Politics: Council taxes may rise 10% in spending squeeze

Council tax payers will face increases of up to 10 per cent in their bills next April. Colin Brown, Chief Political Correspondent, says John Prescott, the Deputy Prime Minister, is also taking money away from rich London boroughs and giving more to Tony Blair's council.

Councils were predicting cuts in welfare services such as home- helps and meals-on-wheels after Mr Prescott announced a tough year ahead for council spending.

Mr Prescott said the average rise in bills would be around 7 per cent, increasing the council tax for a typical band D house, worth pounds 68,000 to pounds 88,000 from pounds 593 to pounds 635 - a rise of pounds 42.

The Tories' loudest complaints were over changes to the system for assessing the needs of councils, which will see a switch in resources from many leafy Tory shires to hard-pressed Labour councils.

The big winners are all in the North-east, including Easington, Wear Valley and Sedgefield - in the Prime Minister's constituency, which will be allowed to spend an extra 13 per cent. The biggest losers in the shires are Runnymede, South Staffordshire and Rushcliffe, constituency of the former Chancellor Kenneth Clarke.

The biggest losers in London including the Tory flagship borough of Westminster, which will lose pounds 20m, and the City of London, but Labour- controlled Camden is also down by pounds 1.6m on the amount it can spend.

One of the reasons for the shift in the capital is a change in the rules, which previously gave a bonus to Westminster for the number of tourists it attracted. "The previous Government's formula treats people staying in the Ritz in London as if they were as deprived as the average local resident - that was unfair and wrong," Mr Prescott told MPs.

Mr Prescott, who remains in favour of redistribution of wealth, will be consulting on a plan to introduce a new top rate council tax band, above the present H band, for those with houses worth pounds 450,000 or more.

Next year's budget is in line with figures Labour inherited from the Tories. But the Opposition spokesman, Sir Norman Fowler, protested that millions would be worse off and John Redwood accused the Government of "mean-minded tax rises by stealth". The shadow trade spokesman said tax on savers, business taxes since the election, and the increase in council tax bills showed the Chancellor, Gordon Brown, was storing up a war chest for the next election. "He is a morose man and he wants everyone to be miserable as well," Mr Redwood said.

Liberal Democrat spokesman, Paul Burstow said: "Having adopted Tory spending plans, the Government is now delivering Tory spending cuts."

Welcoming an increase in spending for education of pounds 835m, Sir Jeremy Beecham, the Labour leader of the Local Government Association, said: "I think we will have to look at cuts in social services."

The Department of Education and Employment last night wrote to councils warning them not to spend on other services the extra 5.7 per cent spending earmarked for schools by the Chancellor in his Budget. But there is no legislation to make sure it is ring-fenced.

who's footing the bill

Biggest Winners

Council % Change

Easington 19.8

Wear Valley 15.4

Sedgefield 13.3

Hyndburn 11.3

Chester-le-Street 11.3

Rossendale 10.6

Wansbeck 10.5

Teesdale 9.7

Harrogate 9.0

Pendle 9.0

Biggest Losers

Council % Change

Runnymede -9.9

South Staffordshire -7.4

Rushcliffe -6.8

South Bucks -6.8

East Dorset -6.3

Broxbourne -5.3

Sevenoaks -5.2

South Oxfordshire -5.1

Taunton Deane -5.0

Tewkesbury -5.0