Council tax, not inheritance tax, is what the Autumn Budget will be remembered for in the long term. The response to a Chancellor’s statement often varies considerably between days one or two and three or six months later.

The Westminster world was excited yesterday by Gordon Brown being forced on to the ropes by David Cameron. It was obviously a 30 minutes that Mr Brown will want to forget but, however bruised, he will remain Prime Minister for a long time.

Similarly, the fevered debate about inheritance tax will soon fade. There will be gains for married couples who have not employed tax accountants, but less for wealthy homeowners than under the Tory plan. While of symbolic importance, however, the direct impact will be limited. Many more people will be affected by the Government’s spending plans, particularly for local authorities. No tax generates more fury than council tax, and we will hear a lot more from the Liberal Democrats about their plans to replace council tax with local income tax.

Whitehall funding for councils will increase by an average of 1 per cent in real terms in the three years from next April: 1.5 per cent in the first year, then 0.8 and 0.7 per cent. The Government claims that this should be sufficient to ensure improved services, enabling local government to keep council tax rises low, with “an overall increase of well under 5 per cent in each of the next three years”. This is well above the forecast 2 per cent annual growth in consumer prices over the period.

These figures do not look plausible. Local authorities complain that the Whitehall grant is not enough to provide new services promised by central government. Hence, the Local Government Association says: “Councils will be left with no choice but to raise council taxes by more than inflation.”

Of course, ministers always say that they have been generous and council leaders always claim that Whitehall has been mean. There are some positive moves: greater flexibilty from the removal of ring-fencing on £5 billion of grants; fewer Whitehall indicators; more resources for concessionary fares; and more to achieve efficiency savings (which can always be found).

Councils are, however, being asked to do much more: particularly to meet the growing costs of providing services for the increasing numbers of old people. The LGA claims that the additional cost of managing an ageing population will equal the full funding increase over the three years, leaving nothing extra for other services. More is also required for green priorities, such as waste management, and for housing. Moreover, the proposed new supplementary business rate, to aid projects such as Crossrail, has been set at a level lower than that backed by councils or the Lyons review, and is partly offset by a cut in related funding.

The probability, therefore, is that authorities will be pressing for council tax increases of more than 5 per cent a year and will blame central government, especially as many more town and county halls are now under Tory control. Whitehall will no doubt blame Conservative profligacy and cap those proposing the biggest rises, but ministers may have to find some extra money to help out pensioners and others as polling day approaches. Those will be the headlines in a year or more’s time.

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