The year ahead is set to be challenging for everyone's finances. This is not just true of households and families, but also for the public services.

It is now clear that the Gloucestershire Constabulary, in particular, faces a tough year. The Government funding formula allocation – the main Government grant – will increase by just two and a half per cent for each of the next two years. Other grants, such as the Crime Fighting Fund, which pays for extra police officers, are being frozen.

As a result, total funding for the county's constabulary will increase by just 2.1 per cent, below the general rate of inflation and below the police's own estimate of inflation for the police of 3.6 per cent. This leaves a significant shortfall of 1.5 per cent.

Normally, local council tax payers would be expected to pick up the tab through the police authority's council tax precept.

But council tax payers are already stretched and we simply cannot afford to have a large increase in the council tax precept. Gloucestershire County Council has delivered a record low council tax rise and I was pleased to see that this week Gloucestershire Police Authority has voted for just a 2.9 per cent increase in council tax for the financial year of 2009/10.

A shortage of money is not a new problem. Gloucestershire, historically, gets a poor deal from central Government for police funding. Last year, the Government awarded just £58 per head of population for policing in Gloucestershire. The national average is £81.

This poor settlement puts the county in the bottom six for funding in the country. Only Dorset fares worse in the South West.

This gap has been made up by a higher than average council tax precept. The Government's refusal to adequately fund the county means that local taxpayers carry an unfairly large share of the burden.

So why does Gloucestershire get such a poor deal? The Government's method of working out how much money is allocated to police forces assumes that areas are uniform in nature.

Gloucestershire's Chief Constable Dr Tim Brain explained why this is a problem: "This principle rewards areas of uniformity in population distribution, density and relative wealth.

"If, therefore, your police authority area is characterised by strong contrasts between partnership areas of high population density and other areas of low density" – as in Gloucestershire – "you tend to lose out."

When the formula was introduced it was recognised that it was not perfect.

So a mechanism of funding floors and ceilings was introduced to ensure that places like Gloucestershire did not suffer the extreme effects of the formula.

Until recently, the Government had threatened to remove these floors and ceilings. The full implementation of the formula would have cut £2.5 million off Gloucestershire Constabulary's budget – and led to the loss of the jobs of another 62 police officers.

However, in a recent meeting I held with the Policing Minister Vernon Coaker, he confirmed to me that these changes were no longer planned, which was a welcome development. The Government is now in the process of reassessing the formula for the future, but that review will take several years.

But while the Government is holding funding down, it is also forcing costs up. The Government has demanded initiatives are followed through, but failed to maintain appropriate funding for them. Funding must be found elsewhere and, consequently, other services are affected or extra burdens are placed on the local taxpayers.

The poor settlement might have tempted the police authority to go for the easy option of sharply increasing the council tax precept to cover the costs imposed on the police by the Government.

But that would have been the wrong thing to do. In this particularly tough economic climate, with household budgets under pressure, it is essential that council tax increases are kept to a minimum. The police authority must play its part.

Furthermore, council tax payers have already done their bit. The Government likes to claim how many more police there are on the streets.

The fact is, in Gloucestershire, all the increase has been funded by local people. In fact, had it not been for local tax- payers, we would have fewer police today than 11 years ago.

Also, since 2005, the Conservative administration running Gloucestershire County Council has been delivering on its commitment to fund 63 new police officers across the county, one for every county council division. The final officers will be in place by this May.

Three years ago, the Government was forced to abandon its misguided attempt to create a giant force for the entire South West. My concern is that poor funding may be a back-door effort to force these mergers through.

However, there is already a great deal of collaboration. For instance, there is a regional intelligence unit, based at Clevedon in North Somerset, which is funded by a number of forces and led by Gloucestershire.

The best example of collaboration is with other emergency services. The triservice centre at Quedgeley in Gloucester is an excellent facility, hosting control rooms for police, fire and ambulance services. Its value was demonstrated during the summer floods in 2007.

It is disappointing the Government is insisting on breaking up this centre by taking away the fire control in an over-budget, behind-timetable and ill-conceived regional project and creating a regional centre in Taunton.

This is going to be a very tough year for local policing in Gloucestershire. The grant provided by the Government is inadequate, compared to centrally imposed costs. Council tax payers are already stretched and we cannot afford a large increase in the council tax precept.

Gloucestershire County Council has delivered a record low council tax rise of 2.9 per cent and I am glad the police authority has followed that example.

Mark Harper is the Conservative MP for the Forest of Dean.