Plans to consult on hiking council tax bills by 3.8% have been approved by members of Barnet Council’s Labour administration.

The proposed increase would bring in an extra £4.1million for the council next year, as a report by town hall bosses warned of “difficult choices” ahead amid soaring inflation and increased demand for services such as social care.

Despite plans to make £11.8m of savings – including almost £3m in the adults and health budget – the council still needs to plug a £1.7m budget gap during the 2023/24 financial year.

In November, Chancellor Jeremy Hunt’s Autumn Statement gave councils the power to increase core council tax by 3% and the ‘precept’ used to fund adult social care by 2% without holding a referendum. Barnet Council plans to raise core council tax by 1.8% and the precept by 2%.

When the proposals were presented to the policy and resources committee on Tuesday, council leader Barry Rawlings claimed the government had not provided enough funding for local authorities in the Autumn Statement.

Cllr Rawlings said: “It was the government using councils to raise taxes on their behalf so that local councils got the blame. When you see the figures, how much more local government is getting, that presumes every council does the 5% increase. We are not going to do that.”

The council leader claimed 2% of council tax was being given back to residents – 1% of next year’s bills and 1% that had already been used to set up a residents’ support fund.

Conservative councillors refused to back the plans and called for Labour to stop spending money on “vanity projects”. The Tories accused the administration of breaking a key manifesto pledge to refund this year’s 1% increase in bills, which was approved by the then-Conservative administration to help fund social care.

The accusations came after a report published in September proposed only a 0.99% increase in core council tax, which it described as a “1.99% increase reduced by 1% to reflect a rebate of the 2022/23 increase to residents”.

Tory leader Dan Thomas agreed to support some lobbying of the government on behalf of the council. But he added: “Just because the government has allowed councils to charge more, it doesn’t mean that you have to. This is a test for the Labour group, as far as I’m concerned – you can keep your promise of low council tax or to show your true tax-and-spend colours and rack it right up.

“Claiming everything is okay because the increase is below the new legal maximum – that is shifting the goalposts.”

Cllr Thomas urged Labour to freeze council tax and called for an end to a “spending spree”, claiming the administration had spent £300,000 on a subscription to the Local Government Authority, £800,000 on community skips and £200,000 on new officer posts. His Conservative colleague Sarah Wardle said Labour had spent “quite a significant amount of money on several vanity projects”.

Labour councillors denied the claims, insisting that initiatives such as community skips and community safety hubs had been popular and were introduced in response to demand from residents. Cllr Rawlings said: “I do not consider our wish to transform Barnet and our wish to reach ‘net zero’ as a vanity project.”

Labour committee members approved the budget plans, including the proposal to consult on the council tax increases, while the Conservatives voted against. A public consultation on the budget is due to launch next week.