Millions of households are facing a further squeeze on finances with almost three in four local authorities planning to increase council tax by the maximum amount allowed.

Of the 114 councils who provide social care and have published their 2023/24 budget proposals, 84 are planning a 5% hike, research by the County Councils Network (CCN) suggests.

The Labour vice-chair of CCN, and leader of Cheshire East Council, Sam Corcoran, said local authorities had “little choice” but to make the move.

“With inflation reaching levels not seen for over 40 years and with demand-led pressures for care services showing no sign of abating, local authority leaders are setting their budgets in the most difficult circumstances in decades,” he said.

“We all recognise the cost of living crisis is impacting on every household in the country and disproportionally on low incomes, but we have little choice but to propose council tax rises again next year, with many local authorities reluctantly opting for maximum rises.

“With councils facing multi-million funding deficits next year, the alternative to council tax rises would be drastic cuts to frontline services at a time when people at the sharp end of the cost of living crisis need us to be there for them.

“With the financial situation for councils looking extremely tough for the next few years, we will be calling on the chancellor for further help in the March Budget.”

Previously, local authorities would have needed to hold a referendum to raise the levy by more than 3%, but Chancellor Jeremy Hunt raised this cap to 5% last autumn.

The Office for Budget Responsibility says this will raise £3.3bn in 2026/27, rising to £4.8bn in 2027/28.

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A spokesperson for the Department for Levelling Up, Housing and Communities said: “We recognise the pressures councils are facing and have made almost £60bn available over the next financial year – a 9% increase on 2022-23 – with the most deprived areas of England receiving 17% more per household this year than the least deprived.

“Our approach to council tax balances the need to deliver vital services while protecting residents from excessive increases, and we expect local authorities to take into consideration the challenges many households are facing.”

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