Ken Livingstone's honeymoon with the Labour Party appeared short-lived yesterday when the Government hinted that it may block his plans to raise London's council tax precept by 12 per cent.
Nick Raynsford, the Local Government minister, told the House of Commons that he expected all authorities to look for bill increases in "low single figures".
He said: "We will use our capping powers if necessary and we intend to do so if authorities are not responsible and prudent, and that applies to all authorities."
The minister's remarks, which came less than 24 hours after Mr Livingstone was re-admitted to the Labour Party, were prompted by complaints from the Conservatives about the Mayor of London's budget proposals for 2004-05. Mr Livingstone is currently consulting about plans to put up the precept, the element of the capital's council tax bills that is used to fund the Greater London Authority.
David Curry, the Conservatives' local government spokesman, asked Mr Raynsford if he intended to act on the plans of "your new party friend".
Steve Norris, the Conservative candidate for London Mayor, was scathing about Mr Raynsford's remarks. Mr Norris pointed out that the precept had gone up by nearly 100 per cent since Mr Livingstone came to office.
He said: "Ken spends money like a drunken sailor. I don't approve of capping but if anyone deserves capping it is Ken Livingstone."
A spokeswoman for Mr Livingstone said that his budget was designed to continue putting more police on the streets and create new firefighting units.