Croydon households face a two per cent council tax hike because of "unprecedented" changes to local government funding, it was claimed today, after Chancellor George Osborne was compared to the Sheriff of Nottingham.

Mr Osborne announced new powers this afternoon that would allow local authorities to raise the tax by up to two per cent to pay for cash-strapped social care services.

But in his spending review the Chancellor also revealed central government grants to local authorities would be slashed by 56 per cent over the next five years.

Croydon Council leader Tony Newman said most councils would be "forced" to raise council tax as a result.

He said: "To have the government effectively impose an extra two per cent charge locally is not the way the country is normally run. It's unprecedented.

"It's technically optional, but adult social care has huge funding pressures. I think most councils will be forced to do it. There's something of the Sheriff of Nottingham about it, really.

"To a degree it's an imposition of what I think should be a national tax, being effectively collected by local government. Really, one of the responsibilities of national government should be the responsibility for policy and tax raising around [adult social care].

"If he believes it’s not properly funded, he should have looked at raising that money through national taxes."

When asked whether Croydon Council would raise council tax by two per cent, Coun Newman said: "We have got huge pressures on our budget. We will look at it in the context of the other changes - it's certainly putting us in a very difficult situation."

Mr Osborne's autumn statement also included changes that will allow councils to keep all revenue from asset sales and business rates.

He said the measures would mean council spending power remained unchanged in cash terms despite central government grants falling from the £11.5bn allocated nationwide this year to £5.4bn by 2019/20.

Coun Newman welcomed the business rates announcements, but said it was unlikely that asset sales would be able to significantly improve the council's financial situation.

He said: "It's something we look at anyway. [But] we haven't got that much stuff left to sell really. It's a very tough budget for Croydon Council and others."

Coun Tim Pollard, leader of Croydon's Conservative opposition group, predicted the shift away from central government funding would be an "uncomfortable" transition for the council.

He said: "It is one of those situations where residents will blame the local council for tax changes rather than necessarily thinking through where the incentive behind it has come from, so it is never comfortable for local councillors.

"But there is no doubt that some of the other changes they have made in terms of the business rates and the ability for local authorities to take the uplift from those will help boroughs like Croydon in the long term, so I guess it's a swings-and-roundabouts situation.

He added: "I think whilst it's uncomfortable in any transition period, it is probably the right way to go in the longer term to free up local authorities to charge local residents for the services they want to provide and be accountable for it.

"But I don't think it's necessarily going to be a comfy process getting there."