LABOUR MPs are looking at hiking council tax by 10 per cent for millions of Brits in regions of the UK without a referendum, The i Paper reports.
This will mean local authorities in London could raise their council tax rates above the 5 per cent cap that is currently set without public vote.
The move hopes to cover losses that are expected to come for local governments as new reforms will be introduced.
Details in the Government’s overhaul of local government funding are set to be unveiled with a so-called “fairer funding” model.
Central London areas are likely to be the councils hit the hardest in the UK, as ministers are believed to have agreed to allowing increases above the current 4.99 per cent without referendum.
In the Midlands and north, reforms will also see Whitehall grants diverted from areas considered to have low spending needs to places deemed to have higher needs.
Plans are understood to be first steps in a larger transition for new reforms to be phased in over three years.
Full details, however, are not expected to be unveiled until after the Budget is announced next week.
This news comes after six councils in England were given permission to raise their council tax by up to 10 per cent earlier this year.
Included were councils of Bradford, which hiked their taxes by 9.99 per cent, and councils in Scotland which increased taxes up to 13 per cent after a freeze was lifted.
Some hardest hit may even see double increases in council tax to around 10 per cent once the transition period ends – likely to be in 2028/29.
However, under current rules councils in England who want to raise council tax above the 4.99 per cent cap must hold a referendum for local residents.
The Ministry for Housing, Communities, and Local Government (MHCLG) may be waiving this requirement, in order to let town halls worst hit by funding reforms to cover their losses.
MPs in areas most hit by the reforms have warned: “They are likely to agree to removing the cap without the need for a referendum.
But there’s no way additional council tax will be able to make up for the drop in funding,” one source said.
“Even if you doubled it, it won’t cover it,” they added.
Inner London councils projected to be impacted most include Wandsworth, Richmond, Westminster, Camden, Islington, Hammersmith and Fulham, and the City of London.
Home county areas like Hertfordshire, Surrey, Buckinghamshire, Wokingham and Oxfordshire are also expected to be significantly hit.
A report from London Councils has warned the reforms could result in Kensington and Chelsea seeing a shortfall of £30.1 million by 2028/29 – requiring a council tax rise of 27.4 per cent.
Badly impacted councils have called for a transition period of up to 10 years to ease people into the changes in funding.
Beneficiaries of the new funding model are believed to include councils in urban areas like the Midlands and North, such as Telford, Blackpool, Manchester, Nottingham and Wolverhampton.
Yorkshire and the Humber could also see big funding increases.
Some urban unitary authorities in the south of England, such as Slough, may also benefit from the changes.
Local government minister at the time, Jim McMahon, announced the plans in June saying the reforms were “urgently needed to put councils on a stable footing and ensure better services for residents – especially working people – right across the country”.
However, London Mayor Sadiq Khan has expressed his concern and told the London Assembly in September that reforms “must take into account the disproportionately high housing and living costs of the capital, as well as appropriate deprivation indicators”.
He added: “Otherwise, we risk support being taken away from those Londoners who need it most.”
An MHCLG spokesperson said: “This is complete speculation. Council tax rises are limited to 5 per cent without a local referendum, and we have not made any decision to change that.
“We have made £69bn available for council finances and will fix the outdated and unfair funding system we inherited, so funding finally matches local people’s needs and councils can deliver better public services.”
