In a move that has stirred considerable discussion, Labour has approved requests from seven local authorities to exceed the usual 5 percent cap on council tax increases, with some councils receiving the green light for rises as steep as 9 percent.

Generally, councils can implement a maximum annual council tax increase of 4.99 percent without triggering the need for a local referendum. This cap typically includes a 2.99 percent rise for general expenditure and an additional 2 percent dedicated to adult social care.

However, exceptions have been made this year. Shropshire, Worcestershire, and North Somerset councils have been granted permission to elevate their tax levies by up to 9 percent, an unprecedented allowance under current regulations.

In addition, councils in Trafford, Warrington, and Windsor and Maidenhead have been authorized to raise their council taxes by as much as 7.5 percent. Similarly, Bournemouth, Christchurch, and Poole Council has been permitted to increase their rates by 6.75 percent.

Meanwhile authorities in Trafford, Warrington and Windsor and Maidenhead are being allowed to hike their council tax by up to 7.5 per cent.

And Bournemouth, Christchurch and Poole Council is being permited a 6.75 per cent rise.

Alison McGovern, the local government minister, said: ‘Our local government finance reforms get money to where it is needed.

‘But we recognise that some councils remain in a challenging financial position as they continue to deal with the legacy of the previous system.’

Ms McGovern warned the councils the ‘additional flexibilities are a limit, not a target’, stressing that final decisions on council tax levels are for local authorities themselves.

It is part of a three-year settlement for local council which the Government has finalised, making around £78billion available to town halls throughout England.

Ms McGovern said the deal was designed around ‘reconnecting funding with need’.

‘We are reconnecting funding with need,’ she added. ‘Only around a third of councils were given the funding to broadly match their assessed need before our reforms.

‘By the end of the multi-year settlement, that will be nine in 10 councils.

‘As a result of these changes, the most deprived places will receive 45 per cent more funding per head than the least deprived in 2028/29.’

The package will include a £440million uplift to the recovery grant, ‘aimed at the councils most impacted by cuts during austerity’, bringing its total to £2.6billion.

It will also include £272million additional allocations within the homelessness, rough sleeping and domestic abuse grant, bringing its total to £2.7 billion.

Ms McGovern said: ‘We promised to reconnect funding to deprivation and this final settlement delivers on that promise.

‘With more new funding, we’re giving councils the certainty they need to plan ahead and transform services.

‘Our purpose is to support families, tackle homelessness before it happens, and finally giving communities worst affected by historic cuts their fair share.’

Steven Broadbent, the County Councils Network (CCN) finance spokesman, warned the next three years ‘will be very challenging’ for the organisation’s members. 

He said he was ‘disappointed’ that ‘ministers have chosen to yet again unfairly target even more resources on a select cohort of urban and metropolitan councils’.

Mr Broadbent, who is also the Conservative leader of Buckinghamshire Council, added: ‘This is because the recovery grant overwhelmingly benefits urban metropolitan borough councils.

‘Yet analysis by CCN shows that they collectively face a funding gap of £180million next year whereas county and rural unitary councils face a colossal £2.7billion funding black hole.

‘This shows that today’s decision to increase the recovery grant by a further £440million, rather than providing extra funding to all county and unitary councils, is patently unfair and compounds the decision to downgrade remoteness within the formula.’

Mr Broadbent added that ‘the three-year period will be very challenging for all our member councils’.

He said: ‘County residents and their councils will be forced to make up a significant shortfall through council tax rises and cuts to local services as CCN members grapple with a multi-billion shortfall.’

Jeremy Newmark, the District Councils’ Network finance spokesman, said ‘the funding redistribution in the final settlement has created winners and losers’.

Mr Newmark, the Labour leader of Hertsmere Borough Council, added: ‘It is clear that district and unitary councils, especially in more remote and rural areas, will struggle to preserve the full range of services that residents need and value.

‘The transitional funding protection is welcome but for many districts, the settlement still amounts to a real-terms reduction in core spending power.

‘That is why we will be asking Government to act beyond the finance settlement to help councils support themselves and continue delivering high-quality services.

‘We will be urging them to swiftly progress the review of fees and charges. Councils need to be able to recover the full cost of services they provide.’