New powers for voters to veto big rise in council tax

VOTERS will be able to veto above-inflation council tax increases in a referendum under plans to be unveiled by the Government today.

The system whereby Ministers impose a "cap" on council tax rises will be scrapped and a referendum would be triggered automatically if a local authority wants to increase bills above a specified level, likely to be inflation.

Councillors would have to draw up an alternative budget which would keep the increase below inflation – and meaning less money would be spent on services – and let voters decide which to back.

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The plan, to be unveiled by Local Government Secretary Eric Pickles today, comes amid widespread concern over soaring council tax bills over the past decade and is part of a drive to put more power in the hands of local communities.

"Hard working families and pensioners were left feeling powerless and frustrated under the previous government, as council tax bills doubled while their frontline services like weekly bin collections were halved," said Mr Pickles.

"If councils want to increase council tax further, they will have to prove the case to the electorate. Let the people decide.

"The new Government is committed to tackling the fiddled funding which drove up council tax but such reforms must go hand in hand with measures to protect the interests of local taxpayers."

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Council tax bills across England have doubled since 1997, pushing the average bill to 120 a month on a Band D home. In the early years of Labour's period in office, bills soared with the average increase hitting 10.3 per cent in Yorkshire and the Humber in 2003/04.

Amid growing public fury during the early 2000s, Labour announced it would cap increases deemed to be excessive, forcing some councils to issue fresh bills or limit their budget for the following year.

Today's announcement will see that system overhauled. MPs would set a ceiling – likely to be around inflation, which is currently five per cent – each year and any council wanting to increase bills by above

that level would be forced to let voters have their say.

An alternative "shadow budget" – which would keep the increase within the limit, leaving the authority with less money to spend – would be produced and voters would be asked which they back. A "no" vote would force the council to refund taxpayers or issue a credit at the end of the year.

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The move, which would come into force in 2012, fulfils a Conservative manifesto vow. Residents are already expecting a freeze in next year's bills as part of another coalition pledge, although the Tory promise of a two-year freeze has been watered down.

The coalition has pledged a review of local government finance but while the veto was a Tory idea the Lib Dems are still pushing for a local income tax to be introduced, which they argue is a fairer system because it takes into account people's income.