County councils reject budget spending limits

Oxfordshire and Cambridgeshire yesterday defied the Government, becoming the first two local councils to reject the Government spending limit on their budgets for the coming financial year. Others may follow over the next four weeks.

Cambridgeshire, the Prime Minister's home county, voted for a budget that will raise the council tax by about 9 per cent.

Oxfordshire made no final decision over its budget yesterday, adjourning a full council meeting until Tuesday. But a proposal from Conservative councillors to set a budget at the capping limit, and not above it, was rejected. The county council will consider a Liberal Democrat proposal that would raise council taxes by 13 per cent, and a Labour budget that implies a 17 per cent tax hike.

The Government had decided Cambridgeshire could spend a maximum of pounds 402.6m in the coming year, compared to pounds 395.4m it will have spent when the present financial year ends next month.

But the hung council, which has 20 Labour members, 20 Liberal Democrats and 33 Conservatives, decided to set a budget almost pounds 6m above the cap, to protect key services. Council leaders said ministers had not taken account of the fact that Cambridgeshire is one of Britain's fastest-growing counties.

The two councils will probably meet ministers to persuade them to allow them the extra spending. If the Environment Secretary turns them down in the summer they will have to set a lower budget and send out fresh council tax demands to all their households.

"If the Minister asks us to explain ourselves in the spring, I believe we can put forward a convincing and compelling argument," said the council's Labour leader, Janet Jones.

This year, as last year, the Government allowed local councils no increase in fundsfrom Whitehall. Government-controlled cash accounts for almost four-fifths of their income.

The Government did raise the capping limits, allowing most councils scope to raise their council tax by well above the inflation rate, should they choose. Ministers say council tax rises should be around 8 per cent; the growth is likely to be higher on average.

nThe Government last night announced a delay in moves to start up some of the new all-purpose authorities in England, including the revived Herefordshire County Council and the cities of Nottingham and Plymouth. The Environment Secretary, John Gummer, announced in a Commons written reply that the launch of 11 unitary authorities, originally planned for next year, could not be implemented by then.