COUNCIL tax in Southampton could rise by an inflation-busting 15.2 per cent it was revealed last night.

The huge increase would mean council tax payers in an average band D property would see their bills crash through the £1,000 barrier for the first time to £1,046.

Residents living in band D homes currently pay £908 a year. If the increase went ahead, council tax would rise by around £138.

Council leader, Councillor June Bridle, said the final amount of money that the government would be giving to Southampton had not yet been disclosed.

But she admitted the situation looked grim.

She said: "At the moment it is not looking good."

The figures were revealed at a meeting of the city council's budget standing scrutiny panel last night.

The leaders of all four political parties were told by the city's chief financial officer Terry O'Rourke that the amount of grant money the government was giving to Southampton left the city with an estimated shortfall of around £7.6m for next year.

Last week, The Daily Echo revealed that council tax could rise by 9.9 per cent next year on top of a £2.6m shortfall in the council's budget and more than 130 job cuts.

But the amount of support grant the council receives from central government has turned out to be less than city finance chiefs expected.

The 3.5 per cent increase of £26m will still leave city finance chiefs struggling to balance the books with possible job losses and cuts on the cards.

The full picture of the amount of money central government gives is still to emerge due to changes in the way money is handed out to local authorities.

But Mr O' Rourke said his "gut feeling" was that council tax would have to rise by around 15 per cent.

Mr O'Rourke said the full picture of the city's budget would hopefully emerge before Christmas. He blamed the government moving more resources from the south to the north as the reason behind the shortfall.

He said: "That is clearly where we have lost out. There is no doubt about it. They have clearly moved money from the south to the north."

Liberal leader George Melrose condemned the "absurd situation." He said: "We are getting hammered."

Final details of how much the government gives to the city are only likely to emerge at the end of January - seven working days before the city's Cabinet are due to put forward their final budget proposals on February 3.

Leader of the Conservative group Councillor Alec Samuels, said the scrutiny panel was "wasting its time" trying to comment on the budget when the full picture had still to emerge.

He said: "We have no certainties as to the relevant base figures. What has happened has called into question the whole new process."

Councillor Paul Russell added: "There are more questions than answers."

Speaking after the meeting, Cllr Bridle said she still did not know just how much money the city would be getting due to the amount of changes in the way the formula was calculated by central government.

She said: "We will be able to put forward our ideas just as soon as that work is complete.

"As far as the north south issue is concerned, on the surface, it looks as if Southampton has not done as well as we would have hoped. We need to understand why."