FEARS are mounting of a hike in Dorset's council tax as a formula which the Audit Commission branded "fundamentally flawed" is again used to calculate the county's funding.

Last year Dorset was among the worst funded counties in the country and council chiefs are bracing themselves for news of whether the county will again miss out. They fear the govern-ment's formula will favour councils in the North and Midlands.

Among the steps being considered by chiefs at Dorset County Council are a hike in council, spending cuts, borrowing from capital reserves and lobbying the government for fairer funding in the future.

Peter Lewis, director of resources at Dorset County Council, said: "The 'fundamental flaw' is that the formula assumes people who live in expensive houses can afford to pay high council taxes. We know that's not true."

He described the county council's dilemma: "A budget that meets our wish to further improve our services would lead to an unacceptable council tax rise.

"Yet a low budget increase is unlikely to cover some of our essential top priority needs."

Cabinet members are looking into a budget increase of five per cent but say after they have set aside millions to cover inflation, insurance premiums, the capital programme and national pay awards and allocated the £4.2million of "ring-fenced" funding the Department for Education and Skills dictates, five per cent will only generate an extra £800,000 to meet £19 million of service pressures.

The county council will hear in mid-November if it is stuck at the bottom of the funding league.

First published: October 23