There is “no realistic alternative” to a council tax hike next year for North Herts, a senior councillor has said.

Debating a draft budget for the 2023/24 financial year on Tuesday, December 13, the council’s cabinet agreed they must raise their rates by the highest amount possible – three per cent – from April.

Raising council tax is one measure which would help the authority plug a £200,000 hole in next year’s budget – and a £2.5million net savings requirement between now and 2027/28.

Councillor Steve Jarvis, who sits on the cabinet, warned councils which do not raise council tax when they really need to risk a fate similar to Northamptonshire County Council, which declared itself effectively bankrupt in 2018.

Cllr Jarvis said: “Clearly nobody likes paying more council tax, but I think we have to recognise that councils which have not increased tax when there was a serious need to, like Northamptonshire, have just got themselves into a position where they aren’t able to provide the service which people need.

The Comet: Cllr Steve Jarvis.Cllr Steve Jarvis. (Image: 2017 Pete Stevens

“It is inevitably the most vulnerable members of society that are impacted most by that.

“Whereas one would wish the rate of inflation was much lower and there was no need to put council tax up by a significant amount, I think in the circumstances, there is no realistic alternative.”

The central government gave district councils the power to raise council tax by a maximum of £5 per month on a band D “average” property or three per cent, whichever is greater, in the November Autumn Statement.

This is up from a previous cap of £5 or two per cent.

North Herts Council believes that by using this power – and by assuming the number of council tax-paying properties rises by approximately 0.5 per cent each year – it will generate £12.77million in income in 2023/24.

At the December 13 meeting, the council’s cabinet also agreed to support a new council tax reduction scheme for working age residents, which will automatically apply to Universal Credit claimants.

Discounts will be based on the applicant and their partner’s income, as well as the number of children in their household.

The existing reduction scheme requires all households, including those on the lowest incomes, to pay at least 25 per cent of their council tax bill.

This requirement would be abolished in North Hertfordshire for the first time since 2013, when the reduction was introduced.

According to North Herts Council, households on the lowest incomes are often unable to pay their 25 per cent contribution regardless of the requirements, and the existing rules sometimes push families further into debt and further away from being able to afford council tax.

Other discounts will be set at 25, 45 and 75 per cent depending on each household’s circumstances.

The Comet: Cllr Ian Albert.Cllr Ian Albert. (Image: North Herts Council)

On the tax hike, Cllr Ian Albert, who is responsible for finance at North Herts Council, said: “We do recognise there is a real issue for residents here who are already hard pressed and it’s important we take that into account.

“But it is also true to say we are having to use £1m of our reserves – better than we were expecting, but that’s a lot of money and once it’s gone, it’s gone.”

In addition to fresh tax arrangements, the council will try to close the five-year £2.5m budget gap using income generated at the Churchgate Shopping Centre in Hitchin, which the council acquired this year, and a £15,000 reduction in IT and printing costs.

The council is considering charging for garden waste towards the middle of this period, which could generate £168,000 in income from the 2025/26 financial year.

Before the new budget arrangements can take effect, they must be agreed by cross-party members at a series of full council meetings before April next year.