Council tax to soar by 30 times inflation

Published by This is Money

Council tax is to rise by 30 times the rate of inflation, despite a pledge by town hall chiefs to help struggling families. 

On the rise: People could soon be paying more for council tax

They promised 'enormous' efforts to keep bills down yesterday, saying: 'Councils understand that people are suffering' – before warning the tax would rise 3%, even though inflation stands at 0.1%. 

The increase will mean an average bill in England will go up by £34 from £1,145 to £1,179.35. The tax for a benchmark Band D house will rise by £41 from £1,373 to £1,414. The figures from the Local Government Association are based on information provided by 52 local authorities. 

Councils are under pressure from ministers to keep increases down when the bills land on our doormats next month. Those who impose unreasonable increases will have their spending capped. 

The 3% increase compares with inflation of 0.1% as measured by the Retail Prices Index, which is regarded as the most reliable measure because it takes mortgage and housing costs into account. 

Gordon Brown favours the Consumer Prices Index, which does not include mortgages. This was at 3% last month, but is expected to fall below 2%. Matthew Elliott, of the TaxPayers' Alliance, said: 'Council tax rises are totally unacceptable when people are struggling to put food on the table.' 

Local authority chiefs said income from charges had fallen because of the fall-off in construction and the housing market, and because fewer people were using car parks and swimming pools. 

However, council tax bills have more than doubled since 1999. The LGA said: 'Town halls are making enormous efforts to keep bills down.' But a quarter of the tax pays for town hall pensions. 

Councils also lost nearly £1bn in October's Icelandic banks collapse. Local Government Minister John Healey said: 'There is no excuse for excessive tax rises or service cuts. We will take capping action where necessary to protect taxpayers.'

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