Chancellor shelves council tax shake-up

A MAJOR review of local government finances looks set to be shelved until after the next General Election as Chancellor Gordon Brown refuses to take action which could see council tax rocket.

By Graham Dines

A MAJOR review of local government finances looks set to be shelved until after the next General Election as Chancellor Gordon Brown refuses to take action which could see council tax rocket.

The Lyons report published yesterday said council tax was still workable, but suggested the bottom band should be reorganised to help poorer households while houses worth £2.5m should pay double their current rate.

It also called for extra taxes to pay for waste disposal and an end to capping, effectively allowing authorities to charge what they like.


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SPARSE, the coalition of over 85 of England's most rural local authorities, immediately called for the Government to end the unfairness of high rural council taxes.

The lobby group, which includes Mid Suffolk, Forest Heath, Babergh, Suffolk Coastal, St Edmundsbury, Maldon and Uttlesford districts, said research had shown that rural taxpayers can pay up to a 90% premium for some services in some remote areas, when compared with their urban counterparts.

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Graham Biggs, Chief Officer of SPARSE, and its sister body, the Rural Services Partnership, said:

“We have proven over the years that the present system of funding local government results in rural people paying more in council tax and receiving less by way of services. This is an inequity which needs to be stopped. The Lyons report gives Ministers the opportunity to do just that.

“The fact that countryside councils get less per capita in government grants than their urban counterparts means the burden of higher council tax bills falls hardest on those communities. This is compounded by the fact that the higher cost of providing services in rural areas limits the level of provision to council taxpayers in the countryside.

“Time and again, the Government has said that people should not be disadvantaged because of where they live. We urge the Treasury to use the Lyons Review as a springboard to prove that this applies to the millions of rural dwellers living across England.”

In his review, Sir Michael Lyons - the former chief executive of Birmingham city council - proposed that householders in homes worth more than £2.5 million should pay a new top-rate band.

With Communities Secretary Ruth Kelly ruling out a revaluation of homes during this Parliament, Sir Michael acknowledged that his banding proposals were for the medium term.

“A failure to revalue, basically, is a vote in favour of those who have become wealthier from disproportionate increases in their houses' value and a vote in favour of the south against the north,” said Sir Michael. “This is not a question of what is fair in terms of impact on people's income.

“But it is about fairness as a property tax. Council tax is a property tax based on valuation and therefore those whose properties have become more expensive should properly pay more and those whose houses have become less expensive should properly pay less.”

He urged the Government to give councils greater flexibility by abolishing capping, which he branded “dishonest and perverse” because it penalised individual councils when most of their funding and spending decisions were dictated from Whitehall.

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