George Osborne will today attempt to appease voters hit by spiralling food and energy prices by promising a second year's freeze in council tax.
The move – to be announced in his speech to the Conservative Party conference – will save the average family £72 a year, the Chancellor will claim.
But the £805m "giveaway" was condemned by union leaders, who said it would do nothing to create jobs or encourage growth. The move comes as a poll of Conservative MPs for i reveals a growing pessimism about the Coalition Government's ability to achieve sustained growth over the next year. Only half the party's MPs expect growth to improve, the ComRes survey found, while one in six (16 per cent) predict it will decline and 32 per cent say it will stay at its current feeble level.
The party gathered yesterday in Manchester amid mounting gloom over the state of the economy and fears that Britain could slide into a double-dip recession. Mr Osborne has already signalled that tax cuts are unlikely before the next general election in 2015 and admitted that his timetable for cutting the deficit may be delayed. Ministers will warn activists of tough times ahead, but will also try to lift spirits with a series of crowd-pleasing announcements. Iain Duncan Smith, the Work and Pensions Secretary, will promise moves to cut tax for married couples and warn the unemployed of tough new penalties if they fail to look for work.
The money for the council tax freeze for 2012-13 has been found from under-spending across Whitehall departments, a Treasury source claimed.
Under the plans, local authorities that promise to peg – or even cut – council tax levels will receive a 2.5 per cent increase in Whitehall funding. Council tax was also frozen last year.
Mr Osborne will argue in his speech that the sovereign debt crisis in Europe makes it more, not less, important to stick to the Government's deficit reduction plan – explicitly ruling out any "Plan B". But he will hint at new proposals, likely to come in November, to boost growth in the economy.
Last night Brendan Barber, General Secretary of the TUC, said that while the council tax freeze might help families cope with rising bills, the announcement would do nothing to deal with the UK's underlying economic problems.
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