PEOPLE in Durham city will have to pay 3.5 per cent more for services provided by the city council.

The Labour-run council is expected to ratify the slightly-above inflation council tax rise on Monday after the Government confirmed it would provide £7m in grants.

People in band A and band D properties currently pay £104 and £156 to the council.

The increase would take their bills to £107 and £161 respectively.

But the final amount people will have to pay will not be known until Durham County Council, which could levy an increase of about nine per cent, and Durham Police Authority, have finalised their spending plans.

The city council, which will have to subsidise the £14m Gala Theatre after the collapse of the firm it appointed to run it, will receive a 7.2 per cent increase in Government grants.

The council says it received the "least favourable'' grant settlement in the county. Authorities such as Derwentside and Chester-le-Street received 12.5 per cent increases, but cash awarded to individual councils ranged from £2.2m to £9.9m.

Council leader Maurice Crathorne said the council had made savings which would not affect services.

He said: "Local people have made it very clear that they do not want to see huge tax rises. We have listened and delivered.

"It has been a very difficult exercise, but we have managed to protect the services we offer while offering an acceptable council tax rise.''

Coun Crathorne echoed the call of many council leaders in the region for better funding, warning that services would suffer in future.

He said: "If we do not receive reasonable support in the future, there may be a significant deterioration in our ability, and that of other councils, to meet the needs of council taxpayers.''