A move to slash rent increases for tenants in Dudley will leave the council £450,000 out of pocket, it was revealed today.

The Government has capped increases for the borough’s 23,000 tenants at three per cent – or a maximum increase based on inflation. A low rate of inflation caused by the recession means the council is only able to introduce a two per cent rise for 2010/11 – leaving a shortfall of almost half a million pounds.

The authority will not be able to claim the lost income back from the Government until 2011/12.

A council report revealed the authority would “suffer a cashflow shortfall of around £450,000”.

A proposed rent increase of two per cent for 2010/11 will go before the cabinet on Wednesday. Under the plans the average rent for a council home would rise by £1.31 per week to £67.60 per week. The rent increases across the full range of council properties will range from £51p to £1.50. Service charges will remain at their current levels.

Cabinet member for housing Councillor David Simms said: “Our rent increases have, since 2002, been controlled by central government. Despite this latest increase, our rents compare favourably with other local authorities.”