Angela Rayner has refused to rule out Labor introducing unlimited council tax rises just months after claiming the party had no plans to raise the levy.

As it stands, the city council cannot raise the percentage by more than 5 percent, without voters supporting the move in a local referendum.

That said, even if council tax bills were raised by 5 per cent, in cash terms, that would mean an increase of £100 in April – well above current inflation.

On Friday, the opposition accused Labor of planning another “stealth tax” after the Deputy Prime Minister and the Ministry of Housing and Local Government refused to remove the referendum cap.

It has led to concerns that April could see council bills soar if she announces the move in December.

The Local Government Association (LGA) wants ministers to scrap the 5 per cent cap and allow unlimited tax increases. This is the case in Wales, which is Labour-run, and council taxes have ticked up much faster than in England.

The LGA claimed England’s councils were facing a £2.3bn black hole next year, rising to £3.9bn in 2026.

They added that one in four councils would require an emergency bailout by 2025 to stave off bankruptcy.

A decision on the referendum is due by the end of 2024; however, the chancellor has included it in his budgets in the past. Rachel Reeves delivered her first budget on Wednesday.

A government spokesman said: “We do not comment on speculation about tax changes outside of tax events, and we have been clear that any future decisions on council tax will be made at the spending review and local government financial settlement.”