Changes to the way that central government funds local councils have made it almost certain that council tax hikes this April will be higher in the south of England than those in the north, according to a local government expert.

Professor Tony Travers made the comments on BBC’s 'The World Tonight', and if he is right then increased council tax in the south will pile added pressure onto beleaguered homeowners who are already struggling to make ends meet due to increased mortgage repayments, rising utility bills and soaring fuel costs.

The Local Government Organisation, which approached 112 councils to compile data, has already stated that it believes the average council tax increase will be 4%, almost twice the rate of inflation. But, some councils have admitted to the LGO that they are planning an even bigger rise, and from the comments made by Professor Travers it appears it will be councils in the south who will be piling on the agony to tax payers.

Add in the misery of cuts to local services potentially affecting social care provisions, refuse and road sweeping services and it isn’t shaping up to be a bright 2008 for many living in the south. With the level of personal debt in the UK estimated at £1.4trillion many people hovering on the edge of the financial abyss may just be pushed over with the onset of unaffordable council tax demands.

Almost 107,000 people became insolvent during 2006, a 59% increase on the previous year, and the Council of Mortgage Lending (CML) is predicting repossessions will hit 45,000 during 2008, an increase of 50% on 2007. Although that figure is still well below the record 75,000 homes repossessed during 199, at the height of the last property crash.

But, for those struggling to make ends meet, effective debt solutions such as debt consolidation loans are becoming harder to obtain for many, as cautious lenders apply much tighter lending criteria. Although 45,000 repossessions doesn’t sound many when compared to the total of 11.8million mortgaged households in the UK, it is still significantly higher than previous years and may simply be the tip of a much bigger iceberg.

Indeed, in light of the predictions of financial doom and gloom the Citizens Advice Bureau is already bracing itself to receive even more requests for debt management advice. The volunteer organisation will no doubt be monitoring the situation closely throughout the year and it, like many, will be hoping that things improve sooner rather than later.