Council tax set to rise 4 per cent, but local services will still be cut


Last updated at 08:30 24 January 2008

The Local Government Association has warned that many local authorities will still have to ration or cut services despite an increase in tax.

Town halls yesterday admitted that council tax will go up at double the rate of inflation this spring.

The latest rise - of four per cent - will mean that the average local tax bill in England will reach £1,145 - more than double the level of council tax when Gordon Brown became Chancellor in 1997.

But protest groups warned that rises will be higher still in some parts of the country, and especially for those who live in the largely Tory-voting shire counties.

The scale of the increase to come when the new bills are sent out at the beginning of April was calculated by the councils' umbrella body, the Local Government Association.

It blamed the Government for shifting extra work onto town halls while restricting the subsidies they get from the Treasury.

The figures were gathered from a check on 102 councils which are currently finalising their budgets for this year.

The four per cent overall rise is around double the level of the Prime Minister's favoured measure for inflation, the consumer price index, which is running at 2.1 per cent.

Increases of that magnitude will bring the average council tax bill in England up to £1,145 from £1,101, a rise of £44. For a benchmark Band D home, the rise will take the average English bill from £1,321 to £1,374, up £53.

The average English bill in May 1997 when Labour were elected was £564.

Ministers have kept a firm five per cent cap on annual council tax increases since 2004, when, in the wake of double-digit rises, pensioner protests swept the country and one police chief warned of the prospect of civil disorder.

The tax remains hugely politically sensitive and Mr Brown has chosen to put off until after the election a long-overdue revaluation of homes for council tax. This is certain to bring major new increases for people in southern England and other areas where the value of houses has soared since the last nationwide revaluation, in 1992.

But protest groups said yesterday that the cap is not certain to be held as low as five per cent this year, and warned that southern England and shire districts will face bigger than average increases.

Christine Melsom of the Is It Fair? campaign group said: "A lot of us will get more than that. Hampshire, where I live, has already said their rise will be 4.9 per cent.

"The Government has tilted Treasury grants for councils towards its friends in the north and so people in the south have had to pay more in council tax. This year the county shire authorities, both north and south, look as if they will have the biggest rises."

She added: "My fear is that the Government will set the cap higher than five per cent. Hazel Blears has not yet said what it will be."

Anna Pearson of Help the Aged said: "This is going to be a tough year for many older people, with ever increasing costs of living combined with council tax bills that continue to rise.

"The irony is that while council tax takes more and more money from older people's pockets, the services many of them rely on are consistently being cut back.

"Many vulnerable pensioners can expect to see reductions in social care provision this year."

Town hall chiefs blamed ministers for limiting the Treasury grants that pay for three quarters of all council spending.

LGA chairman Sir Simon Milton said: "Town halls are making enormous efforts to keep the bills down."

He said councils faced higher costs for home help for the elderly, financing free national bus travel for pensioners and the disabled, paying Mr Brown's fast-rising taxes on landfilled waste, and additional red tape like the new alcohol licensing laws.

Tories said the Band D tax in England of £1,374 will be £225 less than the average Band D bill in Scotland, where council tax is frozen this year, of £1,149.

Shadow Local Government Secretary Eric Pickles said: "Gordon Brown's fingerprints are all over the fact that council tax bills have now doubled under Labour, making it his sneakiest stealth tax.

"The hikes have been engineered by Whitehall, but they leave councillors to take the blame when the weighty bills hit the doormat."

He added: "Behind the Government's relentless spin, this rise of 'only four per cent' will mean more misery for families and pensioners, since it compounds previous inflation-busting hikes."

Local Government Minister John Healey said the Treasury had given councils grant increases over inflation year after year and called on them for more efficiency.

"There is no excuse for excessive council tax increases," he said, adding that town halls had had "a fair and affordable settlement for councils with over £900 million extra core funding next year, in a tight financial climate for central and local government alike.

"Councils could also save £1.5 billion next year just by cutting waste at the same level as central Government. This money can be used to improve services or reduce pressure on council tax bills."