Council tax ‘to rise by £53’

Council tax bills in England and Wales could rise by an average of £53 a year, an independent investigation has discovered.

The Chartered Institute of Public Finance and Accountancy (CIPFA) forecasts council tax for band D properties will increase by £53, or 4.2 per cent, to £1,302 in 2007-08.

Commissioned by BBC Radio 4’s Today programme, the CIPFA analysed the council tax settlements from nearly two thirds of English and Welsh local authorities.

Although above CPI inflation of 2.7 per cent, the increase is the second lowest annual rise since 1994-05. This is due to a £926 million formula grant and £719 million in special and specific grants, as well as continued efficiency as councils implement the Gershon agenda.

Steve Freer, CIPFA’s chief executive, said: “This will be regarded as a very positive result in Whitehall and in town halls up and down the country.”

Councils are also increasingly aware of the possibility of capping, which has “concentrated minds” according to Mr Freer. Last year it was applied if local tax and budget requirements increased by more than five per cent and six per cent respectively.

Mr Freer added: “Councils simply do not want to set a collision course with government with all of the uncertainty and risk which that involves.”

The Liberal Democrats have, however, criticised the increase and renewed calls for the government to amend the local government bill and replaced council tax with a system based on ability to pay.

Council tax is a “totally unfair burden council tax places on pensioners and the low paid,” claimed Lib Dem local government spokesman Andrew Stunell.

He said that two million people already struggle to pay council tax and their number will rise following the latest increase. He concluded: “It is essential the government abandons the unjust council tax”.

A recent report by the Joseph Rowntree Trust found one in seven households have difficulties paying their council tax bill.