Two-year council tax freeze, vows Osborne

Sep 30 2008 by William Green, The Journal

SHADOW Chancellor George Osborne yesterday pledged a Tory Government would freeze council tax for two years.

But council bosses immediately dismissed the promise as half-baked populism, criticised the plan for interfering with local government and questioned how the move would be funded.

The surprise move would save a typical Band D household more than £200, with town halls pegging tax rises to 2.5% or below getting extra Whitehall funding.

Mr Osborne said cash would be found from savings in central consultancy and advertising budgets to pay for a 2.5% cut in council tax, effectively cancelling out any increase.

Qualifying councils would also need to make savings, but could freeze or cut bills for two years. Councils rejecting the deal could set their own tax levels, subject to a possible local referendum if they wanted “excessive” rises.

The cost of the scheme has been estimated at £500m in the first year and £1bn in subsequent years after it was unveiled at the Conservative conference in Birmingham.

Mr Osborne said: “The country may not be able to afford upfront tax cuts because borrowing is too high, but families facing the squeeze cannot afford tax rises either. So we’re going to go into partnership with local councils.

“If they find matching savings in their town hall, we will give them these savings from Whitehall.”

To cheers, he said: “The next Conservative Government will freeze your council tax for at least two years.

“Every council tax bill of every family in every council that takes part will be frozen.

“Instead of council tax bills that rise year after year, under Labour, millions of families will get help at the time that they need it most.

“Conservatives will not leave people to struggle with the credit crunch alone. We won’t walk on by. We will help families over this crisis.”

But Sir Jeremy Beecham, vice-chairman of the Local Government Association and a Newcastle Labour councillor, said: “It is half-baked populism given the amount that councils are already making through efficiency savings which are very substantial.” He said councils were facing significant cost pressures such as the bill for adult social care, adding: “I cannot see how theoretical savings from consultants are going to save even enough to bridge the gap between current spending and inflation.”

Nigel Martin, a councillor in Durham and vice-chairman of the Association of North East councils, said: “This is another example of central government interfering with local councils.

“As a Liberal Democrat, we feel local councils should take responsibility for their actions and not be told what to do all the time.

“If councils do put up the council tax and local people don’t like it, they have got a very simple solution, they vote them out.”

He also warned of a bureaucratic nightmare and questioned why some councils would be unable to claim cash even if they had a good reason to increase council tax by 2.6%.

Peter Atkinson, Tory MP for Hexham, said: “We all know council tax has become a very heavy burden on the least well-off families in this country.

“So anything that can be done to relieve that burden at the same time as encouraging councils to be thrifty and efficient is to be welcomed.”

Every council tax bill of every family in every council that takes part will be frozen