The Government has attacked Newcastle City Council over its plans for an above-inflation council tax rise.
Council leader Nick Forbes has said taxpayers may have to find the money to pay for a potential hike of up to 2%, to offset scaled back council budgets.
But chosing a full 2% rise would trigger a referendum with local people, the minister for Communities and Local Government warned in Parliament on Thursday.
He said any English council choosing to raise its council tax by 2% must hold a vote so the public can have the final say.
However the city council’s plans are still up for negotiation and no final decision has been made.
Councillor Forbes plans on rejecting the Government’s 1% council tax freeze deal, after taking the offer for the past four years.
Minister Kris Hopkins said: “Councils choosing an increase should have the courage to put their case to local people. Any council proposing to increase to 2% we need to allow local people to have the opportunity to approve of veto through a referendum.”
He said this threshold should also apply to the police, fire service and parish council precepts and warned them against ‘inflation busting’ hikes.
Mr Hopkins said all English councils should take advantage of the Government’s freeze offer which this year stands at 1%.
He said: “All councils should freeze council tax in 2015 - 16 to help people with the cost of living. We are providing additional funding to a 1% increase in council tax freeze it. This is the fifth consecutive year we have done this.”
Councillor Forbes announced on Wednesday that he planned on rejecting the Government’s offer of freezing council tax and instead take a financial sum that would be equivalent of a 1% rise.
The Government claims their deal has saved the average household £1075 since 2010.
Newcastle could boost its spending power by up to £600,000 if they raise council tax, rather than if they were to accept the freeze.
A spokesperson for Newcastle City Council said: “It appears that the council tax referendum will be two per cent next year but we will read through the detail of the settlement to confirm the actual position.
“Our proposed council tax rise is now subject to consultation. We want people to tell us how they feel about this. Our financial position is such that we need to generate additional income from any rise to help balance the budget.”