Dudley Council is warning of a council tax increase of at least five per cent next year.

A £5 million hole in the budget will have to be filled by residents, whose annual tax bill will go up by about £50 for the second year in succession, council leader David Caunt said today.

Huge increases in running costs – such as a projected £500,000 rise in the cost of street lighting due to rocketing energy prices – will be passed on to householders, he added.

A five per cent rise would mean a resident in a band D property paying about £1,110 in council tax, up from £1,060.

Councillor Caunt said tax increases were the only way to raise the revenue shortfall as government funding had already been set.

A one per cent increase would generate an extra £1million, and £5 million was likely to be needed to shore up council accounts hit by the economic crisis.

Councillor Caunt said: “We along with everybody else will be struggling to keep our rise within what we expect the cap to be, at five per cent.

“No-one is immune to the credit crunch.

“We know what we’re getting from the Government, and it isn’t enough. Shortly I will be writing to them to tell them that.”