Havering Council is set to raise council tax by almost five per cent - the maximum allowed - as it battles a huge budget shortfall.

The council is proposing to increase the tax on homes by 4.99pc, the most it is permitted to without holding a referendum.

Residents living in a band D property would see their total annual charge increase by £119.79 to £2,207.92.

The total increase also includes the Mayor of London’s share of council tax – known as the Greater London Authority (GLA) precept – which will also rise by 8.58pc, significantly higher than Havering’s share.

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This means residents of band D properties will pay the mayor £471.40 next year, £37.26 more than last year.

Havering Council will bring in about £158million from council tax in 2024/25 – more than three quarters of its annual spending.

However, the council says its own tax increases will not be enough to pay for the soaring costs of adult social care, children’s welfare and temporary accommodation.

These costs have left the council in a severe financial crisis, with a £21m overspend this financial year and a £31m budget gap forecasted next year.

The council tax increase is due to be formally agreed by cabinet next week (February 7) followed by all of Havering’s councillors on February 28.

To avoid having to declare itself effectively bankrupt by issuing a section 114 notice, the council is waiting to hear whether the government will approve a multi-million pound loan.

Without the loan, the council says it would be forced to declare bankruptcy, which could result in even higher council tax increases, closures and sales of community buildings, redundancies and other cuts to services.