Council Tax: 'Bribery' accusation over £1bn package

Council tax rises will be pegged to an average £58 next April after a £650m pre-election sweetener to local authorities by the Chancellor. Gordon Brown raided £512m from the budgets of cabinet colleagues to increase the support for local councils after they had warned their rises would average more than £100 next April, a month before the expected date of the general election.

Council tax rises will be pegged to an average £58 next April after a £650m pre-election sweetener to local authorities by the Chancellor. Gordon Brown raided £512m from the budgets of cabinet colleagues to increase the support for local councils after they had warned their rises would average more than £100 next April, a month before the expected date of the general election.

Council leaders welcomed the increased support but warned it was a "one-off" for election year which will leave the council taxpayers facing bigger bills after the election.

The Local Authority Association accused the Treasury of hiding more pain for the public in the small print. The Chancellor announced he was providing nearly £1bn extra for councils, but the local authorities said that they had to raise £285m themselves.

Fees for homeowners seeking planning permission and businesses seeking licences will be increased to raise £60m. About £75m will be transferred from education budgets. A further £50m will come from changes to their targets for dealing with waste; and £100m will be raised by squeezing local authority pensions. Eric Pickles, the Tory spokesman on local government, said the councils were getting a "bung" from the Chancellor to keep bills down during the election year, but he claimed the Treasury was estimating receipts would rise by at least 8 per cent, equivalent to £100 on the average council tax bill.

That was denied by Nick Raynsford, the local government minister, but he warned local authorities they would be capped if they allowed council tax bills to rise more than an average 5 per cent next April. Council tax bills rose by an average 5.9 per cent this year, and some homeowners, particularly pensioners, are likely to object to further rises of 5 per cent, more than twice the expected 1.75 per cent inflation rate.

Ed Davey, the Liberal Democrat spokesman, said: "Ministers are shielding the council tax rises until after the general election. This is the calm before the storm."

Council taxpayers face the prospect of a big increase in bills in 2007, the date for revaluation of rising property values. Protests in Wales are seen as a taste of worse to come in England. John Prescott, the Deputy Prime Minister, has also ordered a review of council tax to be delivered after the election.

The Chancellor provided only £125m from the exchequer to limit the rise in council taxes in England. He is raising a further £512m by raiding budgets across Whitehall departments, including the departments of health and education.

Opposition MPs last night demanded details from the Treasury on the cuts that would be made in budgets announced after the spending review in June to pay for the pre-election support for councils.

Council workers are likely to react with anger at the squeeze on their pension entitlement. Councils are being told to stop allowing workers to take their pension before the age of 55 and to stop retirement before 65 unless the staff are prepared to take a cut in their pension payout.

Five million teachers, police, firefighters and town hall staff will be required from 2008 to increase their pension contributions by up to two thirds to fund their final-salary schemes.

Police authorities that protested at shortfalls in funding this year are to get an extra 5.1 per cent. David Blunkett, the Home Secretary, said it would mean police forces could maintain the increases in police and community support numbers.