Revealed: huge council tax rise

Labour dismay as memo discloses local authorities will raise bills by up to 12 per cent before May polls

Internal links

Hooray - council tax is up

A leaked Labour memo today reveals that council tax payers across England can expect a rise of 10 per cent in the bills that will be arriving in the next few weeks.

The increases – nearly five times the rate of inflation – come as a fresh blow to Tony Blair, who is under fire over the Government's failure to deliver promised improvements to the public services.

They mean that many householders in ordinary band D homes will face council tax bills of £1,000 a year. In Sedgefield, the Prime Minister's constituency, Band D payers could see their council tax bills rise by £105 to £1,160, one of the biggest increases in the country. In Bury a 10 per cent Band D rise could see £91 added to bills for a total of £1,002, while in North Warwickshire a £97 rise could give a bill of £1,074

Former Tory Cabinet minister John Redwood last night said: "Council taxpayers will feel badly done by when they realise that council tax has taken over from petrol duty as the Government's favourite stealth tax." Such increases could backfire on Tory councils, who are raising their bills by similar amounts.

With councils across the country up for election in May, the inflation-busting hike in council tax bills threatens to wreck Mr Blair's hopes for trouncing the Tories again.

Gordon Brown, the Chancellor, budgeted for an extra £1bn in income from council tax for councils – a rise of 6.8 per cent – in his pre-Budget report but the leaked internal memo, sent to colleagues by Councillor David Wilcox, the secretary of the Labour county councils group, reveals that many councils are planning 10 per cent increases and one is planning a rise of 12 per cent. The rises are so high, he says, that 8.9 per cent could look "attractive" by comparison. "At this moment, 9.9 per cent feels like safe ground with 8.9 per cent looking attractive. Coming local elections are causing some concern with Labour authorities that perhaps should be going for increases of around 10 per cent but consider that they may have to cut their rise back in an election year."

Confirming the document was genuine, Councillor Wilcox, from Glossop in Derbyshire, said councils had to meet higher social services demands, including coping with elderly patients who are discharged from hospital to stop "bed blocking". He said council tax payers can expect even higher bills in the future, as local government takes a smaller share of its income from the Treasury.

The prospect of higher bills is certain to put pressure on Mr Brown and the Secretary of State for Health, Alan Milburn, to produce an emergency package of help for social services to keep council tax bills down. Mr Milburn came up with £200m this month but that has had little impact on the bills.

It could also put more pressure on Stephen Byers, the embattled Secretary of State for Transport, Local Government, and the Regions, who was criticised last week for failing to come up with more new money to fund the strategic plan for the railways.

Interviewed today in The Independent on Sunday, Mr Byers says there is no reason for council tax bills to rise by 10 per cent, because councils have received above-inflation increases in grants. "I haven't seen such figures. They have all had an increase above inflation and I hope they will use it to improve the quality of services they are providing," he said. Mr Byers makes it clear that the Prime Minister and his close supporters in the Cabinet are ready for a battle over the modernisation of the public services, which this week led to warnings that the Government was out of touch with the voters.

Mr Byers says the Government has "a once-in-a-generation" opportunity to change the public services for good.

Mr Blair had to face a stream of critics at last week's meeting of the Parliamentary Labour Party. The main cause of MP's anger was the introduction of private health care in the NHS. And in remarks which echo Lady Thatcher's slogan of "Tina" (there is no alternative), Mr Byers says Mr Blair should refuse to back down over the radical reforms in his second term. "This is not the time for standing still ... I believe it is absolutely the right time to push ahead with the reform and modernisation of our public services. And this is not going to be easy," he says.