THE Government has given a district council permission to set an inflation-busting rise in its council tax demand without holding a referendum.

Members of Hambleton District Council in North Yorkshire are considering whether to scrap its plan to freeze council tax and instead demand residents pay up to six per cent extra.

A month after the council announced its tax demand would be pegged for the third year running to help families struggling with rising household budgets, local government minister Brandon Lewis revealed the authority would be the sole council in the region permitted to impose a rise of above two per cent.

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He said it was only fair Hambleton, which has the third lowest council tax demand in the country, and 49 other low-cost authorities, be granted additional flexibility in raising funds.

The Government had previously said any council seeking to raise its council tax demand above the rate of inflation would have to hold a referendum, which Hambleton councillors had rejected as time-consuming and difficult to win.

If councillors decide to charge the 40,000 households the maximum £5 more, it would raise about £200,000 and its element of council tax for a Band D property would be £94.48.

After receiving 12 per cent less Government funding and accepting a grant to freeze council tax, the council agreed in December to make up its budget shortfall by using savings it had made in recent years, the council's reserves and a rise in car parking charges.

However, council officers warned in future years the authority, which was capped by the Government in 2005 when it tried to set a council tax rise of 17.6 per cent, would either need to charge more for its services, such as leisure centres, or reduce services.

Members of the council’s ruling Conservative group are split over whether to take advantage of the offer and are set to hold a meeting this week to debate the issue.

Arguments appear to centre around whether it is more important to increase the council’s budget base figure, enabling it to fund more services in the future, or to allow householders to retain the money during a tough economic time.

The council’s leader, Councillor Neville Huxtable, said: “We haven’t finished discussing it yet. Any help that we get will be gratefully received.

“We have got to decide what is best for our residents and will make an announcement later this month.”