THE GREAT COUNCIL TAX U-TURN

First published by: This is Money

MILLIONS of families are to be spared swingeing Council Tax rises after a climb down by the Government.

According to Whitehall sources, the Deputy Prime Minister has suspended a nationwide revaluation of homes in the face of a mounting backlash.

One in three homes in England - seven million in all - had been expected to move up a Council Tax band in the revaluation. In the South, where house prices have soared, bills were expected to rocket by at least £270 a year in four out of five towns.

Preparatory work for the revaluation has already begun. But ministers are expected to argue next week that it is 'pointless' to proceed while they are awaiting the results of an independent inquiry into the future of Council Tax.

Former Labour councillor Sir Michael Lyons, who is conducting the investigation, will report in December. Sir Michael has called for the revaluation to continue because updated valuations will be central to any reform. So the postponement will prompt accusations that ministers are scared of the political implications.

With the first bills based on the new valuations due in April, the Chancellor is understood to have been alarmed at the potential impact at the next election. Voters have already suffered a rise of more than 70% in Council Tax since 1997, sending bills above £1,000 in some areas.

The depth of public resentment was shown earlier this month when retired vicar Alfred Ridley, 71, was sentenced to 28 days in one of Britain's toughest prisons for refusing to pay part of the latest increase in his bill.

The revaluation would have punished regions of the South, where house prices have risen most since the existing tax bands were calculated in 1991, while favouring Labour heartlands in the North.

A senior Whitehall source said: 'The revaluation exercise will be postponed - not cancelled, but postponed. 'The thinking is that yes, it will be politically sensitive, but it would also seem very strange to go into a revaluation exercise when you are still waiting for the Lyons report.'

The Government had signalled that anyone whose home had risen in value by more than the average - 160% since 1991 - would move up to a new tax band. In the South-West, 81% of towns have seen prices rise above the national average. In the South-East, the figure is 78% and in East Anglia 66%. In the North-East, no towns have topped the average. Moving an average Band D home up to Band E would mean a tax increase of 22%, from £1,214 to £1,484 - a rise of £270 a year.

A revaluation already carried out in Wales led to an average 9% rise in tax bills this year - five times the rate of inflation. A third of homes were moved up to a more expensive band, with only 8% moving down.

Tory spokesman Caroline Spelman said: Council Tax plans are now in disarray. There is no logical link between the cost of emptying your bins and how much your house has increased in value. The only thing for the Government to do is to cancel revaluation outright.' Liberal Democrat Sarah Teather insisted: 'Council Tax is in a desperate mess, and cancelling revaluation does nothing to change that. 'By opting out of meaningful reform, the Government is letting down the millions of pensioners and low-paid workers who struggle to pay their Council Tax bills.

'Revaluation or no revaluation, Council Tax is Britain's most unfair tax. It's time to introduce a fair local income tax based on the ability to pay.' The Deputy Premier's Office said: 'Any statement we make on this matter will be made at the appropriate time'.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX

ARE YOU PAYING TOO MUCH COUNCIL TAX - COUNCIL TAX CHECKER