HAMPSHIRE residents could face a huge hike in their council tax bills of nigh on 25 per cent thanks to new government proposals to cut its grant to local authorities in the south east.

Hampshire County Council is appalled by the proposals to introduce a new funding formula to calculate government grants given to local authorities which accounts for a large chunk of their revenues.

It believes that this will mean that money will be redistributed from the south east counties in favour of the north. Metropolitan authorities also benefit, as do counties outside the South East.

Hampshire County Council leader Ken Thornber said the effects of the grant cuts would mean a huge loss of revenue for key services such as education and social services.

The county council would then be forced to increase council tax in order to maintain its key services to the same standard as today, the leader warned.

He said: ÒAt stake is the money which compensates counties in the south east for the higher cost of providing services. The redistribution of government support to the north will result in an even greater council tax burden and cuts in services for Hampshire residents.

ÒThe governmentÕs preoccupation with redistributing council revenues to the north flies in the face of the higher cost of living in the south east.

ÒIf the worst case were to be introduced, a loss of over nine per cent of our grant support would be disastrous. It would be equivalent to cutting services by £80m or an even greater council tax burden of about 23 per cent.

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 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 this.

ÒWe have already got a highly complicated formula that applies to all local government and we were promised a simpler, more transparent system to replace it. In fact, what we seem to be offered is an equally complicated system that isnÕt intelligible, transparent, or fair.Ó