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Islington residents could see their council tax bills rise by 10 per cent over the next two years as Town Hall chiefs seek to plug holes in budgets ravaged by austerity.

Yesterday (Thursday), the government announced that local authorities in England can raise council tax by an extra 3 per cent per year over the next two years to pay for social care. This is on top of the 2 per cent councils are allowed to put up bills by every year without having to hold a referendum.

Asked by the Tribune if Islington Council would opt to raise taxes by the maximum amount, finance chief Andy Hull said: “I’m definitely not ruling it out.” He added: “But I would be as clear as I can be: this would be raising tax for council purposes, and a precept that the government is using to pay for a national social care crisis it has created.”

Residents of the most valuable properties could see their total tax bill rise by more than £200 over the next two years. And those in band D properties will see bills of £1,400 a year, up from £1,296.

The Town Hall has to make savings of £21million next year and more thereafter, and has an ageing population putting pressure on social care budgets. Hiking taxes by the maximum 10 per cent would raise around £8m, of which £4.8m would be spent on social care.

Cllr Hull added: “The government is opting for an ill-fitting local solution to a national problem. The idea that the availability of social care should depend on local house prices last valued in 1991 seems mad. It’s creating a postcode lottery. The government is trying to pass the buck, and it’s like putting a sticking plaster on a haemorrhage because the crisis in social care funding is a deep one, and has to be seen in the context of us losing 50 per cent in government funding [between 2010 and 2016].”

In April, Islington hiked council tax by 3.99 per cent, raising £3m – a combination of 1.99 per cent rise plus a new 2 per cent precept to spend on adult social care.

Opposition Green councillor Caroline Russell said the Town Hall should put council tax up by even more than the maximum amount, by balloting residents in a borough-wide referendum. “I think that it’s the only option in order to meet the adult social care funding gap,” she said. “We should be having a conversation about a referendum and going beyond that [10 per cent in two years].”

Asked whether she thought residents would vote to have their council tax bills increased, she added: “I suspect Islington residents would want our oldest and poorest to be able to live in dignity. We need to have a mature conversation with residents what society we want to live in – a society able to provide the care people need.”

Cllr Russell also called on the council to fully fund council tax support. Under the scheme, the poorest households only have to pay 8.5 per cent of their council tax bill. Last night (Thursday), councillors voted to retain support at that level. But Cllr Hull said Islington’s scheme was “one of the more generous in London”, adding that bailiffs were not used in cases where households part of the scheme failed to pay.

Town Hall chiefs will publish their budget plans for 2017/18 in January.