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Wednesday, 29 January, 2003, 18:02 GMT
Millions face 'biggest' council tax bill
Council tax form
Many households could face a higher bill

Millions of people face the biggest rise in council tax bills since the tax was introduced ten years ago.

Shire counties in the South East are warning of rises up to 20%.

They blame the increases on shortfalls in grant caused by the government's new formula for distributing grant.

Many people will see their bills go through the 1,000 barrier for the first time.

Kent shortfall

Kent County Council - England's biggest local authority - has confirmed it is cutting three hundred administration jobs to avoid a swingeing increase in tax bills.

Even so, it is putting up council tax by 12.5% - its biggest ever rise.

Proposed tax rises
Kent 20%
East Sussex 20%
West Sussex 18.5%
Essex 16.7%
Hampshire 15%`

Kent says that, like other councils, the government expects it to increase school spending by 6.6% and social services by 8.9%.

But Kent's grant support from the government has risen by just 3.9%, leaving it no choice but to find savings and increase council tax sharply.

North-South shift

Councils are complaining about a new government funding formula which they say is shifting resources from the south to the North and Midlands.

Kent council's finance director David Lewis described it as "the biggest shift of funding in my career in local government."

The shadow chancellor Michael Howard, MP for Folkestone and Hythe, said the Government had stolen 40 million from Kent and given it to other parts of the country.

Other counties have been harder hit and are proposing even bigger increases.

They include East Sussex (20%), West Sussex (18.5%),Hampshire (15%) and Essex (16.7%)

Not-so magic formula

The Government's "formula funding" system was used for the first time this year, replacing the old method of "standard spending assessments".

The new system is meant to be fairer, simpler and a truer measure of need.

That is an infinitely more generous settlement than under the Conservative years

Tony Blair

Although councils in the North and the Midlands received some of the biggest grant increases this year, the Government denies it was all part of an agenda to shift resources from the South.

To cushion the effects of any changes, they've introduced "floors" and "ceilings" to make sure no one loses or gains too much.

This year, every council was guaranteed an above-inflation increase in grant of at least 3.5%.

Generous?

But Kent warned that over the next three years it will suffer an 8% cut in grant for school budgets.

The council's leader, Sir Sandy Bruce-Lockhart, acknowledged that the northern economy needed boosting but said the way to do it was through capital grants from the Department of Trade and Europe and not through the council tax rises in the south.

In the Commons on Wednesday,Tony Blair said that this year local government overall was getting a 6% real terms increase in grant.

"That is an infinitely more generous settlement than under the Conservative years," he said.

See also:

04 Jan 03 | Politics
05 Dec 02 | Politics
27 Jan 03 | England
19 Dec 02 | Business
19 Nov 02 | Business
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