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Last Updated:  Friday, 28 February, 2003, 15:30 GMT
Q&A: Council tax rise
Huge council tax rises have provoked a political outcry. BBC local government correspondent John Andrew examines some of the key issues.

Will John Prescott try to cap some of the rises?

The government has abolished "crude and universal" capping of council budgets but still has reserve powers.

It says it won't hesitate to use them if it decides that an increase is unreasonable or excessive.

A decision will be taken in the next few weeks.

However, the government's in an embarrassing trap of its own making.

Councils rated as excellent or good by the Audit Commission have been guaranteed freedom from capping.

They include councils with some of the highest council tax rises: Wandsworth at 45% and Croydon at 27%.

Ministers have said these councils won't be capped.

Why the apparent shift from south to north?

Ministers are is using a new formula to distribute government grants to councils.

It aims to be simpler and fairer than the old one-and to be a truer reflection of local need happened.

But it's tended to give higher grant increases to councils outside the South and South East.

Ministers accept that there will be some redistribution of grant-so they┐re using a dampening system of "floors and ceilings" to make sure no one gains or loses too much in the changeover.

Without this, the council tax rises in the south would be even higher.

The government haven't said whether this dampening will continue.

Is it true all councils are getting above inflation rises in grant?

Yes and ministers say this is the first time that's happened.

But not everyone is getting the same.

For the high-spending councils - those that provide education and social services - increases range from 3.5% to 8% according to how the new grant formula measures their need.

Many of the southern councils with high tax rises are at or near the 3.5% "floor" - one of the reasons they have to ask council tax payers to fill the gap.

Who is to blame for the rises?

Councils and the government are accusing each other.

Ministers say there's a correlation between some of the highest rises and areas here there happen to be no local elections this year.

There may be some truth in that, but it can't explain all the high increases.

Some experts believe that a decision by the education secretary to force or "passport through" cash increases to schools is another factor in the rises.

In many cases the increased grant councils have received for all its services is less than the extra it's supposed to pass on to schools.

Councils don't like ring-fencing because it denies them the flexibility of deciding priorities locally.




SEE ALSO:
Council tax north-south divide
28 Feb 03 |  Politics
'Horrendous' tax rise approved
18 Feb 03 |  England
Lib Dems target 'super-rich'
26 Feb 03 |  Politics


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