Half a dozen cash-strapped local authorities in England will be allowed to raise council tax by as much as 10% this year in a bid to stave off bankruptcy, it has been confirmed. The Government signed off its final funding settlements for town halls on Monday and announced the six authorities in England who have permission to raise council tax bills beyond 5%. London boroughs say they still face a £500million funding gap in the coming year, despite receiving a 5.7% increase to their core spending power under the settlement.

Deputy Prime Minister Angela Rayner confirmed Newham will be able to raise council tax by 9% in April in a bid to help it balance its books. It means an average Band D home in the borough will see bills increase by about £131 including the City Hall precept, which the Mayor of London adds to pay for the Met Police, TfL and Fire brigade. Windsor and Maidenhead, which had asked to raise bills by a quarter, was only given permission to increase them by 9%.

Birmingham residents will see payments rise by 7.5%, Bradford Council 10%, Somerset 7.5% and Trafford Council 7.5%. A record seven London boroughs applied for hundred-of-millions-of-pounds of emergency cash from the Government this year as the capital’s town halls struggle to stay afloat amid skyrocketing social care and temporary housing costs. Lambeth, Newham, Havering, Croydon, Enfield, Barnet and Haringey all said they could face going bust in the future unless they get more money to fund services.

Ms Rayner added that decisions on councils’ “overall request for exceptional financial support will be taken and communicated ahead of local budget setting” later this month. Requests for exceptional financial support can include emergency loans as well as permission to sell off assets for day-to-day spending. The Government said it had introduced a “stricter approach” to rules that allow town halls to hike council tax above 5% if they need emergency funding and they were only agreed in places where households have lower than average payments.

“These are difficult decisions that Government has not taken lightly,” Ms Rayner said. “We recognise the importance of limited increases in helping to prevent these councils falling further into financial distress – but we have been clear this must be balanced with the interests of taxpayers. “We have agreed to a limited number of requests and in all cases have not agreed to the full amount requested. Where we have agreed, it is only for councils with amongst the lowest levels of council tax.”.

Newham Mayor Rokhsana Fiaz blamed her borough’s £157million budget gap on the spiralling cost of providing temporary accommodation for homeless families. She added: “We know that this is a difficult time for many of our residents and we don’t take the decision to raise council tax lightly. “We will continue to support those most in need through our proposed 80% Council Tax Reduction Scheme. “We are also proposing to keep intact the 90% Council Tax Reduction Scheme for eligible pensioners.

“All our measures reflect our unwavering commitment to ensuring low-income households receive the vital assistance they need. “Newham has historically set one of the lowest council tax rates in London, and with this proposed increase, we’ll have the seventh lowest council tax in London and the lowest of any outer London borough.”. A record number of local authorities put in bids for exceptional financial support on top of their usual financial settlement this year.

Havering is predicting a budget gap of around £74million mainly due to exploding social care costs. Croydon, which has collapsed into bankruptcy three times between 2020 and 2022, continues to struggle with the rising cost of services and its historic £1.4billion debt burden. Haringey has been in discussions with the government for up to £37million of support to cover day-to-day spending and look after vulnerable residents.

Lambeth faces a £70million deficit over the next four years over its rising temporary accommodation bill. Barnet Council has asked for a £59million bailout with leaders saying they are caught in a “perfect storm” caused by cuts, sky-rocketing inflation and increasing demand for services. Enfield council applied for £30million of extra Government support due to the “rocketing demand” for social care.

Cllr Claire Holland, Chair of London Councils, said: “Massive service pressures and tight funding constraints mean that hard times are still here for boroughs’ budgets. “Having faced more than a decade of structural underfunding, councils in the capital remain under enormous financial strain. “We are dealing with a range of immense challenges in London, but the worsening homelessness emergency represents the biggest single risk to borough finances.