Council tax bills 'to rise by 10%'

Wednesday, 2 November 2005 12:00 AM

Council tax bills may have to increase by ten per cent next April to make up the shortfall left by central government funding, local authorities warn today.

In its pre-Budget submission, the Local Government Association (LGA) claims that there is a £2.2 billion "black hole" in local government finances that needs to be filled.

It warns that a ten per cent rise in council taxes is needed to plug such a gap, taking the average annual bill for a Band D property to £1,335 - an extra £121 a year.

The LGA claims the problem is caused in part by a "flawed" council tax system, but also blames the government for calling for more services from local authorities without providing an equivalent increase in funding.

"This year's extra legislative and cost pressures imposed on local councils by government add up to £2.8 billion. In addition, the increase in government grant next year is considerable less than the rate of inflation," LGA chairman Sandy Bruce-Lockhart said.

"Nevertheless it is for the government to ensure that the council tax payer does not have to pick up the bill for another shortfall in grants to local councils.

"Last December, the government put in an additional £1 billion to help overcome similar cost pressures, but this money was one year only, one off, funding."

The Office of the Deputy Prime Minister (ODPM) last night rejected the ten per cent tax rise claims as "pure fantasy" and said that local government "cried wolf every year".

However, Labour is acutely sensitive to controversies over council tax and has already delayed a planned property revaluation, which would have seen tax bills rise considerably.

And the Conservatives used today's report to accuse the government of having put off the increase until after the general election.

"Gordon Brown is back to his old trick of keeping council taxes down before a general election, and hiking them up after," said shadow local government minister Caroline Spelman.

"Labour has turned council tax into a punishing stealth tax - engineered by Whitehall, but with councils taking the blame when bills hit the doorstep."

She added that pensioners in particular were likely to lose out as a result of the rises, given the onset of winter resulting in higher heating bills.

"Labour's taxes have hit not only hard-working families, but also some of the most vulnerable people in our society," she added.

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