Angela Rayner yesterday refused to rule out scrapping a council tax exemption for people living on their own.

The single person discount automatically reduces bills by 25per cent for taxpayers who live alone, regardless of their financial circumstances.

It saves a person living alone in a band D property around £500 a year from their council tax bill.

But councils are reportedly begging the Government to end the discount and scrap the five per cent limit on annual council tax rises.

The Local Government Association (LGA) wants the Chancellor to give councils the power to axe the discount – which they say is worth around £3 billion a year.

Yesterday Housing Secretary Ms Rayner refused to commit to keeping the single person discount in place.

In the Commons, Conservative former minister Graham Stuart said the discount ‘is so important to pensioners who are already losing out because of the absence of the winter fuel allowance’.

He urged Ms Rayner to ‘guarantee today, put gladness into all their hearts across the country’ that she would not look at removing the discount.

But she failed to do so, instead replying: ‘I find it astonishing that members opposite, after running down the economy in the way that they have, after the Chancellor had to come to this House to talk about the billions of pounds black hole, that they’re now trying to claim that this Government is about raising taxes.

‘This Government is about making sure that working people are better off and we’ll intend to do that.’

Shadow housing, communities and local government secretary Kemi Badenoch earlier told MPs: ‘It’s been reported that the Secretary of State is being lobbied to increase council tax and remove discounts like the single occupant discount.

‘Will she take this opportunity to reassure the House that the Government has no plans to increase council tax as they assured us before the election?’

Ms Rayner replied: ‘Yes.’

At present, council tax can be raised by a maximum of five per cent unless local residents approve of higher increases in a referendum.

But Pete Marland, chairman of the LGA’s economy and resources board, said: ‘It should be for councils and their residents to decide how local services are paid for, not Whitehall.

‘No other tax increase is subject to a referendum, as all other taxes are rightly seen to be within the mandate of the elected government. The same should apply for council tax.’

He claimed town halls are facing a financial black hole of £6billion over the next two years ‘just to keep services as they are with no further cuts’.

‘We need a significant change in our funding… so we can deliver the services local people want to see,’ he said.

There is also speculation the Government could overhaul council tax bands in the budget on October 30. They are currently based on the value of a property in April 1991.