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Treasury announces council tax freeze

Treasury announces council tax freeze

Category: Money

Updated: 03/10/2011
First Published: 03/10/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

George Osborne has announced that it the Government extend the freeze on council tax for a second year in England.

On taking over Government last year, the coalition said to all local authorities that they had the option to either freeze or reduce council tax bills.

Under the plans, councils that limit their spending rises to 2.5% will be able to access an £805 million fund that has been made available because of savings in Whitehall.

Money will also be offered to Scottish and Welsh councils, although they will have more freedom to choose how it is spent.

The announcement means that the Government has kept its promise it made in opposition to out a hold on council tax if it was voted to Downing Street.

"A second year's council tax freeze will give real help to households in difficult times and this extra funding will make a positive contribution to those local authorities who wish to keep council tax," said Chancellor of the Exchequer, George Osborne.

The policy has been met with a mixed reception, with Labour writing off the freeze as 'too little too late'.

"Out of touch Ministers don't seem to understand that people are struggling with rising prices and energy bills now, but this policy means no help for another six months," said Chris Leslie MP, Labour's Shadow Treasury Minister.

"And it would mean just £72 for a typical household, which is a fraction of the extra £450 a year the Tory VAT rise alone is costing a couple with children."

The chief executive of Family Action, Helen Dent, described the announcement as being worth 'a loaf of bread and a pint of milk a week'.

"It is spitting in the wind compared to rocketing food and fuel costs," she added.

The British Retail Consortium (BRC) said the council tax freeze would be welcomed by retailers as it will keep money in the pockets of consumers, but is warning that business rates must also be frozen.

Under current rules, this September's RPI inflation figure will determine next April's Business Rates rise in England.

The BRC says that could easily top 5% even though recent figures show the volume of sales and retail employment are actually falling.

"If the Government really believes in generating growth, it will limit the burden for businesses too," said the BRC's director general Stephen Robertson.

"Under the current rules, businesses are likely to be hit by a destructive 5% increase in business rates next April on top of a similar increase imposed this year.

"These extra costs can only undermine retailers' ability to invest and create jobs. The Government should abandon the rates-roulette of basing each year's rates increase on the previous September's RPI.

"We need a system that produces Business Rates changes that are more certain and, above all, more affordable."

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