HUGE council tax rises in Hampshire moved a step closer yesterday after the government unveiled funding levels for local authorities.

The worst fears of civic leaders were finally confirmed when Southampton received a 3.5 per cent increase while the county council is in line for a rise of 3.8 per cent.

Council chiefs had already unveiled council tax proposals on the understanding of the funding levels rubber-stamped by the government yesterday.

Householders in Southampton face a 14.3 per cent rise while those outside the city are likely to suffer a 15 per cent hike.

The huge rises have been blamed on the government for diverting cash usually earmarked for the south to the north.

Tax on an average band D property in Hampshire would rise from £734.67 to £844.56, while Southampton's would break the £1,000 barrier.

County leader councillor Ken Thornber said they had no choice but to increase council charges to make up a near £45m shortfall and avoid service cuts.

The government's announcement coincided with a meeting of Southampton City Council's Cabinet last night, when Labour chiefs confirmed its budget plans.

They will go before the full council later this month. Under the proposals, up to 130 jobs would be shed, with cuts in services.

About 2,000 City Council staff have agreed to work to rule from February 10 in protest and talks were held between union leaders and civic bosses yesterday to try to avert the action.

Finance supremo Councillor Peter Marsh-Jenks said at last night's Cabinet meeting of the government's funding levels: "It's an extremely poor settlement for Southampton.

"It's going to be very expensive for the people of Southampton, even when proper measures are taken to reduce expenditure in the authority."

Government minister Nick Raynsford claimed the funding was more than adequate.

"Last year we were able to guarantee authorities an increase at least in line with inflation but this year we have gone a step further and every authority will receive an above-inflation increase."