Councils facing annual polls

BY DONALD MACINTYRE

Political Editor

Labour is planning further reserve powers to curb exceptional cases of high-spending councils after it ends the present system of capping, party sources confirmed yesterday.

The announcement came as Labour opened its local election campaign with a claim that the Government had "rigged" the grant system to "featherbed" Tories in the London borough of Westminster by keeping down the level of council tax.

Frank Dobson, party environment spokesman, said if equivalent levels of grant were paid to other local authorities, residents in 345 councils - or 95 per cent of the total - would not have to pay council tax. Instead councils would be giving refundsranging from £1,460 in Forest Heath to £17 in Hounslow.

The Labour charge came as Mr Dobson repeated that under Labour, capping would be replaced by annual elections to make councils more accountable to voters and new powers for the Audit Commission to shame high-spending councils into reducing tax levels.

Although Labour gave no details yesterday of what additional powers it would take to curb "hard case" councils that defiantly ignored such constraints, the party is considering how to flesh out its declared policy of considering "what fall-back powers central government requires to enable it in extreme circumstances to protect council tax and business ratepayers in individual authorities".

The commitment is contained in the party's local government policy document published earlier this year - in an ambiguous passage that says "this could" involve new powers for the Audit Commission to produce reports on worst-offending councils.

Senior Labour figures - including Gordon Brown, shadow Chancellor - are said to be conscious of the need for further protection in exceptional cases, for example those of high-spending councils in ultra-safe Labour territory which have no fear of losing control to the Tories. While acknowledging that details have not yet been worked out, officials pointed to the Government's potential role in reducing the level of central government grant to excessively overspending councils.

Mr Dobson added yesterday that the grant allocation to Westminster was based on theunfair assumption that it was the "fourth most deprived place in Britain". He added: "What is even more unfair is that Westminster gets an enormous grant to match its unjustified place in the deprivation table." Senior Shadow Cabinet members, led by Tony Blair, laid heavy emphasis yesterday on the importance of Labour's record in local authorities, though Mr Blair acknowledged the poll was also "inevitably about the government's record".

But a party political broadcast last night dwelt entirely on the national issue of taxation, and repeatedly accused John Major of lying over tax.

The broadcast said a "typical man" was £800 worse off because of increases, whereas Mr Major had promised in March 1992 "a series of reductions".

David Hunt, Chancellor of the Duchy of Lancaster, yesterday immediately attacked the broadcast as "gutter politics".

The Tory party also strongly refuted Mr Dobson's claims that Westminster had been unfairly allocated grant.