Pressure grows to ease council tax

ENVIRONMENT ministers will face strong pressure to use the grant system to allow richer parts of the country to subsidise poorer ones under the new council tax. Figures released yesterday show that a fifth of councils are more than 10 per cent out on their expected tax base.

Figures produced by Jack Straw, Labour's environment spokesman, confirm that many more houses have fallen into lower property price bands than expected. Councils will have to set the new tax higher than expected to bring in enough revenue.

Nationally, the difference is only 1.8 per cent from the expected figure - which leaves councils about pounds 150m short on the pounds 8bn they are expected to raise from the new tax.

The national average, however, hides far larger local variations, leaving some councils with the prospect of having to set the council tax 20 per cent higher than expected. Others could produce bills 20 per cent lower than was implied in the figures produced by ministers 18 months ago.

Hackney and Greenwich in London have so many more lower value houses that their tax base is a fifth lower than expected, while in Scarborough and Ryedale the reverse is the case. In all, some 79 councils are more than 10 per cent out - around a fifth of the total.

Mr Straw argued that the figures showed the council tax to be 'an increasing shambles'. The smaller tax base and more homes in lower bands 'can only mean higher bills for most people, or higher taxpayer subsidy, or both'.

A partial solution would be to make councils with higher property values subsidise those with lower ones - as happened under the rates. But the principle proved so unpopular when it was partially preserved for the first year of the poll tax that the Treasury was eventually forced to pick up the bill.

Mr Straw predicted a flood of appeals once the council tax bills arrive because the valuations, despite being lower than expected, are based on April 1991 house prices. When it was realised that moving down a band could save pounds 60 or so, people would appeal in numbers, he said, making the tax deeply unpopular.