DORSET County Council is facing a funding shortfall of £8 million.

Council chiefs fear that jobs will go and services will be cut as they struggle to make ends meet and keep council tax increases down.

Departments are looking at a string of measures to keep the increase in council tax down to a maximum of 4.9 per cent - just below the Government capping limit of five per cent.

Possible savings could include: Freezing recruitment Reducing support services Reducing money spent on books in libraries Closing some youth clubs Reducing day care provision for older people.

Paul Kent, head of financial services for the county council, warned today that the authority faced some tough times and difficult decisions in the next few weeks.

He said that although the council was given a slightly better Government settlement than expected Dorset was still at the bottom of the league when it came to funding.

"We are still the lowest-funded county council in the country. If we were funded at the average level we would be £40m better off.

"We have been lobbying the Government on this issue and will continue to do so but there are some tough times ahead."

He said that all the directorates at the county council - environmental services, adult services and children's services - were looking at how the money could be saved.

"As well as having less money than needed we are also faced with increasing service pressures - we have more older people using our services, energy costs are going though the roof, care homes costs have increased by around 10 per cent and the cost of highways maintenance has gone up by a similar amount."

He said possible savings could include increasing the criteria people have to meet to receive care, reducing care home places, reducing day care provision closing recycling centres and closing youth clubs.

"When we collect the proposals from the different directorate a report will be presented to the Cabinet on February 1 and they will decide what measures need to be taken," added Mr Kent.

A 4.9 per cent increase in the council tax would see an average Band D household paying £3.92 a month more for services provided by the county council.