She 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.”

The government blocked several councils from raising taxes above 4.99%, including Hampshire, which had asked to be allowed a 15% increase.

A statement on local government funding, external also confirmed that councils will have access to more than £69bn this year – a 6.8% increase in cash terms compared to 2024-25.

The agreement means no council will see a reduction in core spending power.

More than £2bn of this will come from direct grant funding above revenue received from council tax.

The announcement also confirmed councils will get extra money to manage the cost of increases to employer National Insurance contributions.

The top-up brings additional funding for next year to around £2bn, on top of £1.3bn announced at October’s Budget.

Specific allocations to mayoral combined authorities remain at zero, meaning they are expected to generate funding through other means.