Spending review ahead of funding cuts

ESSEX county council has ordered a major review of spending after predictions that a clampdown on Government handouts could see council tax go through the roof next year.

ESSEX county council has ordered a major review of spending after predictions that a clampdown on Government handouts could see council tax go through the roof next year.

But with Whitehall support for councils rising next April by £1.1billion less than in the current year, and a further squeeze planned for 2005-6, there is no guarantee that local authorities will be able to prevent double figure tax rises.

For householders in the south and east, the prospect is grim because of the Government's policy of diverting resources to the north and midlands. The result this year was a 16.7% rise in Essex council tax and a 18.5% rise in neighbouring Suffolk.

Lord Hanningfield, leader of Conservative-controlled Essex County Council, forecasts Essex will be the worst hit authority in England.


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He said: "All the indications are that there will be a substantial rise in council tax. We are expecting to lose £45m in Government grants over the next three years but we still have to provide the services people want.

"We have already taken major steps to try to look at our spending. All service departments other than education, children and highways have been told to expect a standstill budget next year."

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The Government's spending figures are hidden at the back of Chancellor Gordon Brown's Budget book. It sets out in stark terms the difficulties facing local councils.

The Treasury this year provided an extra £2.7bn, but next year there will be a rise of just £1.6bn – that's £1.1bn lower that in the current 12 months. In 2005-06, the rise will be cut to £1.5bn.

Any chance of the Chancellor changing his mind evaporated when more than 30 independent economists anticipated that Government borrowing next year will be almost £10bn higher than Mr Brown's forecast because he had been over optimistic about tax revenues.

Colchester's Liberal Democrat MP Bob Russell, a former council leader, said this year's average tax rise of 12.9% was more than double that of the year before Labour swept to power.

"Essex is Tory controlled, Suffolk is in the hands of Labour and the Lib Dems, yet both have been forced to raise taxes through the deliberate actions of Tony Blair's government."

In Suffolk, Bryony Rudkin who leads the joining Labour-Liberal Democrat administration, promised a major consultation exercise to ask voters which services should have priority.

Suffolk councillors were stunned at the reaction to this year's rise, nearly seven times the rate of inflation, and Mrs Rudkin said: "We are looking to save money on procurement, the outside goods and services which we buy. "We have ordered a review of our property portfolio – that's not selling off the family silver but trying to maximise our revenue."

West Suffolk Tory MP Richard Spring said swingeing council tax increases were having a devastating effect on people on fixed incomes, notably pensioners.

"It is a truly disgraceful that in Suffolk, the elderly are subsidising richer folk in the north of England because we are not getting a fair deal from Whitehall."

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