A district council in Leicestershire has announced plans to increase council tax by almost 3% despite having a "more positive financial outlook".

North West Leicestershire District Council (NWLDC) has launched its early budget proposals, in which it says it will propose a "mid-level increase" of 2.75%. The council has said this rise is due to "inflation and increased demand for services".

Last year, the district council raised the council tax by 2.5%. At the time, it said there were growing financial pressures and that it needed to increase these costs as part of work to "close a growing funding gap".

Councillors previously predicted a gap of £2 million in the council's budget, but following the Government's Fair Funding Review, it has confirmed that it is set to receive "sufficient funding over the next three years to balance its budget and maintain its reserves", thanks to a grant that will "provide more financial certainty for the next three years".

However, councillors claim that they need to "maximise ongoing income to prepare for future funding reductions", leading to the rise in council tax.

NWLDC has said the council tax rise would be an increase of £4.59 on the annual bill for a Band D property. Leicestershire county residents do not just pay council tax to their district or borough council, but to Leicestershire County Council, the police and fire services and, in some cases, to their parish or town council also. This means residents in NWL can expect their total costs to increase by more overall.

The council says it plans to invest £796,000 to maintain waste services ahead of a major recycling system upgrade, £175,000 to repair bin lorries, and £40,000 to continue the FlexCollect recycling trial for flexible plastic.

Councillor Keith Merrie, Conservative finance and corporate portfolio holder at NWLDC, said "it might seem confusing to people" that the council is increasing despite the council getting better funding.

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He added: "With the cost of providing services going up across the country and demand increasing week on week, there are still pressures, and we do still need to keep a close eye on our income to make sure we continue to be financially sound.

"The Government itself expects councils to increase council tax year on year, for this reason. That's why we're proposing a small increase in council tax – of around £4 or less for most households – to keep our income healthy and enough funding for vital services.

The council has also said it will create a 'Legacy Fund' to provide one-off funding for long-lasting community projects, which has received cross-party support.

The project could include investment in community buildings, improving or increasing leisure facilities in the district, and creating and improving walking and cycling routes.

Labour leader of the opposition Cllr John Legrys said he was mindful of people's concerns when it came to council tax rises but told the Local Democracy Reporting Service (LDRS) "you don't get 'owt for nowt".

He said: "I'm fairly neutral on the council tax rise. We have been discussing with council officers and looking very closely at the budget about what's happening around it.

"But the bottom line is that North West Leicestershire District Council will cease to exist very soon, and we've got to make sure that we look after the budget beyond that.

"I think I can understand why people are annoyed about further [tax] increases, but people need their bins emptying, and there are important planning decisions that the council does, but as I say to people, you don't get 'owt for nowt.

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"There are also lots of great events we run, and we want to keep funding and continuing them".

NWLDC has launched a budget consultation before proceeding with the increases. It said it is welcoming feedback from residents, businesses, and groups to review the proposals and share their views via an online survey on its website.