JUST two months into the financial year, an East Lancashire council has announced that it will overspend by £2.3million.

Now Hyndburn Council has unveiled a package of cuts in a bid to claw back the funds.

Council bosses have blamed the withdrawal of a government Home Improvement Programme (HIP) grant of £710,000 and a rise in costs of £999,000 towards refurbishing properties in Pendle Street, Accrington.

But the Labour opposition said "the shocking state of affairs" was the fault of the ruling Tory administration.

The row prompted an angry clash between council leader Peter Britcliffe and the borough's MP Greg Pope.

The authority is a massive 17 per cent over budget and will have to make £2,363,000 worth of savings.

Aside from the loss of £1.7million of Government grants, the rest of the shortfall had been predicted when the budget was drawn up.

Initial recommendations to save £1.8m are due to be decided on by the cabinet today.

These include delaying funds promised to Oswaldtwistle Civic Theatre and Rhyddings Park until 2009/10 and halving funds for displays for the Floral Market Towns project.

However these initial savings, which include expected funds from the sale of houses and land, still leave a £470,000 shortfall.

Mr Pope has revealed figures showing government grants to the council had actually increased by £3m since 2002, and that this year it received a £571,000 rise.

But Coun Britcliffe said government grant figures from Mr Pope were a "smokescreen".

He said: "Many are earmarked for government projects, while grants towards our capital programme have in fact been cut.

"The truth is that the government has been very hard on this council and withdrawn funds from areas where they are desperately needed.

"As a result we are working very hard to make up the shortfall with as little disruption to public services as possible."

But Mr Pope slammed Coun Britcliffe's stance.

He said: "They can't possibly have expected the HIP again this year.

"It was a one-off windfall and no other councils are complaining.

"As for Pendle Street, they haven't spent any money there yet - they've only allocated funding "I'm getting tired of Councillor Britcliffe blaming the government for everything, so I requested figures which clearly show the council are getting more, not less.

"But whenever anything goes wrong, it's the government's fault."

Opposition leader Coun Graham Jones said: "The coun-cil got greedy and expected more of these hand-outs and now there's a big black hole in the accounts. It's a shocking state of affairs."