Blair plea over council budgets

Tony Blair has told Labour-controlled local education authorities to avoid setting illegal budgets wherever possible to prevent Labour being blamed for soaring council tax bills in the May local elections.

The message to the Labour LEAs was conveyed by David Blunkett, Labour's shadow education secretary, at a local government conference two weeks ago. It was not issued in a circular partly to stop it being exploited as propaganda by the Government.

The Labour leadership is keen to show responsible government and is determined to avoid the "loony left" tag being re-attached by the Tories to Labour local authorities. But Mr Blair's team is also anxious to avoid the dispute over spending on education leading to rocketing council tax bills for which Labour could get the blame.

The leadership urged LEAs to avoid breaking their caps on spending, with "re-determination" of their budgets by the Government, because it would pass the excess on to their local council tax payers.

About 15 per cent of an LEA budget is met by the council tax but one ministerial source last night estimated the gearing effect of a five per cent increase could raise council tax bills by a third.

Gillian Shephard, the Secretary of State for Education, believes Labour's efforts to keep within budgets will help to avoid the widespread warnings of a crisis coming true.

She has told colleagues that the LEAs are creating "hell and fury" but when the dust settles a handful will face difficulties, which have been deepened by the Government's failure to fund fully the teachers' 2.7 per cent pay award. Leicestershire last week fixed its budget within its limits and agreed to fund the pay award.

However, Mrs Shephard has made it clear to Cabinet colleagues that they cannot afford a crisis in LEAs next year in the run-up to the general election.

nDonald Dewar, the shadow Social Security Secretary, has proposed equalising the state pension age at 63. The Government is committed to increasing it to 65 in the next century to comply with a European ruling.

Mr Dewar's plan is likely to be attacked by those who back equalising the retirement age for both sexes at 60.