Money: Ups and downs of council tax

Council tax bills are set to rise in April by an average of 6 to 8 per cent, but some householders face rises of close to 20 per cent.

The average masks enormous differences across the country. Manchester City Council is considering increasing its rates by up to 17 per cent. This could leave its council tax for an average Band D property, valued at pounds 68,000 to pounds 88,000, at pounds 980. The London borough of Brent is believed to be considering a similar increase after cutting its charges for the previous six years. The increase would take to pounds 533 the council tax for a Band D property. Next door, Hammersmith & Fulham, a less deprived borough, expects to increase charges by 9 to 10 per cent, increasing Band D tax to about pounds 790.

Some councils are reducing their rates or are increasing bills by less than the rate of inflation. Hackney, which currently has the capital's highest council tax charge at pounds 855 for a Band D property, is committed to reducing its bill. Lambeth, currently charging pounds 655 for Band D, intends to charge the same next year.

Many local authorities will make severe cuts to keep increases down or to achieve lower bills, not least Labour-controlled councils under pressure from their national party. Sheffield, which is trying to limit tax increases to 5 per cent, is considering making cuts of up to pounds 30m, which could lead to about 1,000 job losses. Birmingham, which will increase average bills from pounds 749 to pounds 794, will be making cuts of pounds 28m. At least 50,000 jobs are likely to go across the country

as councils try to limit the size of tax increases.

The situation is perhaps most uncomfortable in London, where boroughs have been making cuts for several years. As well as their own resource requirements, the councils must also pass on the "precepts", or extra bills, from the Metropolitan Police and the London Fire Authority. The police are increasing the precept by 14 per cent, and the fire service will probably increase its precept by 21 per cent.

London boroughs, in particular, have to date been able to subsidise council tax charges through their recovery of old poll tax debt. But arrears payments are now slowing, leading some councils to make above-inflation increases in council taxes to compensate. Others, notably Lambeth, are still collecting large amounts of old debt, and have been able to cushion their council tax as a result. Lambeth still has pounds 58m of poll tax arrears uncollected, after collecting pounds 6m in the last year. It has written off just pounds 5m of old poll tax debt.

A spokeswoman for Lambeth said it is committed to the recovery of all outstanding debt. "We stop at nothing. We go right through from normal reminders to using the courts, and court costs are charged on top. We use bailiffs, seize goods and ultimately we would send people to prison. We have a computer system with phone numbers of people who haven't paid, and people call at their homes."

Other councils are also taking a tough line on old debts. The National Association of Citizens' Advice Bureaux continues to receive inquiries from people with poll tax debt arrears. It advises them to treat these as "priority debts", "because the penalty is severe, up to and including imprisonment", says Moira Haynes, a spokeswoman.

Those not in arrears may be eligible for big discounts if they pay new council tax bills early. It is up to individual councils to offer early- payment discounts. Brent offers an 8 per cent discount for payment of the entire yearly bill in the first three weeks of the financial year, a deal taken up by one third of residents. Lambeth offers a 5 per cent discount for early lump-sum payment, while those paying by direct debit are entered into a prize draw. Any lump-sum discount offer should be compared with the alternative of paying monthly and earning interest or having use of the rest of the money in the meantime. There seems little point in paying overdraft or borrowing charges for these discounts.

Residents unhappy with their council tax valuations may still appeal in a few instances where there has been a change in circumstances. Grounds for appeal include demolition of part of a property, or a new development near to a home.

People who live in the vicinity of the proposed second Manchester Airport runway, for instance, should now be entitled to a reduction in their council tax valuations. A property can be revalued for council tax purposes as soon as a development is given the go-ahead. A spokesman for the Department of the Environment explains: "Appeals can be lodged when it is determined the material value of a property is reduced and you can get a valuer to say so."

Council tax bandings use 1991 house price valuations, and a fall in value because of the state of the housing market is not grounds for appeal. But people who have moved into a home in the last six months have a right to appeal if they believe their property is overvalued, based on 1991 house prices. Appeals should be lodged with a valuation tribunal, which can be contacted via the valuation office, listed in the phone directory.