TOWN HALL SQUEEZE MAY FORCE UP COUNCIL TAX

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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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HOUSEHOLDS FACE 4% RISE IN COUNCIL TAX BILLS

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COUNCIL TAX BILLS WILL GO UP AN AVERAGE 4% - 85P A WEEK - IN APRIL, ACCORDING TO AN EARLY SURVEY OF PROPOSED TOWN HALL BUDGETS.

The Local Government Association (LGA) said the increase, based on responses from more than 150 councils and police and fire authorities, would take the average annual bill to £1,145.

Ministers have demanded rises well below 5%, threatening to cap higher levels despite council bosses' warning they would have to cut services instead.

LGA chairman Sir Simon Milton said: 'Nobody likes paying more Council Tax but this year town halls are making enormous efforts to keep bills down. It is a testament to the determination of councils that the average rise is likely to be close to the rate of inflation.

'Keeping Council Tax down has been made harder by several Government departments shifting extra costs on to councils whilst limiting funding from central Government to a real terms 1% increase.

'Council Tax would have been a lot lower with a more realistic central Government grant.'

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THOUSANDS FACE RUIN OVER COUNCIL TAX

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THOUSANDS OF PEOPLE ARE BEING TIPPED INTO BANKRUPTCY WHEN TOWN HALLS CHASE THEM TO PAY THEIR COUNCIL TAX, A REPORT SAID YESTERDAY.

Dumped on: Council's are turning to bailiffs too quickly

Dumped on: Council's are turning to bailiffs too quickly

Citizens' Advice said two and a half million people were summonsed after failing to pay their tax bill last year. Bailiffs were used in 1.2m cases and councils asked for bankruptcy orders in 5,000. The report says pensioners and poor families have had to sell their homes to meet the legal costs of fighting bankruptcy orders. 

It accuses local authorities of using increasingly aggressive methods and forcing families to run up five-figure legal bills in Council Tax disputes.

The charges by Citizens' Advice follow years of growing controversy over local government attempts to collect the Council Tax, which went up by around double the rate of inflation last year and is likely to increase by much more than inflation again this year. Around 3% of all Council Tax bills went unpaid last year, costing town halls some £60m and adding just under £35 to the average bill of families who did not default.

Citizens' Advice said 5,000 households were threatened with bankruptcy petitions and in a thousand of these cases town halls were allowed to seize assets. Liberal Democrats said councils should not be trying to push people into bankruptcy in the current economic crisis. Local government spokesman Julia Goldsworthy said: 'Public bodies should do everything they can to ensure bankruptcy is avoided.'

But the Department for Communities and Local Government said: 'Local authorities must have the tools at their disposal to tackle the small minority of people who can but won't pay.' Sir Jeremy Beecham, vice-chairman of the Local Government Association, said: 'People are given as much leeway as possible.' But Peter Tutton, debt policy adviser for Citizens' Advice, said bankruptcy orders were used too often against vulnerable people with relatively small debts.

He said: 'Even more people on low incomes are struggling to pay their tax. The best councils are doing all they can to help people in difficulty, but too many still send in bailiffs indiscriminately.'

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GREEN LIGHT FOR COUNCIL TAX INQUIRY

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AN INDEPENDENT INQUIRY HAS BEEN ORDERED INTO PROPOSED REFORMS OF THE COUNCIL TAX SYSTEM AND THE POSSIBLE INTRODUCTION OF A LOCAL INCOME TAX.

A Local Government Minister told MPs he had asked Sir Michael Lyons to report on the future of town hall funding by the end of the year. His announcement came as he disclosed details of an initial review of the system which found strong arguments for combining a reformed Council Tax with measures to raise more cash locally.

Mr Raynsford said the Government accepted the need for reform but dismissed press speculation that it would lead to massive tax rises as 'wholly misleading and inaccurate'. No decisions had been taken, he said, as there remained much detailed work to be done on the possible options. 

'Any suggestion that we have opted for any particular course of Council Tax reform is just plain wrong,' he told MPs in a statement. The Balance of Funding Review contained a number of suggestions. The one that has caused most alarm comes from a think-tank, the New Policy Institute, which calls for changes to the banding system and the amounts paid by each of them.

The Sunday Telegraph reported that under the NPI proposals, there would be three new bands one at the bottom and two at the top. Anyone with a property worth £170,000 or more would face higher bills. The new top rate band would see the average bill for properties worth more than £620,000 rise from £2,334 to £6,224.

Those with homes valued from £440,000 to £620,000 would pay £4,149 and those in the £310,000 to £440,000 bracket could see their average bills rise from £1,945 to £2,982. Only those with homes worth under £130,000 would see their bills fall. The review says the bands should be revamped when a nationwide property valuation takes place for the first time since 1991

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GREEN LIGHT FOR COUNCIL TAX INQUIRY

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AN INDEPENDENT INQUIRY HAS BEEN ORDERED INTO PROPOSED REFORMS OF THE COUNCIL TAX SYSTEM AND THE POSSIBLE INTRODUCTION OF A LOCAL INCOME TAX.

A Local Government Minister told MPs he had asked Sir Michael Lyons to report on the future of town hall funding by the end of the year. His announcement came as he disclosed details of an initial review of the system which found strong arguments for combining a reformed Council Tax with measures to raise more cash locally.

Mr Raynsford said the Government accepted the need for reform but dismissed press speculation that it would lead to massive tax rises as 'wholly misleading and inaccurate'. No decisions had been taken, he said, as there remained much detailed work to be done on the possible options. 

'Any suggestion that we have opted for any particular course of Council Tax reform is just plain wrong,' he told MPs in a statement. The Balance of Funding Review contained a number of suggestions. The one that has caused most alarm comes from a think-tank, the New Policy Institute, which calls for changes to the banding system and the amounts paid by each of them.

The Sunday Telegraph reported that under the NPI proposals, there would be three new bands one at the bottom and two at the top. Anyone with a property worth £170,000 or more would face higher bills. The new top rate band would see the average bill for properties worth more than £620,000 rise from £2,334 to £6,224.

Those with homes valued from £440,000 to £620,000 would pay £4,149 and those in the £310,000 to £440,000 bracket could see their average bills rise from £1,945 to £2,982. Only those with homes worth under £130,000 would see their bills fall. The review says the bands should be revamped when a nationwide property valuation takes place for the first time since 1991

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VOTERS TO GET SAY IN SPENDING COUNCIL TAX

VOTERS TO GET SAY IN SPENDING COUNCIL TAX

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COUNCIL TAX PAYERS ARE TO GET A GREATER SAY OVER HOW THEIR MONEY IS SPENT.

Residents will be able to vote to axe unpopular fortnightly rubbish collections or use a 'community kitty' to build new school playing fields. Communities Secretary Hazel Blears promised it would herald a 'real shift' in power to neighborhoods away from centralised state control.

But exactly a week after the Government pledged an end to the era of spin, the plans were trailed in a pro-Government newspaper before they were announced to MPs and the wider public. It was claimed residents would have control over £20m of local government funds but it later emerged the money will be spread over four years and across ten pilot areas in England.

This means £500,000 will be in the kitty every year, scarcely enough to buy one playing field or weekly rubbish collections for around 40 streets. The pilot schemes will take place in Birmingham, MoD pays its civil servants Merseyside, Lewisham, Bradford, Salford, Sunderland, St Helens, Newcastle, Southampton and Nottinghamshire.

Miss Blears said local people would receive training on how council budgets work. Within five years, the powers will be extended to every local authority in the country. Residents will be nominated to sit on panels, which will draw up suggestions for spending the money. A shortlist will be put to every local Council Tax payer. The Minister told the Local servants £41m in Government Association's annual conference in Birmingham yesterday: 'Democracy should be about much more than casting a vote every few years. 'It should be a daily activity, not an abstract theory. Local people know the needs of their area better than anyone. This Government is delivering a real shift in power to town halls, and ensuring town halls pass this on to local communities.

'We want to bring devolution to the doorstep, giving communities a direct say over how to tackle the things that matter most to them - from improving playgrounds, to tackling litter, to making their street safer.' Ed Cox, director of policy for the independent Local Government Information Unit, said empowering communities with spending had been widely adopted in South America.

He said: 'By making some aspects of council finance a neighbourhood issue I have witnessed large community meetings in Brazil where there is positive, proactive dialogue about local spending priorities where councillors are recognised as the true community champions.'

In a speech to the same conference, Mr Cameron promised a Tory government would introduce more elected mayors and give councils more freedom to spend their cash by ending ring-fenced budgets. He added: 'This is a ridiculously over-centralised country and I stand before you a convinced localist. A decentralised country, with local people in direct control of the decisions which affect them, is a more free country.

'A Minister has announced that she is giving people a little bit of power to spend a little bit of money. By contrast, we would give people a lot of power to spend a lot of money. 'It is one of the great tragedies of our politics that local government is so little regarded by the public.' The Tories also seized on the way the proposals were leaked to the Guardian before they were published - despite the Prime Minister's promise that all new policies will be unveiled to voters or Parliament first. The party's spokesman Eric Pickles said: 'It looked for a week like government Brown was making an effort to do away with spin but it seems like a case of old habits die hard.'

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COUNCIL TAX 'BAD NEWS' ON THE WAY

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COUNCIL TAXPAYERS ACROSS BRITAIN ARE BRACED FOR BAD NEWS

The Government gives the first indication of how much their Council Tax bills will rise next year. The Chancellor dished out the lowest increases in a decade before this year, with councils told a cash boost meant they were not allowed to raise bills by more than 3.5%.

But with extra costs having been loaded onto councils by central Government over the past year, slower than expected growth and pressure lower public spending, Council Tax bills are expected to rise considerably this year.

The current average level of Council Tax for a Band D property is £1,214, and the expected increase of £100 will push it through the £1,300 mark. The Treasury will give an indication today of its local government settlement for the coming year. Last month the Local Government Association warned that a £2.2bn black hole across the country would result in a typical £100 increase in bills.

Councils across Britain are angry that they have delivered on targets to cut costs and reduce waste but will be blamed for Council Tax rises. LGA chairman Sir Sandy Bruce-Lockhart told Radio 4's Today programme: 'The Government are offering a 1.5% increase to councils. That really needs to rise to 3% for all authorities, simply to pay for pay and price inflation.'

He added that council leaders had a 'real determination' to keep bills down. Sir Sandy said councils faced huge costs because of new legislation and the changing demographics of the people they served.

He said: 'I think what we are looking for is a package that has some cash, it has the removal of these pressures. I think the most important thing is that we get this money for two years so we can have a two-year deal and we don't have this business of having a row every single year about whose fault it is.'

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