Average council tax to rise by 4.3%

Average council tax to rise by 4.3%

Householders face inflation-busting council tax rises averaging 4.3% from next month, according to government figures published today.

The average council tax per dwelling will be £1,101, compared with £1,056 in 2006-07, representing just over a pound more per week for individual households.

The increase is slightly higher than last year's 4.2% average rise, which the government blamed on the additional charge levied on Londoners to fund the 2012 Olympic games.

The average increase on Band D households is down from 4.5% to 4.2% for 2007/08, with residents set to pay £1,321 compared with £1,268 last year.

Although the £20-a-year charge to Londoners towards the cost of the 2012 Olympic games pushed up the national average, the area actually saw the biggest drop in council tax, down from 4.5% to 3.6%, according to government figures.

Areas with two-tier shire councils set the highest average increases at 4.4%, down from 4.6% last year.

The overall figures represent the second lowest rises since Labour took power in 1997 following the decision to introduce capping four years ago to curb high council tax increases.

But the average household will still be forced to pay an extra 1.5% above inflation, which currently stands at 2.8%.

Local government insisted they had done "everything in their power" to keep bills down this year.

Sir Jeremy Beecham, vice-chairman of the Local Government.....continued below

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Association - which represents more than 400 councils in England and Wales - said town hall chiefs had faced "tough choices" in setting budgets.

"Government grant has not kept up with the massive demands being placed on councils, such as caring for an ageing population and costs arising from new legislation," he said.

Sir Jeremy insisted the government needed to be "open and honest" about what it is prepared to fund in the future and how this will impact on local services and the council taxpayer.

Alongside efficiencies, some local authorities have caused controversy in their efforts to keep residents' council tax bills down.

Camden council set a zero council tax increase but provoked local furore by announcing the closure of some services for homeless people and the elderly.

The government has yet to announce whether it plans to cap individual authorities who breached the 5% limit imposed to prevent unacceptable council tax rises.

The measure was introduced after the average rise soared to 12.9% in 2003-2004 and has been lauded as the chief factor holding down high council tax rises.

The government is keen to stave off mounting protest from pensioner groups who complain that the property-based tax fails to consider the plight of those on low fixed incomes.

A government spokesman said: "A final decision has not yet been made on capping."

A long-awaited report on the future local government published by Sir Michael Lyons for the government last week recommended that capping be scrapped to allow councils more autonomy in setting budgets.

But local government minister Phil Woolas signalled the government had no intention of putting the measure aside in the foreseeable future because he said the government had a duty to protect residents from huge jumps in bills.

"Our tough action on capping has helped keep down council tax bills for 2007-08," he said.