Taxpayers will be told exactly how much their local authority expects to make in efficiency savings under Government plans to improve value for money.

The information, as well as details of how much has been saved in the past two years, would be sent out with annual council tax bills.

The move is part of a drive to make £5 billion in town hall savings over the next three years – worth an average of £184 per band D council tax bill.

Local Government Minister John Healey has started a consultation exercise on the proposals, which are designed to improve public access to information on how their money is spent.

He wants savings made by local authorities to be published next to those made by similar councils.

The tax demands would also show how much the savings are worth on an average band D bill.

Mr Healey said: “Councils have a good track record in making savings and becoming more efficient. Over the past four years they are expected to have delivered more than £3.3 billion savings, the equivalent of £123 off the average band D council tax bill.

“But more can always be done so I look for councils to make around £5 billion further savings over the next three years to meet the expectations the public rightly hold for councils to deliver for their local communities.

These savings can then be used to further invest in services or reduce council tax bills. I accept this is a big challenge but am confident it can be achieved, particularly if council taxpayers are involved.

“They rightly expect improving services and better value for money and should be entitled to know how their council is performing.

“That’s why I am acting to ensure that local people will be able to see for themselves how efficiently their council is run and to be able to challenge their council if it is underperforming.”

The plans were welcomed by Brighton and Hove City Council leader Mary Mears, who said: “We don’t have a problem with this because we take finances seriously and last year we came in with the lowest council tax rise since the city council was formed.

“It’s taxpayers’ money and it is up to us to give the best value for it.”

Eric Pickles, the Shadow Local Government Secretary, said: “It is ironic that John Healey’s own department wouldn’t pass these tests of efficiency, council savings and transparency.

“Labour’s breathtaking levels of incompetence have resulted in £800 million in uncollected council tax in the last year.”