Suffolk County Council bosses on Jeremy Hunt's budget

The national body representing local authorities across the country has warned that council tax bills could have to go up by 20% over the next two years to maintain services.

And two of the largest county councils in England - Kent and Hampshire, both run by the Tories - have written to Jeremy Hunt warning that they face bankruptcy unless they are given the power to raise more money or to cut mandatory services.

But Suffolk County Council deputy leader and finance spokesman Richard Rout is hopeful that structural changes made over recent years could allow the council to weather the financial storm ahead - although residents could have to face a 5% council tax rise next year.

He said: "At the moment we are having to look at various different scenarios for next year's budget.

"At the moment we are looking at a black hole that will need to be filled but we won't know the size of it until we get more details from the government. 

"It looks as if the worst case would have a gap of £56m and the best a gap of £17m. Once we know where we are we can start to plan ahead."

Reports this week suggest that the Chancellor could be planning to scrap rules preventing councils from raising bills by more than 2.99% - plus 1% for social care - in a bid to raise more taxes locally.

That has prompted speculation that bills could rise by at least 5% - and some experts have predicted a higher figure could be needed with inflation running at more than 11%.

Mr Rout said: "We should have a good idea of what we might be getting after the Autumn Budget on Thursday, but we won't know the exact figure until a few days before Christmas."

Suffolk County Council opposition leader Andrew Stringer said he fears the authority is facing a greater problem than it needed because it had not put up council tax as high as it could in recent years.

Opposition leader Andrew Stringer. (Image: Sarah Lucy Brown)

He said: "When the government sets its payments to councils it assumes they will raise the maximum they can from council tax - if they do not then there could be a greater gap that they have to fill later."

Mr Stringer feared the county might have no alternative next year but to raise council tax bills higher than they would otherwise have had to.

However, Mr Rout disputed this because he said opposition councillors had urged higher council tax bills in the past to spend on more projects - not to boost reserves.

He said the council had cut £320m from its budget over the last decade because it was one of the most innovative authorities in the country. "But it becomes much harder to find savings the longer you go on."

The Local Government Association (LGA) which represents all councils in England warned that councils will face a £3.4 billion funding gap in 2023-24 rising to £4.5 billion in 2024-25.

To plug the gap, it says councils would need to increase council tax by 20% over the next two years – which is “neither sustainable nor desirable given the current cost of living crisis”.

The LGA warned that many services are facing “severe” cuts, and without guaranteed sufficient funding for next year and beyond, councils will be forced to cut vital services for vulnerable children and older people.

It surveyed chief finance officers in 97 councils in England between August and October, with 50 responses.

All respondents reported facing additional costs this year, which were not included in their budget.

Ahead of the budget, the LGA urged the Chancellor not to exacerbate councils’ “dire financial outlook” by imposing spending cuts.

James Jamieson, LGA chairman, said many vital services face an “existential crisis”.

He said: “Inflation is not going to come down overnight; reserves can only be spent once and a local service cannot be cut twice.

“Rising demand for services – and the extra costs to provide them – means that even having the same funding next year as they had this year would leave councils having to make significant cuts to services.

“While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils.”

A Department for Levelling Up, Housing and Communities spokeswoman said: “We understand the pressures councils are under and are working closely with them to ensure vital public services are protected.”