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Many vital public services are facing severe cuts with councils likely to be £4.5billion out of pocket by 2025. The situation is so bleak that the funding gap is too big to be ­tackled by rising council tax alone, the Local Government Association (LGA) has warned.

Council tax is set to soar above £2,000 for the average household under Government plans.

Chancellor Jeremy Hunt has indicated he is about to lift the decade-long cap on increases, amid warnings that hundreds of local authorities could go bust.

It means households could face an average £100 yearly hike in council tax under the push to allow town halls to help fund social care. Rises of more than two percent are currently banned unless they win approval in a local referendum.

In recent years town halls have been allowed to raise an additional one percent to pay for social care, making a total of three percent.

Under Mr Hunt’s new plans councils will now be allowed to hike taxes by five percent.

Most are expected to take advantage and charge more.

Mr Hunt appeared to confirm the move as he addressed MPs in the Commons two days before the big fiscal showpiece.

The Chancellor acknowledged it is going to be “a very difficult” announcement on Thursday because “we are going to be asking everyone to contribute more”.

He added: “But we’ll be asking people who have more to contribute even more. And that will be reflected in our decisions on ­council tax and every other tax.”

Mr Hunt in his Autumn statement will set out a plan to reduce ­government debt.

He also reassured MPs that Government help with energy bills will not end after six months. The Chancellor added: “The energy price support we give to families will not end from next April, and I will be announcing on Thursday what that support will be.”

The Conservative manifesto in 2019 pledged to keep the veto on large council tax rises.

But a Treasury source said councils needed “more flexibility” to raise money and pointed out the increases would remain below inflation which is 10.1 percent.

Analysis by the LGA suggests that town halls in England would need to increase council tax by a fifth over the next two years to plug the gap in Government funding.

It shows councils will face a £3.4billion funding gap in 2023-24 rising to £4.5billion in 2024-25. But the LGA warned that a 20 percent rise in council tax is ­“neither sustainable nor desirable given the cost-of-living crisis”. It warned that local authorities have been struggling to find an extra £2.4billion this year to meet “unforeseen extra inflationary cost pressures”, energy prices rises and estimated increases to the National Living Wage.

Councillor James Jamieson, the LGA chairman, said many vital services face an “existential ­crisis”. He said: “Reserves can only be spent once and a local ­service cannot be cut twice.

“The Government needs to urgently come up with a long-term plan to fund local services.”

Pensioners and other vulnerable people will die needlessly this winter because there is not enough money for social care, councils warned yesterday.

More than nine in 10 social care directors do not believe their local area has enough staff or funding to get through the next three months.

Association of Directors of Adult Social Services head Cathie Williams said: “This is the bleakest autumn survey we have ever had.

“Only a handful of directors have any confidence they may be able to get through the winter.”

She said the £500million pledged in September to support hospital discharges this winter has not yet been allocated.

And Hampshire and Kent County Council leaders have ­written to Rishi Sunak asking for a bailout to avoid bankruptcy.

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