost reduction measures, protecting as far as possible front line services.

County council leader Ken Thornber said: ÒIn 25 years of service I cannot remember more grim news; the government cannot be serious about its funding reforms.

ÒAdded to years of unsustainable council tax increases running at two to three times the level of inflation - to fulfil the governmentÕs priorities and the needs of our residents - a council tax rise of between 20-30 per cent over the next few years would mean the government leaving the people of Hampshire well and truly stuffed.

ÒThere are areas in Havant, Gosport, Basingstoke, Winchester and Aldershot with pockets of deprivation higher than in the north - yet look at all the money being poured into Newcastle, Manchester, Birmingham and Leeds.

ÒHampshire residents should not be burdened with the expense of services in the north. WeÕll be looking at some very painful decisions over the next few months in order to safeguard the people of Hampshire if the government gets it way.

ÒThe grim reality is that we could not meet an £80 million shortfall in funding without decimating services.

ÒWe have already demonstrated through the governmentÕs own tests that we are one of the most effective county councils, with high customer satisfaction and high quality staff. WeÕre taking prudent precautionary measures to plan for the worst case.Ó

He warned: ÒSavings would have to include education and social services, which have always been the publicÕs, county councilÕs and governmentÕs priorities.

ÒThe timing of the review is extremely tight, with the government apparently determined to see a new formula implemented for 2003/04.

ÒHampshire County Council has made repeated representations to government about the unsustainable high level of council tax that government policy has forced upon us in the past and it now seems determined to continue at an even higher level.

ÒWe have already got a very complex formula which determines government funding of the county council and we were promised a simpler, more transparent, system to replace it.

ÒIn fact, what we are being offered is an equally complicated system that isnÕt understandable, transparent, or fair and leaves us millions of pounds out of pocket.Ó

His words echo those of the Hampshire Police Authority, which last week said that it would be forced to raise its share of the precept by up to 22 per cent if the plans are approved.

But East Hampshire District Council is being more cautious and believes that the proposed new funding formula may not be as disastrous for the county as at first appears.

Council spokesman Steve Bradley said: ÒWe are examining this and there are a lot of cost adjustments which will probably mean that we will not get as much as others in some areas.

ÒBut there are other areas that we may get some money from, so it is too early for us to say how this will affect us.Ó

p Last yearÕs average precept in East Hampshire stood at £957.78, with the county council taking £734.67, EHDC getting £114.32, the police receiving £75.15 and town and parish councils - which are unaffected by the proposals - taking an average of £33.64.

If councilsÕ worst fears are confirmed, in the next few years the tax bill could rise to well over £1,100 for a band D property.