Chief Executive George Krawiec says the council has a grip on finances

North East Lincs Council, which is controlled by a Lib Dem-Tory coalition, was the only authority to get a no-star rating from the Audit Commission.

Among criticisms were its education service and its use of resources. The council said these related to earlier years and things had now improved.

Labour said the council was given �30m more cash but things were now worse.

But Chief Executive George Krawiec said the authority had now got a grip on finances and had plans to build on its recovery.

'Penalised'

Council leader Keith Brookes said: "Make no mistake, North East Lincolnshire Council is improving.

"But we are improving from a very low baseline, from a time when the council was completely dysfunctional.

"We believe this is an historic judgement of where we were in 2004/5, which therefore has not sufficiently taken into account the improvements which have taken place since then.

"Clearly, there is always room for improvement in our performance - regardless of the star rating we achieve.

They were given �30m of public money to put things right - and they've made them worse Labour leader Chris Shaw

"However, we believe we have been penalised by a framework which is weighted towards education in children's services, which we are tackling, and which graded us on our performance more than a year ago."

But the leader of the minority Labour group was scathing.

Councillor Chris Shaw said: "They were given �30m of public money in extra funding to put things right - and they've made them worse than when they started."

He said it proved that the coalition control was not working.

"The Liberal Democrats and the Conservatives have a pact not to fight each other's seats at elections, only to fight opposition parties.

"This should be done away with. Let the public decide who should represent them, not the political parties on the council."