Council Tax 'will increase by three times rate of inflation'

Local government

More than 20 million households will be warned today that their council tax bills will rise by three times the rate of inflation as the Government unveils its annual funding deal for town halls.

The Tories and Liberal Democrats will claim that fresh "stealth taxes" will be imposed in the announcement by Stephen Byers, the Secretary of State for Transport, Local Government and the Regions.

In his statement to the House of Commons, Mr Byers is likely to insist that this year's local government settlement in England will prevent the need for large tax rises.

But his opponents will argue that the Treasury's own figures show that Whitehall is expecting an increase in council tax receipts of 6.8 per cent, triple the rate of inflation. According to figures buried in Gordon Brown's pre-budget report last week, the Government projects that the total tax-take from local authorities will rise from £14.8bn in 2001/2 to £15.8bn in 2002/3. Inflation is projected to be only 2 per cent next year.

Theresa May, the shadow Local Government Secretary, said that the small print on the Chancellor's figures showed that Labour was expecting big rises in bills next April. "Ahead of tomorrow's local government finance settlement, the cat is out of the bag. Local residents can expect yet another year of council tax rising by more than three times the rate of inflation," she said.

"Labour has turned council tax into another stealth tax. Gordon Brown has engineered massive increases, but councillors take the blame when the bills hit the doorstep."

Since 1997, the Government has raised an extra £5bn in council tax, equivalent to 2p on income tax, the Tories say. The average household is paying £212 a year more on Band D properties.

Adrian Sanders, the local government spokesman for the Liberal Democrats, said: "Year on year, the Government expects greater rises in the tax than in the rate of inflation. It confirms the current trend which shifts taxation away from central Government and onto local tax payers."

A spokesman for the Department of Transport, Local Government and the Regions said that the Treasury needed to forecast tax receipts but stressed that it was notoriously difficult to second guess the decisions of individual councils. "The Government does not tell local authorities what level at which to set the council tax. With good grant increases and stable grant settlements, there's no need for councils to set high tax increases," he said.