Council tax is expected to rise by almost three per cent as the local authority tries to pay off a £20m budget shortfall.

The city council’s head of finance has admitted 'a significant budget issue’.

The proposed increase means people on the lowest council tax band could see a yearly increase of about £30.

Meanwhile, people living in the highest band could be forced to fork out an additional £87 a year.

The council says increasing council tax is the ‘prudent’ way to earn the money.

For every one per cent rise in core council tax, the council expects to make an extra £1.1 million to go towards its savings and get its finances on track.

Head of finance, Steve Harrison, attended last Thursday’s (February 2) scrutiny overview and management committee (SOMC) to answer the opposition’s budget questions.

He spoke of the benefits of using the 2.99 per cent core council tax rise as opposed to plugging the gap with council reserves.

He said: “The thing about council tax is it would be a permanent addition to the base budget whereas the use of reserves is only a one-off, so all you are doing is delaying a difficulty.

“It’s always more prudent to use a council tax rise to address budget issues and we do have a significant budget issue.”

Local authorities have been given permission by government to increase core council tax by three per cent and it is ‘assumed’ that those authorities with ‘budget issues’ will take the full allowance.

Councillor Steve Leggett, cabinet member for finance, when asked what the council would do if they did not accept the option to raise the tax, said: “We would have to find ways to fill that gap.”

Nothing in the budget is guaranteed until it is officially announced on February 22.