The Deputy Prime Minister, John Prescott, announced that bills would go up on average by 4.5 per cent if councils kept within Whitehall spending guidelines. The underlying inflation rates stands at 2.5 per cent. Mr Prescott warned that any town hall which exceeded his figure would be subject to tough new penalties and would lose millions of pounds in subsidy.
Council tax for an average Band D home in England will be at least pounds 781, a rise of pounds 33 on pounds 748 today.
But the Liberal Democrats and the Tories claimed that bills would be much higher because the Government had removed budget capping and town halls faced new pressures.
They claimed that councils in London and the South-east had again been hit by changes in grant funding while "crony councils" in the North would receive more help.
Announcing the 1999/2000 local government settlement in the House of Commons, Mr Prescott said that the funding package was the most generous council tax deal ever. Councils across England will be allowed to spend an extra pounds 2.6bn next year, a real terms increase of 2.3 per cent. Over the next three years, Standard Spending Assessments, the amount Whitehall judges councils need to spend, will rise by 7 per cent, he said.
To ensure that councils aren't tempted into profligacy, Mr Prescott revealed a new power to withhold council tax benefit subsidy from any council that put up its bills by more than a 4.5 per cent guideline.
Council leaders claimed that the new sanction which Mr Prescott described as "Prescott's sophisticated capping", would hit poor areas hardest because they had a larger number of residents claiming the benefit and town halls depended on the subsidy.
Under the new settlement, authorities such as Brent, Brighton and Windsor will be allowed spending rises of inflation or less, whereas the biggest gainers such as Rotherham and Gateshead would get more than 7 per cent. A special grant will be paid to cushion those councils that had received less funding than others, Mr Prescott insisted.
"We are asking the council taxpayer to contribute a fair share to the cost of providing local services, no more, no less," he added.
"I make this guarantee for next year. No local authority, north or south, will receive less government grant support next year than they did this year.
"It follows that there is no case for steep council tax increases. If we are faced with such increase, we shall not hesitate to act. We have to protect the country's interests as a whole."
Paul Burstow, the local government spokesman for the Liberal Democrats, said that there was a pounds 1.6 bn gap between what councils needed to maintain services and what the Government was promising.
Council tax rises could average 8 per cent across England, he said. "This is yet another smoke and mirrors settlement. Once again council taxpayers will be forced to pay more for less. They are robbing from the poor to give to the poorest."
Gillian Shepherd, the Conservative spokeswoman on theEnvironment, said that the Government averages hid a range of potentially large tax hikes. "Last year ministers promised rises of no more than 7 per cent and in fact in some areas rises were up to 15 per cent. It is very pointless that they should be making these kinds of promises this year," she said. "You have today promised jam tomorrow. Ordinary families know that the bills will arrive next year."
Eric Illsley, MP for Barnsley Central, warned that his council would have to increase its tax by a large amount.Reuse content