Councils in the South-east of England are about to lose funds to more deprived areas in the North under a long-awaited

Councils in the South-east of England are about to lose funds to more deprived areas in the North under a long-awaited overhaul of town hall finance to be published by the Government today. They will not be hit as hard as the Home Counties.Another factor that has upset councils of all colours is the underestimates of population from the 2001 census. As grants are based on population, many boroughs claim they stand to lose millions. Westminster claims that the census undercounted about 68,000 people, a shortfall of 25 per cent. Manchester, which should gain cash from the increased emphasis on deprivation, could also suffer from the census.The reforms will end the much-derided practice of allowing Whitehall civil servants to use complicated formulae to calculate nearly every penny for every need in every area of England and Wales.The Government will announce a new emphasis on specific grants, such as the Neighbourhood Renewal Fund, which offers cash only to those areas suffering acute deprivation.

Crucially, public service agreements, under which councils agree to set themselves 12 specific targets for improving services, will be rolled out across the country.Westminster council claimed yesterday that the changes could cost it £25m a year. “Any reduction of funding of this magnitude will put the poor and the disadvantaged at risk, and would seriously damage our ability to deliver effective care to the large number of vulnerable children and adults within the city,” a spokesman said.Surrey County Council claimed that the South-east faced a total loss of up to £500m in Government money, pushing up council tax bills by 20 per cent in 2003.. Downing Street denied yesterday that it was interfering in next month’s Israeli elections by organising a meeting between Tony Blair and the country’s new opposition leader. Mr Mitzna has said he wants to restart direct peace negotiations with the Palestinians if elected Prime Minister.Mr Blair’s spokesman said: “It is not a question of the Prime Minister taking a particular position on the elections. He sees opposition leaders from time to time.” He cited the Prime Minister’s meeting with the former Israeli leader, Ehud Barak, before the Israeli elections in 1999, and pointed out that he spoke to Israel’s Prime Minister, Ariel Sharon, last week.Plans for the meeting, which is expected to take place before Christmas, emerged after Downing Street said Mr Blair wanted to bring the Israelis and Palestinians together for a peace conference in London to try to break the Middle East impasse.Mr Mitzna, who was elected Labour leader last month, faces an uphill battle against Sharon’s right-wing Likud Party, which has a large opinion poll lead. He has vowed to begin dismantling Jewish settlements built on occupied Arab lands.

A spokesman for Mr Mitzna described the meeting as a chance for the two men to get to know each other.Mr Blair told the Commons that the election complicated the situation in the Middle East. He said: “None the less, I believe there is a real will and sense in the international community that the issue of the Middle East peace process has to be dealt with and dealt with urgently.”. Tony Blair was forced into a partial retreat over student funding yesterday when he ruled out making parents pay thousands of pounds “up front” in university tuition fees. Helen Liddell, the Scottish Secretary, became the latest cabinet minister publicly to criticise the idea this week.Iain Duncan Smith, the Tory leader, said: “This is a humiliating and spectacular U-turn by the Prime Minister. His policy on higher education is in tatters.”But Downing Street sources said the Prime Minister had kept alive the idea of variable rates of fees for different universities.

Oxford, Cambridge and other elite institutions could still be allowed to charge higher fees than others.The Government will finally end speculation about its plans when it publishes its long-awaited White Paper on higher education funding in January. We will publish it in January and let me tell you what it will do It will increase access to university. It won’t mean that parents are having to pay up front thousands of fees and it will allow people the chance to go to university.”In answer to Charles Kennedy, the Liberal Democrat leader, Mr Blair said the review would look at the option of charging “variable” fees. Elite universities could charge more than former polytechnics.MPs claimed last night that the Government was moving towards the idea of a possible mixture of sources of new funding.While the initial Metropolitan Police estimates were of 6,000 protesters, the National Union of Students insisted 23,000 people had joined its march.. Gordon Brown’s spending plans suffered an embarrassing rebuff last night from the head of the Whitehall spending watchdog. But Sir John Bourn, the head of the National Audit Office, said he believed the public coffers would have to carry the costs of a collapse. He told the Commons Treasury sub-committee: “If Network Rail goes down we are not going to have no railways in country.