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Last Updated: Monday, 27 March 2006, 16:09 GMT 17:09 UK
Council tax bills to rise by 4.5%
A council tax form
An inquiry into council tax reform is due to report in December
Council tax bills in England will rise by an average of 4.5% this year - more than twice the level of inflation, according to government figures.

The increase means the average council tax per home will be 1,056, up from 1,009 last year.

Ministers say they plan to use powers to limit council tax rises against only two councils - Medway and York.

Pensioner groups have voiced anger that over-65s are not to receive a repeat of last year's 200 rebate on council tax.

An inquiry into reforming council tax is being conducted by Sir Michael Lyons, who is due to deliver his findings in December.

Olympic cost

The new figures are broadly in line with recent surveys but give the first firm national picture as local councils send out the tax bills.

Consumer price inflation is currently 2%, although official statistics suggest costs in the service sector have gone up at about 4% during the past year.

Local Government Minister Phil Woolas told MPs the average rise in this year's bills would have been 4.2% if the levy on London homes to pay for the Olympics was excluded.

COUNCIL TAX 2006/7
Average council tax rise in England: 4.5%
Average council tax per home: 1,056, up from 1,009 last year
Average Band D bill: 1,268, up 54 from last year

He said there had been a 39% real terms increase in central government funding for councils since 1997, including a 4.5% rise in grants this year.

And council tax benefit helped those who could not pay their bills, he argued.

Mr Woolas said the overwhelming majority of councils had heeded ministers' warnings to keep council tax rises below 5%.

But he planned to use capping powers to limit the increases against Medway Borough Council and City of York Council.

"The public has a right to be protected from excessive council tax increases," said Mr Woolas.

He said there would be no action against two other councils - Aylesbury District Council and Wellingborough Borough Council - had only just gone over the tax rise limit.

Resentment

Conservative shadow local government secretary Caroline Spelman said council tax had risen 84% under Labour.

"Hard working families and pensioners are being hit right in the pocket by Labour's tax hikes and have to face the prospect of ever-increasing council tax bills year on year," she said.

"It's understandable that people resent these huge rises - the typical household now pays over 100 a month."

Liberal Democrat spokesman Andrew Stunell argued that as council tax continued to rise, "tinkering with capping" would do nothing to help the millions of people struggling to pay their bills.

"Council tax is deeply unfair, and it's time to scrap it, not cap it," he said.

Services cut?

Age Concern claims many pensioners would be "furious" at the increase, saying council tax had nearly doubled since 1997 while the basic state pension had risen by only about a third.

Director-general Gordon Lishman urged people to ensure they were claiming all the help they were entitled to as a "staggering" 1.1bn of council tax benefit was being left unclaimed.

Sir Sandy Bruce-Lockhart, chairman of the Local Government Association, said some council services would have to be cut despite the tax rises.

"Councils are championing the interests of local residents and are doing everything in their power to keep council tax down," he said.

"The money given by central government to most councils was better than originally proposed yet it still left over half of all councils with social services responsibilities with a grant increase of 2% or less."

Sir Sandy said the central government grants included no extra funding for the increasing number of people needing care.

There were also examples of the NHS moving people out of hospital too early and placing them in local council social care, he said.



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