Angela Rayner makes major announcement on Labour government's council tax policy

Her opposite number, Kemi Badenoch, asked her about reports in the Telegraph that council chiefs have been calling on the government to grant them unlimited powers to increase local taxes.

Currently the annual increase is capped at five per cent, unless the government grants an exemption in special circumstances, like Birmingham City Council’s bankruptcy, following a referendum.

Ms Badenoch asked: “It’s been reported that the Secretary of State is being lobbied to increase council tax and remove discounts, like the single occupancy discount.

“Will she take this opportunity to reassure the House that the government has no plans to increase council tax, as they assured us before the election?”

Ms Rayner replied simply: “Yes.”

Before the election Labour had committed not to change council tax bands, or increase income tax, national insurance or VAT.

However, the government now may have to announce significant public services cuts in October’s Budget.

Local authorities have been under huge financial pressure to deliver statutory services, such as housing and social care.

County councils recently successfully lobbied the government to indefinitely delay bringing in a cost cap on social care, saying they could not afford it.

Coun Pete Marland, chair of the Local Government Association’s economy and resources board, explained that councils face a funding shortfall of more than £6 billion over the next two years “just to keep services as they are”.

He argued elected councillors should have the power to set council tax rates locally, instead of central government, saying: “No other tax increase is subject to the extra cost of a referendum, as all other taxes are rightly seen to be within the mandate of the elected government.

“The same should apply for council tax. The ballot box on local election day allows for people to pass judgement on their councils.”

A recent poll found that council tax was the least popular of all taxes for the government to raise.