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Last Updated: Wednesday, 23 January 2008, 22:09 GMT
Council tax 'set to rise by 4%'
By Laura Kuenssberg
BBC News political correspondent


Council tax bill
The bill for a Band D house could average 1,373 this year
Council tax bills in England are set to rise by about 4% on average this year, the BBC has learned.

A Local Government Association study of 100 draft council budgets suggests some councils may put bills up by nearly 5%.

The projected charge for an average Band D property for 2007-8 will be 1,373, the research suggests.

The association has warned that many local authorities will still have to ration or cut services despite the increases in tax.

Ministers say there is "no excuse" for large increases and have threatened to use capping powers.

If increases were to continue at such a rate, householders would be paying out 1,500 a year on average by 2011.

A Band D property is one valued as costing between 68,001 and 88,000.

The chairman of the LGA, Sir Simon Milton, said: "No-one likes paying more council tax, but this year town halls are making enormous efforts to keep bills down."

But he adds it has been impossible to avoid putting up bills because of the increasing pressure on council budgets.

We are being asked to do more and more every year by central government with less and less
Cllr Ken Thornber
Hampshire County Council leader

"Several government departments are shifting extra costs on to councils while limiting funding from central government," Sir Simon said.

The LGA cites extra cash costs from increased migration, funding free travel for pensioners and the disabled, and increasing social care budgets, due to larger numbers of elderly people.

The cost of dealing with waste is on the up too.

'Tight settlement'

In Hampshire, one of the councils where bills will go up by nearly 5%, the authority's Conservative leader Cllr Ken Thorber blames Whitehall for creating the situation.

"We are being asked to do more and more every year by central government with less and less. The system is not sustainable."

But John Healey, the local government minister, said: "There's no excuse for excessive council tax rises.

"We expect them to be substantially below 5% this year and we will use the capping powers that we've got to protect local council tax payers."

Council tax has more than doubled since 1997. And some local government analysts say the only way to slow the increases is to reform the system radically.

Houses
Polls suggest council tax is the least popular tax

Chris Leslie, the former Labour MP who heads the New Local Government Network (NLGN), says "council tax is a real burden and it's becoming really unfair and outdated".

The NLGN is calling for a 50% top rate of tax for people on incomes of more than 200,000 a year.

It says this could raise 4bn, which would be used to fund a one-off reduction in council tax, cutting the average Band D bill by 205 a year.

The charge would be renamed the "local property levy" and updated according to changing property values every year.

The Conservatives have accused the government of "spin", arguing a 4% increase in council tax would compound previous above-inflation rises.

Shadow local government secretary Eric Pickles said: "Not only will local taxpayers have to fork out an extra 53 in tax from April, but municipal taxes will now grab 115 a month from people's pensions and pay packets.

"Gordon Brown's only plan is to hit the public with more tax hikes - with new bin taxes on the way."

The Liberal Democrats say the expected increase in council tax sits uncomfortably alongside the government's insistence on limiting public sector pay increases to 2%.

Least popular

Spokeswoman Julia Goldsworthy said: "This year's tight settlement from the government either means higher council tax bills or cuts to services.

COUNCIL TAX BANDS

Band Property value
A Up to 40,000
B 40,001-52,000
C 52,001-68,000
D 68,001-88,000
E 88,001-120,000
F 120,001-160,000
G 160,001-320,000
H 320,001 and up
England only. Source: DCLG
(Based on 1991 house valuations)

"Thousands of people across the country will now feel the pinch as councils are forced to limit social care services to those in critical need."

Local authorities in Scotland also set their own council tax rates.

The SNP's ministers have proposed freezing any increase in council tax, a move that has been backed by the local authority leaders tasked with delivering their plan.

In Wales, local council leaders have warned that a 2.3% increase in grants from the assembly government will lead to higher council tax bills.

Polls suggest council tax is the least popular tax - a recent YouGov poll claimed 67% of people think it is unfair.

Graph



VIDEO AND AUDIO NEWS
Projected increases in the council tax bill



SEE ALSO
Scots budget faces crucial test
23 Jan 08 |  Scotland
Pensioners' lost millions
08 Jun 07 |  Business
Son of Council Tax
20 Oct 06 |  Politics Show

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