TOWN HALL SQUEEZE MAY FORCE UP COUNCIL TAX

First Published by: This is Money

Local government will contribute £1 in every £5 saved in the cuts, casting doubt over the coalition's ability to deliver a promised Council Tax freeze next year.

Squeezed: Town hall bosses likely to blame the coalition government for deteriorating service. Councils would have to find £1.16bn in savings in the remainder of this financial year, LibDem Treasury Chief Secretary David Laws announced.

Whitehall restrictions on what money should be spent in which areas will be lifted, freeing councils to manage their budgets as they wish, Mr Laws said. 'We will help local government to deliver their savings by removing ring fences around £1.7bn of grants to local authorities in 201-12,' he added.

But the cuts set the stage for a bitter battle with some Labour council chiefs, who are likely to blame the coalition government for deteriorating services. They also raise doubts about whether a pledge to freeze Council Tax for a year can be met, since councils will have to rein in their budgets even further to qualify for matched government funding to keep the tax flat.

Details of which specific local government grants face the axe were thin on the ground last night. But £362m will come from the communities department, £311m from education, £309m from transport, £8m from environment, food and rural affairs, and £175m from other Whitehall grants. Two local government quangos, the Infrastructure Planning Commission and the Standards Board will be scrapped.

Transport grants to be slashed include road safety cash used by local authorities to put up speed cameras. TUC general secretary Brendan Barber said: 'Cuts in local government budgets will affect the most vulnerable who rely on social care.'

Anna Turley, from the New Local Government Network think tank, described the scale of cuts as 'a colossal challenge'. But Dame Margaret Eaton, chairman of the Local Government Association, which represents councils, said: 'We all know cuts are necessary and councils are ready to talk to the Government about how these are implemented and limit their impact on front-line services.'

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