Brighton and Hove City Council is set to end the year £8.6 million in the red - and that could result in council tax bills soaring by 14 per cent.

Just weeks after writing off last year's multi-million pound debt, chief finance officer Chris Taylor warned councillors urgent action was needed.

If it was not taken, next year's council tax could rise by more than £100 on the average bill. Earlier this year, bills increased by 10.9 per cent, from £684 to £758, for Band C properties.

Councillors knew they were likely to be £6 million behind schedule, following a budget report earlier this year.

But several factors are adding to the debt. One of the biggest is the likely change in Government grants.

The Government is changing the way it allocates cash to councils and this could cost Brighton and Hove as much as £1.7 million.

It is also possible the city could lose even more money when the results of the 2001 Census are published.

Population is a big factor in working out grants and there is likely to be a decline in the number of old people, which would affect the figure.

Mr Taylor said the council could be down by up to £500,000 on its culture budget because income is not coming up to expectations.

There could be an overspend of £1 million on adult social services, mainly on the learning disabilities budget, and in children's services where the overspend could reach £1.5 million. National Insurance contributions are to rise and this will cost the council more than £1 million a year.

The council could reduce costs through more money from parking charges and savings on the waste contract.

Last year, the council was facing a £5 million deficit but emergency measures put in place reduced that to less than £2 million by the end of the financial year.

Mr Taylor said these could be reintroduced if necessary. They included not filling vacant jobs, putting up fees and looking at the way in which services were run.

A budget review panel is likely to be set up, including leading councillors and senior officers.

Tory opposition leader Brian Oxley said: "We warned at the time of the budget in February that the council was only looking a year ahead and making no provision for the kind of financial shocks that any organisation faces from time to time.

"The Labour council's short-termism has left us with the prospect of either massive cuts to services or further swingeing increases in council tax."

Deputy council leader Jackie Lythell said: "It is early days yet, but the council is already taking a prudent approach to how it will manage within budget this year and the next."

Coun Lythell, who handles finance for the council, added: "I can assure residents that we have all the mechanisms in place to ensure sound financial management of the council's affairs."