“Dismal” Government funding is failing to keep up with the growing demands of local authorities, according to council chiefs.

Morris Bright, leader of Hertsmere Borough Council and Robert Gordon, leader of Hertfordshire County Council, who both run Conservative administrations, have slammed the recent Local Government Finance Settlement, which outlines the amount of funding the Government gives local authorities each year.

The county council is set to see a rise of 1.75 in its funding and the borough council half a per cent, despite inflation being around 4.5 per cent – making Hertfordshire one of the 27 English councils with the lowest percentage increases.

Mr Bright said: “With the cost of inflation rising this amount is dismal. This coupled with a reduction in the council’s income due to the global economic downturn, means it will be a challenging year. It is our job to ensure residents get the services they need at a good price.”

But Mr Bright was unable to rule out any increase in council tax for next year, saying talks about the budget due to be announced next February, were currently underway.

He added: “Historically the council has been prudent with its finances and has been keeping its general fund reserves for rainy days. It is vital residents continue to receive these services and we are committed to ensuring any council tax rise will be at the minimum possible.”

The current financial settlement for the borough council for 2008/09 was £7,829,095 for 2009/2010 it will be £7,868,240 - an increase of £39,145, equal to less than £1 per household in the borough.

Council tax contributes to around 45 per cent of what the borough council spends on its services, with the majority of the rest coming from the Government.

Mr Gordon said: “If we received the average level of grant increase, this would provide an additional £3.7m to help balance the books. We are still facing the same problems we faced over recent years, such as extra pressures from the growing elderly population, the spiralling cost of waste disposal and high energy costs.

“We have worked hard on our financial planning so we can achieve stability and help Hertfordshire weather the storm. It’s more important than ever for me to fight for every penny that is due to us and I will be arguing for a fairer share of the pot to meet our needs.”

Of the total council tax people pay in this borough, 77 per cent goes to Hertfordshire County Council, 11 per cent goes to Hertsmere Borough Council, ten per cent goes to Hertfordshire Police Authority and about two per cent goes to parish or town councils, although this varies between the different parish councils.