Council tax rises `twice inflation'

THE GOVERNMENT was accused of taxing Britain "by stealth" yesterday when a new survey claimed that council taxes across the country would rise by more than twice the rate of inflation.

The Tories attempted to take the shine off the Budget announced by Gordon Brown, the Chancellor, on Tuesday by seizing on a report which found that councils in England and Wales were about to put up bills by 6.9 per cent.

The Chartered Institute of Public Finance and Accountants (CIPFA) found that an average band D home would face the rise when bills for 1999-2000 drop through letterboxes next month.

The survey found wide variations around the country, with Liverpool the most expensive at pounds 1,171 for an average home and Westminster the cheapest at pounds 350.

Following a survey of 92 per cent of all authorities, the CIPFA found that millions of average households would be paying an extra pounds 51 a year. However, the average figures hide some huge differences between individual authorities which have been caused by historical levels of cuts and grant aid.

The largest increase in real terms will be in South Cambridgeshire, where householders face a rise of pounds 106, or 17 per cent, on average. By contrast, Hackney, Islington, Greenwich and even Liverpool will have bills frozen. Councils claim that their budgets will have to go up by an average of 5.3 per cent, but a smaller rise in government grant will necessitate more money being made up by local taxpayers.

Richard Ottaway, the Tory spokesman on local government, said that rural areas would be hardest hit because the funding formula had been "fiddled" to shift funds from Tory areas to urban Labour heartlands.

"These latest figures show that the Government is imposing yet another stealth tax on hard-working people. Council taxes on ordinary families are more than pounds 100 a year higher than when Labour came to power - a stealth tax of pounds 2 a week," he said.

"John Prescott [Secretary of State for the Environment, Transport and the Regions] likes to pretend that this year's settlement was the most generous ever. But he hasn't given councils enough money to fund the raft of expensive promises which Labour made. Now the British people have to pick up the bill."

However, Mr Prescott said that similar predictions about council tax rises last year had not come true. Bills had been forecast to go up by 11 or 12 per cent, but turned out to be something over 8 per cent, he said.

Councils had received their biggest funding increase ever for the coming year, including record money for education, he said. "People are now predicting council tax rises. I don't get the information from councils until the 17th [of March]. I must wait for the information. Until councils come to their decisions, you can't make the assessment," he told BBC Radio 4's Today programme.

Mr Prescott has warned that boroughs which push up bills by more than 4.5 per cent will face budget capping, but he will not apply "crude and universal" caps as the previous government did.

The Liberal Democrat local government spokesman, Paul Burstow, said councils faced a "serious shortfall" in their budgets which they would have to make up to ensure that education and social services were properly funded.

"Once again, the Government have used spin and false accounting to hide a Treasury-led attack on our public services, leaving council bosses to take the blame for Gordon Brown's spending decisions."

The worst hit areas will be in East Anglia, where bills will go up by 9.6 per cent, Wales (14.8 per cent), the West Midlands (9.1 per cent) and the South-east (8.8 per cent).

The lowest rises will be in the North and North-west, both of which will see taxes go up by 7.3 per cent.