Council tax rises ‘under control’

Ministers insisted council tax rates were “under control” as the government said it expected average bills to rise by less than 5% next year.

Announcing a 4.2% rise in central grants for English councils next year, John Healey said containing tax rises was a “top priority” for government.

The local government minister said he would not hesitate to cap individual council tax rises where excessive.

The Tories said rate payers faced an “enormous whammy” of future rate rises.

‘Tough choices’

And the Lib Dems said council tax payers faced a “nasty shock” in future years as under-pressure councils were forced to choose between cutting spending on services or raising rates substantially.

The Local Government Association, which represents local authorities, said it was relieved that funding had not been cut back but said town halls faced “tough choices” in the current economic downturn.

Councils will get £2.96bn in extra funding in 2009-2010, the second year of a three-year settlement, a rise of 4.2% on this year. This will be followed by a proposed 4.4% increase in 2010-2011.

Mr Healey said councils would enjoy an £8.9bn overall increase in funding over the three-year period and that the settlement reflected Labour’s “continuing commitment” to front-line services.

“The funding increases are tight but they are fair and affordable and will mean councils can continue to deliver quality services,” he said.

This year’s 3.9% average rise in council tax was the lowest for 14 years, Mr Healey said.

He said he expected the average rise in bills to be below 5% next year and would intervene where increases were well above this level.

‘Not enough’

The Tories, who have pledged a two-year freeze on council tax bills if they win the next election, said council tax had risen hugely under Labour and was set to increase sharply after 2010-2011.

“This is a thoroughly bad settlement for council taxpayers in this country,” local government spokesman Bob Neill said.

For the Lib Dems, Julia Goldsworthy said that “instead of putting more money into people’s pockets, this settlement will mean more large bills landing on overstretched families’ doormats”.

With economic conditions worsening and many families facing growing hardship, ministers are asking councils to find increased efficiency savings of £1.5bn a year to boost value for money for constituents.

The LGA said finding such savings would be “difficult”, adding that the level of central funding was “simply not enough to provide everything ministers have promised”.

“The council taxpayer will once again be left to pick up the bill for promises made by the government,” said Margaret Eaton, the organisation’s chairman.

But ministers have said councils with money tied up in failed Icelandic banks do not need to account for these potential losses in their accounts next year in an effort to ease their financial worries.