Tory councils to defy David Cameron's tax rise ban They plan to reject a grant offered by Mr Pickles's Department for Communities and Local Government (DCLG) in place of a tax rise, claiming they need the revenue for services such as meals on wheels and road repairs. Councils receive money from two main sources - central government and local taxes. Mr Pickles has said he wants to reduce funding from Whitehall's grant system, and last month announced a settlement that will result in councils" spending power being reduced by an average of 1.7 per cent in the next financial year and by a further 3.8 per cent the following year. In order to offset some of the loss from the reduction in funding and freezing tax, he is offering councils that freeze or cut tax a separate grant equivalent to a 1 per cent rise in council tax. But councils rejecting the offer say that it is too little to make freezing the levy worthwhile - putting them on a political collision course with Mr Pickles. Under his rules, local authorities would have to hold a referendum on any increase of more than 2 per cent, or £5 per year for shire councils. A Conservative source insisted that all councils were under a moral obligation not to raise tax, saying the freeze saved a family in a Band D property £72 a year. "If they are going to increase council tax, they should have the guts to put it to the electorate," the source added. We don't want a whole load of ­democracy-dodgers who hike it to 1.99 per cent to avoid a referendum. John Gilbey, leader of Canterbury city council, said the grant would not provide the financial support his council needed because it would end after two years, whereas increasing tax would raise the council's annual income ­indefinitely. The council is planning to raise its share of tax by 1.99 per cent - about 7p a week for a Band D council-tax payer. Mr Gilbey said he accepted that the Government was "doing its best" but said: "People have said they were prepared to pay small increases in taxes providing they keep their services or get improvements, and that is what we're doing. To be fixed and focused on freezing is something we said we can't go on doing. Patrick Roberts, the leader of Runnymede borough council, claimed the Government had failed to address concerns about the annual grants. Mr Roberts said: "The freeze grant sounds attractive, and Runnymede has accepted the last two offers, but each time the benefit from it gets shorter and shorter. Once the grant stops, you go back to the position that you were in prior to the grant. Although we have endeavoured to explain this to DCLG, they don't seem to want to ­accept it. The Telegraph asked all English councils whether they intend to increase or freeze tax when they finalise their budgets in the coming weeks. None has decided to risk a referendum. Of the 231 councils that responded to the survey, 96 said that they intended to freeze bills, in return taking the grant on offer, while 23 said they planned to increase the levy. Five local authorities said they intended to cut the levy: the London Borough of Hammersmith and Fulham, the Royal Borough of Windsor and Maidenhead, South Holland district council in Lincs, South Oxfordshire district council and Uttlesford district council in Essex, all of which are Conservative-controlled. A further 107 said they had not yet made a decision, raising the prospect of more rising bills. A coalition of more than 120 rural councils has said it is considering bringing a judicial review against the "grossly unfair" spending settlement. A spokesman for the DCLG said: "Councils have a moral duty to sign up to the council-tax freeze and keep down the cost of living for hard-working households up down and the country. A hike in council tax is a kick in the teeth to hard-working, decent taxpayers.