Council tax, the UK investment by which local authorities raise revenue for local spending on statutory and voluntary services, will rise by an average of 4.2% across England and Wales, according to a survey conducted by the BBC.

It found that local authorities will raise their council tax bills by £53 to £1,302 for an average Band D property in the coming tax year – the third lowest annual rise since the tax was introduced in 1993.

Steve Freer, of the Chartered Institute of Public Finance and Accountancy, which conducted the survey, said: “The Government threat to cap spending if increases went above 5% has concentrated minds.

“This will be regarded as a very positive result in Whitehall and in town halls up and down the country. The second lowest increase in council tax for 13 years is a significant achievement.”

He concluded: “Councils simply do not want to set a collision course with the Government, with all of the uncertainty and risk which that involves.”

However, Lib Dem local government spokesman said: “This rise will still be too much for some. It will be a heavy blow for pensioners and people on low incomes.

“The council tax as a UK investment to raise local revenue is getting increasingly unfair and when it rises above the rate of pay inflation and even more above pension inflation, that clearly puts people in difficulty.”