Angela Rayner has been warned her plan to axe councils could cost taxpayers billions of pounds in pay-offs to high-ranking officials. The Housing, Communities and Local Government Secretary plans to scrap more than 100 councils in the next four years as part of an overhaul of town halls from two-tier to unitary authorities in a bid to boost efficiency.

But Tory peer Lord Fuller, a former chair of the District Councils Network, said there would be “multi-billion pound implications”. He warned Britons may end up funding huge pay-offs to high-ranking officials through generous pension settlements.

He told The Times: “The government has made these announcements without any consideration of these pension costs.

"In their haste to decimate what’s left of the Conservatives in the shires, they could be writing themselves another billion-pound black hole to be filled by already hard-pressed council tax payers.

“Efficiencies may come from local government reorganisation, but if those efficiencies are swallowed up by huge capital payments to a relatively small number of officers, then all the savings were for nothing.”

He added: “The total cost of a pension for a 55-year-old senior council officer who joined after school could realistically reach half a million pounds. It only takes 2,000 people out of 1.8 million local government workers to be in that category to reach £1 billion.”

A government spokesperson said: “This is speculation and no decisions on proposals have been made.

"Our ambitious reorganisation plans will be locally led, putting more money in working people’s pockets and saving significant taxpayers’ money to be reinvested in public services.”