COUNCILS in Oxfordshire may have to make yet more savings thanks to the latest Government changes to the council tax system.

For the past two years the Government has offered local authorities funding in exchange for freezing their council tax.

But now councils will be given three choices after an announcement at the Conservative Party Conference this week, which could leave them out of pocket.

They can keep council tax at its current level and accept a grant equivalent to a one per cent increase from the Government, make the maximum two per cent increase or hold a costly local vote on any rise higher than two per cent.

For Oxford City Council, where finance chiefs were hoping to increase council tax by about three per cent next year and in 2014 and 2015, it could mean a funding gap of hundreds of thousands.

Deputy leader and finance board member Ed Turner said: “This is heaping un- necessary pressure on councils. If the Government wanted to see council tax frozen it should pay for it properly, not indulge in this short-term posturing.”

He said the council had not decided whether it would take the one per cent deal or pursue a two per cent rise, but added: “We will cope with it as best we can.”

An increase of three per cent next year would have added around £330,000 to the council’s annual budget.

If the council accepts the deal, it will be out of pocket by £220,000 next year, compared to a £110,000 loss if it chooses the two per cent rise.

Oxfordshire County Council could be left with an even bigger hole in its budget.

This year, the council received a grant of £7.5m, equivalent to a 2.5 per cent rise in council tax.

But based on the same figures it would only receive £3m if it took the government’s deal in 2013.

County council spokesman Paul Smith said: “The council doesn’t set its budget until February, so proposals and decisions on council tax levels will be made in the new year.”

The 2.5 per cent grant was given to councils that chose not to increase council tax in 2011/12 and 2012/13.

Thames Valley Police Authority spokesman Candy Stallard said: “The precept will be set by the Police and Crime Commissioner when he or she is elected in November.”

Chancellor George Osborne made the announcement this week but stressed the Government was still trying to help local authorities.

He said the Government will set aside an extra £450m to help freeze council tax bills.