Council tax in Elmbridge will rise by 1.95 per cent this year, after the council refused to accept the Government’s council tax freeze grant.

People living in a band D property will pay 7p more a week.

Delivering his budget speech, Councillor John O’Reilly, leader of Elmbridge Council, said: “We must recognise that in terms of running a serious business continuing the council tax freeze indefinitely is not a sustainable strategy even as we continue to bear down on costs.

“In a period of huge uncertainty when we continue to experience fluctuations in our levels of income, investments and yet another sharp reduction in central government grant, we are proposing to increase council tax by below inflation at 1.95 per cent for next year.”

For 2013/14, council tax will be £3.90 per week per household for a band D property, up from £3.83 in 2012/13.

Coun O’Reilly said the council had decided not to accept the government’s freeze grant because it would lead to a “financial black hole of £1m in five years’ time”.

Putting it into perspective, Coun O’Reilly said losing £1m could equate to stopping their community transport service for two years, stopping contributions to the voluntary sector for two years or being unable to maintain the borough’s parks for a year.

Coun O’Reilly said: “These services are too important to risk on the roulette table of one-off freeze grants that add nothing to the base on which our recurring services depend.”

Presenting the Residents’ Group alternative budget proposal, Councillor Stuart Selleck asked for all members’ support.

In the alternative proposal, the council would accept the 1 per cent council tax freeze grant of £128,487 and use £106,093 from the 2013/14 New Homes Bonus by reducing the amount transferred into the property acquisition reserve.

Councillor Barry Fairbank, representing Liberal Democrats, said: “I have found myself putting together a speech which contains the words support and Conservative in the same sentence.”

Speaking about an article written by the Elmbridge Guardian, Councillor Roy Green said that although 7p might seem low, 25 per cent of children are living in poverty in Walton North and it will make “a difference to those families”.

At the meeting, 21 councillors voted in favour of the alternative budget approval proposed by the Residents’ Group, 36 voted against and two councillors abstained from voting.

The Conservative budget was passed.