Surrey County Council is set to increase its part of the council tax, despite the offer of a Government grant in return for freezing it.

It said it would “take a stand” and save the county from a financial blackhole by declining the coalition’s council tax freeze proposal.

The council’s cabinet is set to discuss rejecting the Government’s freeze because it would lead to a £70m financial shortfall over five years.

A council spokesman said that was equivalent to wiping out Surrey’s road maintenance budget for more than two years.

Leader of the council David Hodge said: “For some councils it is a good offer but it’s not right for Surrey. The freeze would be a short-term gain for long-term pain.

“It would create a financial black hole of £70m in just five years, equivalent to wiping out Surrey’s road maintenance budget for more than two years.

“This isn’t about us wanting to spend more money, we’ve already made huge savings from our budget.

“Our plans mean that even in 2017 we won’t be spending any more than we did in 2010.

“The truth is that we have to increase council tax every year just to stand still, because our Whitehall grant is reducing every year.”

The Government has offered all councils a one-off grant of 2.5 per cent for 2012/13 if they froze council tax for another year.

Accepting it would put Surrey £14m down in every subsequent year, when the one-year grant ends. Surrey opposition leader Councillor Hazel Watson said they were likely to agree with the grant rejection.

While she wanted council tax to be kept as low as possible for those struggling to pay bills, Coun Watson said it would have to go up slightly to maintain frontline services.

The proposal - to increase Surrey’s council tax charge by 2.99 per cent in April - will be considered at a meeting on Tuesday, January 31.

A 2.99 per cent increase in council tax would mean an extra 64 pence a week or £33.38 a year on a band D property in Surrey.

Coun Watson said: “Years of financial mismanagement by the Conservatives are now coming home to roost.

“One way or the other the residents of Surrey will be paying a high price for these years of Tory failure.”