RATE CAPPING THREAT

Deputy Prime Minister John Prescott warned local authorities he would step in and cap their council tax if they tried to implement higher than inflation rises. Mr Prescott said there were no excuses for large tax hikes because every single authority - north, south, east or west - received a grant increase greater than inflation. "No-one was robbed. They all got more. Every single one of them." He added local government had received "more money, more jobs, more services, more powers, more freedoms, more flexibilities", but must act more responsibly in return.

Although across-the-board capping was abolished after Labour came to power, Mr Prescott said he retained powers to slash excessive rises by irresponsible authorities. Mr Prescott said, "It is only fair to warn those authorities proposing excessive council tax rises that I do not rule out, on a case by case basis, using reserve capping powers."

Labour had increased funding for local government by 25% in real terms since 1997, and every council enjoyed an above-inflation rise in central support for the coming year, he said. Mr Prescott said he was ready to impose caps on council spending for this year or years to come to protect households from massive rises in bills. "A cap can be applied now to this year's budget, or to next year's budget, or the year afterwards, to ensure that councils aren't accepting generous extra funding from the Government and unfairly increasing the burden on local council taxpayers at the same time," he said.

The cynical might argue that this threat of capping had only been muted because councils in the South and South East had implemented increases of 40%-50% and that if inflation busting rises had only ocurred in the North then Parliament would have remained silent as usual. On 25 March 2003 John Prescott dropped his threat to cap town halls threatening big council tax rises. With five weeks to go before a difficult set of local elections, he published figures revealing council tax bills across England would go up by an average 12.9% in April.

Local councils were given the green light to raise council tax by FOUR times inflation. Local government minister Nick Raynsford stressed he would not cap increases at 6% or below. Inflation, according to Treasury figures, is currently at 1.4%. Mr Raynsford argued, “I am encouraged by evidence that many councils have listened to our exhortations to lower their council tax increases. Six per cent is less than half last year’s 12.5% rise.” But he vowed to cap councils putting “unreasonable burdens” on payers. It follows a campaign by pensioners and others on fixed income ready to risk jail rather than pay rises above inflation.

Mr Raynsford said, “Government will use its capping powers if necessary, where authorities impose unreasonable burdens on council tax payers. We will not cap for the sake of it, but we will cap to avoid taxpayers being subjected to excessive rises.” The average Band D rise is 5.7%, which would boost the average annual payment by £62 to £1,142 over the next 12 months. Some councils who threatened to slap rises of up to 30% were reviewing their increases. Tory local government spokesman David Curry said Labour had put “massive burdens” on councils and “fiddled the funding”.

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