Capping threat to high-tax councils

HOMEOWNERS stung by an average 13% rise in council tax last year will not face big rises again this year, the Government has indicated.

Fears of a middle-England backlash against rising council tax bills have prompted the Government to act amid signs that last year‘s rises might be matched or even exceeded this year by some high-spending local authorities

Local Government Minister Nick Raynsford confirmed he had written warning letters to councils he suspected of planning council tax hikes of more than 5%.

He said: 'I have written to 31 councils from whom we have got information suggesting that they may be contemplating increases in council tax of above 5%. I have got capping powers. We will use those powers if necessary.'

Mr Raynsford said he hoped this capping power would not prove necessary. He added: 'This is just a preliminary letter and I hope as a result of it councils that are considering a large increase in council tax will moderate their proposals.'

Labour politicians fear further big rises in council tax could be politically damaging and some backbenchers have referred to the council tax as 'Tony Blair‘s poll tax', a reference to the unpopular charge that damaged Margaret Thatcher's government in the late 1980s and led to riots in central London.

Yesterday Tony Blair waded into the controversy by warning that local authorities would have 'absolutely no justification' in levying big increases in council tax this year.

A review of local government funding will be published in the summer and is expected to propose reforms to the way local authorities raise money. Among the reforms could be wholescale changes to or even the eventual replacement of the council tax.