Counties keep tax rises in line

24 Feb 00
Government warnings to local authorities to keep down council tax rises may have been heeded. Early forecasts, based on counties' figures, suggest bills will rise by about 6% on average in line with ministers' expectations in 2000/01.

25 February 2000

As county councils rushed to announce their budgets for the next financial year, it became apparent that most authorities do not relish a tax fight with Labour.

Almost all councils fell into line and two counties warned last year about setting excessive increases – Norfolk and Shropshire – announced modest increases, at 6.25%, and 4.9% respectively.

Only a handful of the 34 county councils look set to catch the eye of ministers with large increases. Worcestershire was considering a 9.9% rise, although it would still set one of the lowest band D taxes at £617. East Sussex, Essex and Oxfordshire were all considering increases of more than 8%.

County bills were expected to be the highest of all tiers of local government, and the small increases there point to low rises overall. Counties' bills are rising by just over 7% on average. Once other tiers of local government, such as district and metropolitan councils, make their decisions, this average is expected to fall to the 6% mark.

'There is no evidence of cap-busting increases,' said Mike Grealy, deputy director of local government finance at the Local Government Association. 'The national increases could be somewhat lower than 7%.'

Even so, those councils brave enough to step out of line will run up against a determined government.

A spokesman for the Department of the Environment, Transport and the Regions said this week that ministers would not hesitate in clamping down on big tax increases. The secretary of state has reserve powers to intervene if he feels a tax rise is excessive – around the 10% mark. 'We hope we don't have to use these reserve powers but we have to protect council tax payers,' said the spokesman.

Chris Bilsland, corporate director (finance) at Somerset, which looked set to recommend an increase of just below 7%, said the volatility had been taken out of tax rises because of the government's switch from an annual to a three-year spending programme.


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