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Last Updated: Wednesday, 10 December, 2003, 16:39 GMT
Council tax fears spark cash rise
Council Tax paying house
Council taxes rose by record levels last year
Chancellor Gordon Brown has promised town halls more cash in an effort to quell fears of another round of inflation-busting council tax rises.

In his pre-Budget report, Mr Brown said councils in England would get 340m of an extra 406m for UK authorities.

English council taxes rose by a record 12.9% on average last year and councils had warned the same could happen again.

The Treasury denied using panic measures and Mr Brown said ministers were ready to use capping powers.

Capping warning

In another olive-branch to council leaders, Mr Brown said the extra funds would not be ring-fenced, so town halls will be able to decide how they spend the money.

The cash was "to meet the needs and concerns of council tax payers", Mr Brown told MPs.

"The government will, to ensure next year reasonable levels of council tax, be prepared to use capping powers where appropriate and necessary," he said.

The government, and council tax payers, now expect local authorities to deliver
John Prescott
Deputy Prime Minister
Whitehall grants for councils were only announced a couple of weeks ago.

But asked whether the extra funds were a panic measure, the Treasury said the extra money had been unveiled in the pre-Budget report as the best way of getting the message across to councils.

Later, Deputy Prime Minister John Prescott said in the extra money meant the government had increased support for councils by 30% since 1997.

"The government, and council tax payers, now expect local authorities to deliver," he said in a statement.

"Given this significant investment in local services and the scope for efficiency improvements, it is my view that next year local authorities can and should deliver council tax increases in low single figures.

Tax poll?

"However, I repeat today that authorities, including police and fire authorities, must be in no doubt that I am prepared to use my capping powers next year if that proves necessary.

"Council tax payers do not want another round of high increases.

"If their councils think they do, why don't they allow local people to have their say in a local poll?"

Local Government Association Labour group leader Sir Jeremy Beecham said the money was more than just "welcome sticking plaster".

"It points the way to a more fundamental change in local government finance to a fairer, more transparent and accountable system which will allow people to understand better the relationship between council spending decisions and the local tax they have to pay," he said.

"This new money may not be enough to prevent above-inflation council tax rises in many areas, but it will certainly help.

"Councils will do their level best next year to keep council tax rises as low as possible."

'Panic repairs'

In the House of Commons, shadow chancellor Oliver Letwin branded council tax rises the "least acceptable face" of Labour's tax strategy.

They were creating havoc, he argued.

Later, Conservative shadow local government secretary David Curry said: "After having assured us that the local government settlement was adequate, Labour are now panicking and topping up funding with a further 406m.

"This last minute repair job proves our point that the settlement was flawed in the first place.

"This is an emergency injection of funds as John Prescott's running of council tax evolves from debacle to major crisis."

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