BLACKBURN Cathedral faces one of its "toughest years" after proposals were unveiled to change the way it is funded, a senior clergyman said today.

Canon Andrew Hindley believes the Cathedral could lose £12,000 a year out of its £100,000 fund to pay for lay staff from the Church Commissioners, the body which manages the Church of England's historic assets.

This may leave the Cathedral having to lay off a small number of staff, such as musicians, vergers and administrative officials, if the money cannot be recouped through local fundraising, he added.

Earlier this month the commissioners' recommendations were published in a report titled "Future use of the Church Commissioners' Funds".

It looks at whether the responsibility for funding cathedrals should be met by the commissioners, or from other sources, such as through the dioceses.

In the report, the commissioners justify the proposals to cut their support for cathedrals by claiming they find it easier to raise money from the public than parish churches because of their larger size.

But Canon Hindley said Blackburn Cathedral was only just able to balance the books with the current funding situation

And he was sceptical about the future if funding was routed through the diocese.

He added: "This would mean that the Cathedral funding would have to take its place alongside with the other demands placed on an already over-stretched diocesan purse.

"Inevitably, this would mean significant changes.

"This year we will balance the books but not for long if the worst of our foreboding regarding the recent report by the Church Commissioners comes to fruition.

"This year will be one of the toughest faced by the Cathedral in our recent history. I hope and pray that God will gave us the grace to rise to the challenge that will be set for us."

The report recommends that the grant for employing lay staff be cut by £500,000 nationally, the equivalent of £12,000 per cathedral.

Canon Hindley added: "Any reduction in this grant, which has been virtually frozen for the past five years, is very bad news for us. It means we must find more money locally to cover the shortfall."

Canon Hindley said the proposals were frustrating as they had come at a time when the Cathedral was enjoying an immensely successful period.

He added: "In this diocese, we have seen a decline in church attendance in the past few years. The Cathedral has not only held its own numerically but has grown.

"The Cathedral has never been better physically as we have spent £3million on improving it."

The report will be discussed by the General Synod, the Church of England's governing body, in the coming week and the recommendations could be in place by 2005.