A LOCAL authority leader has warned council tax could rise by almost four per cent this year after almost £5 million was shaved off the budget by government cuts.

Hartlepool Council is likely to raise rates this year after its budget was cut and it lost £3.9 million in annual business rates after tax Hartlepool Power Station contributes was recalculated.

The council discovered just before Christmas it would lose a further £2.1 million in government grant for 2016/17 - on top of the £2.8 million reduction it was already anticipating.

The authority is also reeling from the loss of £3.9 million in business rates every year following the decision by the Valuation Office Agency to reduce rates paid by Hartlepool Power Station.

In a report to the council’s finance and policy committee, which meets on Monday (Jan 11), finance officers are recommending an overall increase of 3.9 per cent to ensure a “sustainable financial strategy”.

Hartlepool Council has been able to freeze council tax for the last five years, the only Tees Valley council to do so.

The report says that previously, councils were encouraged by government to freeze council tax and received a financial incentive to do so, but this is no longer the case due to a change in government policy, which is also shifting the responsibility for funding social care from itself to councils.

If councillors agree to raise council tax, the report says they will be able to fund the remaining loss in Government grant through savings and the use of "one-off" resources.

The report examines a 3.9 increase, which would see most households (in bands A and B) facing an increase of 83p per week.

It also says that further significant cuts in Government grant are on the way and that by 2019/20, Hartlepool Council will have seen its funding cut by two-thirds (£38m) compared to 2011/12 when the austerity cuts were first introduced.

Councillor Christopher Akers-Belcher, the leader of Hartlepool Borough Council, described the Government’s financial settlement as a “ruthless attack” on the people of Hartlepool.

He added: “The further Government grant reduction announced in December and changes in Government policy in relation to how councils are funded have left councillors with some incredibly tough decisions and stark choices.

“This comes at a time when we have set out our ambitions for taking the town forward for the benefit of residents, businesses and visitors, but we will not be beaten in our endeavours.

“The Council has managed to freeze Council Tax in Hartlepool for the last five years but the ongoing immense financial pressures... mean difficult choices need to be made regarding the level of council tax and service cuts."

If councillors at the finance committee approve the rise, it will have to be rubber-stamped by a meeting of full council on February 18.