Prescott plans to cap rises in council tax

Typical homes in England will see their council tax bills break through the £1,000 barrier for the first time this year, figures published yesterday indicated.

Downing Street made clear that ministers were prepared to use their powers to cap the rises after the Chartered Institute of Public Finance and Accountancy (Cipfa) calculated that bills in England would go up by 12.9 per cent, more than four times the rate of inflation.

Based on official budgets set by more than two thirds of councils, the average increase in Britain will be 12 per cent, Cipfa found. Wales will see a 10 per cent rise and Scotland4 per cent. The average band D house would see a rise of £116 to £1,080 from April.

The Tories accused Labour of imposing "the ultimate stealth tax", claiming that many town halls had not been given enough Whitehall funding to cope with new burdens.

All councils have been given above-inflation increases in grants. The Tories said those had been far outweighed by additional costs, such as extra school spending, pay deals and national insurance rises.

The Prime Minister's official spokesman gave a strong hint that John Prescott, the Deputy Prime Minister, was likely to cap budgets of councils seeking unreasonable increases. bills. However, most rises will not be blocked and the Tories and the Liberal Democrats will use them, with the 1p increase in national insurance contributions due to take effect on 1 April, to try to inflict damage on Labour in the May local authority elections.

The Cipfa figures appear to confirm claims that traditionally Labour councils in the Midlands and the North have benefited from more generous government support, at the expense of more affluent areas in the South-east, where the largest rises are concentrated.

The Prime Minister's official spokesman said all councils were being given above-inflation increases in grants, an average of 5.9 per cent. "We have also given more freedoms to councils and with that does come responsibility," he said. "The ultimate decision over whether councils have done the right thing is down to the voters."

David Davis, the shadow Deputy Prime Minister, said the Government's "fiddled funding" had seen resources transferred from Conservative councils to Labour's heartland. "This is the ultimate stealth tax, engineered by the Government for their own politically motivated deception, but with an attempt to make local councillors take the blame," he said.

Edward Davey, the Liberal Democrat local government spokesman, said his party would abolish the council tax and replace it with a local income tax. It would also cut every council tax bill by £100.

"It is time for this unfair and regressive council tax to go," he said. "It penalises working families and many pensioners. Consecutive Conservative and Labour governments have forced up the rate of council tax as they cut their share of local spending and burden local government with new obligations."