Wrong estimates may force up council tax

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FEARS THAT council tax bills will be higher than predicted have increased with the Government's admission that draft valuations of millions of homes have put more dwellings in the lower tax brackets than was expected.

With every home in Britain now allocated a value by the Inland Revenue, the percentage placed at the lower end of the new eight-band system is five times as high in some areas as initial government figures suggested. Affected authorities will have to set the council tax at a higher rate to raise the same revenue.

The valuations, now in the hands of local authorities, will put further pressure on the Government to increase financial assistance to councils to implement the system, which replaces the discredited poll tax.

Tory backbenchers are warning that without extra funds tax bills will be much higher than anticipated and the new system will become another disaster in the Tories' attempts to reform local taxation.

Conservative MPs in marginal seats in London and the South-east are worried that many constituents will now pay more under the council tax than the 'community charge'. Sir Rhodes Boyson, MP for Brent North in London, a former local government minister and leading light in the Tory campaign for financial help for local authorities, has warned that the Government is climbing 'out of one treacle well into another'.

Sir Rhodes said: 'It is essential London and the South-east are not adversely affected by the new tax as the North of England was by the community charge, otherwise woe betide us since this area is already so hard hit by recession.'

Jack Straw, Labour's local government spokesman, said that the Government was 'now caught in a trap of its own making' and accused it of 'further ineptitude'.

Nigel Jones, the Liberal Democrats' local government spokesman, said the Government had 'a fetish for fiasco taxes'.

The Government's underestimate of the number of low-band properties in areas such as Greenwich, south-east London, were described as staggering by Steve Lord, finance officer for the Association of London Authorities.

He said the property slump had little to do with a larger number of homes being placed in the lower bands; property values were relative, not absolute, for the purposes of the new tax. But many people living in homes that had substantially depreciated would see themselves as being hammered twice when high council tax bills arrived.

The Government faced a monumental task in selling such a complex system to a public more likely to compare their bills with this year's poll tax payments than with rates. Mr Lord said that those who gainedmost under the poll tax were most likely to be council-tax losers. 'The Government has already announced that there will be special financial assistance for single people in expensive houses. It will be fascinating to see where extra help is targeted.'

The Department of the Environment confirmed yesterday that the numbers in the lower bands were larger than expected but refused to say how inaccurate the original estimates were. A spokeswoman said that problems would be partially offset by an underestimate - believed to be about four million - in the total number of properties.

People must wait until December to discover in which band their homes have been placed. Then local authorities are obliged to make the information public. But appeals cannot be lodged until the first council tax bills arrive on 1 April.

----------------------------------------------------------------- COUNCIL TAX BANDINGS ----------------------------------------------------------------- Last year's government estimates contrasted with actual numbers of properties in each value band in Greenwich, south-east London Band Number of Properties (pounds 000) Estimate Actual A (0-40) Nil 11,282 B (40-52) 2,030 16,337 C (52-68) 9,300 29,994 D (68-88) 19,173 16,426 E (88-120) 30,504 10,800 F (120-160) 19,173 2,799 G (160-320) 6,972 1,804 H (320+) Nil 209 ----------------------------------------------------------------- Source: London Borough of Greenwich -----------------------------------------------------------------