JOBS are to be lost and council tax is likely to rise as a council tries to claw back a £7m budget shortfall.

But Redcar and Cleveland Borough Council said it was committed to investing in services, which would include care for the elderly and vulnerable children.

The council is preparing to launch its 2006-7 budget consultation with a draft document that predicts a 4.9 per cent council tax rise.

Despite fears that as many as 100 jobs would be eliminated as a result of the budget shortfall, the proposals suggest only 41 job cuts, all of which would be voluntary redundancies or early retirement.

The job losses would save the council about £1m

The council's cabinet chairman, Councillor Eric Empson, said: "This budget consultation process has one key aim - setting the 2006-7 council tax levels, and we are confident we can be inside the Government's five per cent guideline.

"There will be a continual search for further efficiencies. We have gone from being one of the worst performing councils in the country to one of the best.

"We are determined that whatever budget problems come our way, we will not revert back to those bad old ways and days."

The council's cabinet member for corporate resources, Councillor Glyn Nightingale, said: "Our first priority is providing better and more efficient services to local people.

"The council's budget reflects our determination to make Redcar and Cleveland a better place to live and work. We are well on the way to achieving that.

"We have to make it clear that council jobs are there to provide the services.

"We are constantly evaluating how many people we need to deliver those services. It is not a simple science.

"It is clear now that it will not be necessary to make anywhere near 100 posts redundant, but our main focus has never been about the jobs. It will always be about the services to the public."

Council officers say the fundamental problem has been the unexpected shortfall in Government grant, caused principally by an underestimate of the borough's population.

Consultation on the draft proposal has started, with a closing date for comments on February 17. The tax will be formally set in March.