Norwich City Council leaders have recommended a council tax freeze for next year, but warn bills are likely to be hiked in the years ahead.

A recommendation has been made to freeze council tax for Norwich people over the next 12 months, but City Hall leaders have warned it is likely to be the last year before bills are hiked.

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Norwich City Council’s ruling Labour cabinet met last night to decide its preferred level of council tax for the next financial year.

They had pondered upping the tax by 3.3pc to help fund the £20.7m general fund budget for 2012/13, but instead plumped on a recommendation to the full council that it freeze council tax for another year.

One of the reasons for planning no increase in City Hall’s share of the council tax was because the authority had successfully clawed back £1.1m from Her Majesty’s Revenue and Customs after making a claim that it should not have had to pay VAT on trade waste collections.

That meant the extra cash could be ploughed into reserves, giving the authority a little more room to manoeuvre.

Councils are also being given a one-off grant by the government for freezing council tax, equivalent to a 2.5pc increase, which is just over £230,000 for the city council.

Deputy leader Alan Waters said he was pleased that the council was on the verge of being able to freeze bills for people during tough economic times, but issued a stark warning that bills were almost certainly likely to increase from next year.

He said: “Given this year, we have a one-off grant, a grant for freezing it last year which runs for four years and just over £1m from the work done to reclaim VAT, then I am recommending a 0pc council tax increase.

“But that comes with the significant health warning that, given the uncertainty in future years and that the grant is a one-off, we will have to look very carefully at our council tax for the next financial years.

“It’s very difficult to say what the circumstances of the council will be. This approach is arguably sustainable for this year, but not sustainable as a solution for future years.

“There’s no such thing as a free lunch and I think we can do this for this year only. Next year may be a completely different kettle of fish.”

Mr Waters said that the big problem with accepting the one-off grant and not increasing council tax, it meant that by 2015 the council would have lost out on £1m which would otherwise have been generated over that period.

If the freeze is agreed at a full council meeting next Tuesday, it means the share which will go City Hall from a Band D property in Norwich will be £225.87.

Council tax bills for people in Norwich are made up of portions which go to the city council, Norfolk County Council and Norfolk Police Authority.

Norfolk County Council agreed on Monday to freeze its share of the council tax. Norfolk Police Authority will make a decision on its portion next Tuesday.

People covered by Broadland District Council, such as Hellesdon, Sprowston and Thorpe St Andrew will find out next Thursday whether the authority will freeze its share, while South Norfolk Council, which people in areas such as Costessey, Hethersett and Cringleford pay bills to, is likely to agree a freeze on Wednesday.

The city council cabinet last night also made a recommendation to full council for an increase in rents for council tenants.

The council has been asked to agree a rise of 6.85pc on those rents, which is an average of £4.60 a week. About 60pc of people living in council homes will see that covered by their housing benefit.

Claire Stephenson, leader of the Green Party at City Hall questioned whether it might have been preferable to increase council tax, rather than to hike rents for tenants.

• Do you think freezing the council tax is the right decision? Write to Evening News Letters, Prospect House, Rouen Road, Norwich NR1 1RE or email eveningnewsletters@archant.co.uk