Council tax rises expected to be lowest since 1993

Council tax bills in England are to rise this April by an average of 1.6%, putting the nation on course for the lowest overall increase since the property tax was introduced in 1993, according to figures released today by the Local Government Association. Once inflation is taken into account, the average rise will see a reduction in many householders' bills, according to an analysis drawn from a survey of the draft budgets of more than 100 councils, police and fire authorities. The average represents an annual bill of £1,194 per household in 2010-11. With inflation (retail price index) running at 3.7%, a 1.6% increase represents a real-terms cut of 2.1% in the tax, said the LGA. The rises, which comes into effect in April, will add 36p a week on to the average household's council tax bill, compared to 2009-10. The low expected increases across Britain come as a report by the Citizens' Advice Bureau charts an 18% rise in the number of people who need help because they are in council tax arrears. Local authorities' efforts to keep down bills will be welcome by ministers, who had signalled they would take a dim view of rises of above 3% in light of a 4% increase in the government grant for 2010-11, which makes up around 75% of their income. Londoners are expected to fare particularly well, with councils of all political hues intent on freezing or even reducing council tax from April. Only four boroughs have so far confirmed council tax figures for next year: Bromley is planning a 1.24% rise while Harrow, Newham and Southwark have all voted through a 0% rise. Most councils have their full meetings over the next week and a half (deadline in 11 March) so we will be updating this as it goes along.The move is widely seen as a sweetener ahead of the all-out local elections in the capital in May. For councils outside London, the average increase is 1.9%. The LGA said the real-terms cut came despite a sharp fall in income and an increase in demand for councils' services as a result of the recession. The umbrella body for local government says local authorities have been hit by a £4bn deficit in income over the past two years – the equivalent of losing almost £11m a day – due in large part to a decline in sales of land and buildings, lower interest rates on cash deposits and reduced revenue from planning applications, car parking and leisure services. Sir Jeremy Beecham, the LGA vice-chairman, said: "Everyone is facing a squeeze on their finances in the current economic climate and no one likes paying council tax. That is why councils have been doing all they can to keep council tax rises to a minimum. "Councils have had to take tough decisions to carefully balance the need to protect essential frontline services while providing value for money for the taxpayer." A separate calculation by the Chartered Institute of Public Finance and Accountancy (Cipfa) puts the average council tax rise at 1.8%. Cipfa predicted a 2.1% hike, with the highest rises of 2.5% in the south-west. Scotland is set to continue its freeze, while average rises in Wales are forecast to be 3.6%. Cipfa's technical director, Ian Carruthers, told BBC Radio 4's Today programme: "This is unprecedented in terms of the history of council tax but it also follows a trend of declines in the cost for years." A spokesman for the Department for Communities and Local Government said: "Councils would not have been able to deliver low council tax increases without the above-inflation grants they have received every year from government since 1997 – a 45% real-terms increase for councils." He added: "The government expects the average band D council tax increase to fall to the lowest rate for 16 years and will not hesitate to take capping action against excessive increases set by individual authorities." The Liberal Democrats, who favour ditching the council tax for a local income tax, warned that increases could be expected to be much higher in future years, as the "gearing system" which sees councils receive most of their income from the government means that any cut in central funding produces a dramatic additional burden on local tax bills. Julia Goldsworthy, the Lib Dem local government spokeswoman, told the Today programme: "Councils are planning for the worst, for real-terms cuts in funding, and the gearing system is going to make it worse, because, as central government grants get cut back, it is going to put even greater pressure on council tax. "For a lot of councils, what we will be expecting in future years is cuts in services while council tax continues to go above inflation." Goldsworthy noted that the lowest rises were in London, where all councils are facing local elections on 6 May. She said: "Maybe the most interesting thing is to look at the London figures where there are all-out local elections as well as the general election, and I think it is very interesting to see that they have the lowest council tax increases in the country. I think that speaks for itself." Dave Prentis, leader of the country's largest public sector union, Unison, warned there was a "human cost" of keeping down council tax bills. Cuts to libraries, care homes for the elderly and disabled, meals on wheels, services for children, leisure centres, and social care would all suffer as a result, he said. "The public should not be fooled. The human cost of keeping council tax down is huge. It means hitting frontline services hard, shutting care homes for the elderly and disabled, making cuts to home care, to libraries and leisure centres, and cutting services for children. "These essential services are increasingly becoming the casualties of councils putting politics before people. It is bizarre economics to cut council tax when, in the future, budgets are likely to be squeezed."