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Inflation-busting council tax rises will push average household bills above £3,000 for the first time, The Times can reveal.
Council tax, water and energy bills will rise to £2,510 this year, up from just over £2,000 two years ago. Once average phone bills are added, the total rises to £3,169.
A survey by The Times and the Chartered Institute of Public Finance and Accountancy (CIPFA) shows that council tax will rise by 3.9 per cent from April, with the average Band D bill increasing by £52 to £1,374.
The rise, the eleventh in succession that is above inflation, means that council tax bills have doubled since Labour came to power. In 1997 the average Band D tax was £688.94
The survey of more than 250 councils reveals that all but 19 have managed to keep increases below 5 per cent. Councils that break this level risk being capped — a penalty in which the Government forces councils to re-bill every resident or cut spending the next year.
Some councils that have kept tax below 5 per cent have done so at the expense of services for the elderly and the mentally disabled. In other areas public facilities have had to close.
John Healey, the Local Government Minister, told The Times that efficiency savings and the threat of capping had enabled most authorities to keep increases down. He said that any authority that proposed an increase of more than 5 per cent would risk being capped, including the 12 police authorities who have already defied this limit.
Stephen Freer, the CIPFA chief executive, said that some authorities would be forced to cut services but it was too early to tell where this would fall. Many councils had already dug into their reserves. “This will make it much harder for them to contain rises in the next two years,” he said.
The 3.9 per cent rise is much higher than the consumer price index, the Government’s preferred measure of inflation, which is at 2.2 per cent. It is slightly less than the RPI, the popular retail index measure, which stood at 4.1 per cent in January. The rising cost of utilities and council tax means that in real terms the average household has nearly £250 less in disposable income than in 1997.
Figures calculated for The Times by the research consultancy Capital Economics show that council tax and energy and water bills account for 7.8 per cent of average earnings, up from 6.9 per cent in 1997.
Hector Sants, chief executive of the Financial Services Authority, the City regulator, said that the era of cheap credit had come to an end. “People do need to bear in mind that if we do see — as is generally forecast — a deterioration in the real economy, consumers will find paying their financial obligations more difficult than they were in the past,” he said.
Mortgage lenders have tightened lending criteria, leaving borrowers with little equity in their homes facing big increases in repayments when their current mortgage deals end.
This week Bank of Scotland stopped lending to those who did not have at least 5 per cent equity in their home or a 5 per cent deposit.
It emerged that Nationwide, Britain’s biggest building society, will stop offering its best mortgage rates to buyers without a 25 per cent deposit. Abbey, HSBC and Cheltenham & Gloucester operate the same policy.
Consumers with personal loans and credit cards are also finding it more difficult to keep their repayments down. About 3 per cent of credit cards offer 0 per cent introductory deals on purchases, down from 8 per cent in May 2006, according to Moneyfacts.co.uk, the financial information website.
Borrowers hoping for a cut in interest rates next month are likely to be disappointed. Sir John Gieve, Deputy Governor of the Bank of England, said that there was limited scope to lower borrowing costs. “Of course there is a role for monetary policy in smoothing the cycle but it has to address the whole economy and not just the financial sector,” he said.
Most economists forecast that rates will be cut again in April or May.
Taxing times
£1,374.26 Band D council tax bill for 2008-09
£659 Annual household bill for landline and mobile phones
7.8% proportion of annual earnings spent on utility and council tax
bills, up from 6.9 per cent in 1997
3.9% annual increase in Band D council tax
99.5% increase in council tax since 1997
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and the government pays 90K a month to rescue a dead bank....
riccardo, brussels,
My daughter 's house is15 yrs old. 3 bedrooms, utility room & shower room/toilet downstairs. BAND C. Buses, shops and all services.
My home. Tied Agricultural cottage. Built Circa1937 from slum clearance bricks. 2 bedrooms. 1 boxroom which just fits a single bed & chair, so now it's a bedroom! 2 buses a day , none Sundays. Under the old Council Tax we got a rebate for services not supplied. i.e. road repairs, pavements, lights etc.
The walls are damp. The garden floods every time it rains.
I tried to get it revalued but the Valuer wanted to come in and inspect and measure every room. Plans were available from the landlord, and I had already sent in room dimensions with the claim. I knew I wasn't going to get a fair deal when he said people would spend thousands of £s for the view. I told him to go. My right to privacy is all I have. I'm still paying BAND E for a. cottage which would be BAND B elsewhere. No rebate for services not supplied. One huge con!
Beryl, Windsor, England
"some councils that have kept the tax below 5% per cent have done so at the expense of services to the elderly and handicapped"
Then spare a thought for Warrant Officer First Class Fitzmaurice, who despite 22 years loyal service to his country, has been sent to jail in handcuffs for his disobedient protest against these unfair and dishonest increases.
How can we standby and see this happen without protesting ourselves against this disgraceful situation. Especially when it seems as though every Politician, Business Leader and City Employee have their noses deeply in the trough?
nemo, nivillac, france
Of course Scotland can afford to have a freeze on council tax. The Government Grant sees to that. You are quite right vote for this Government and you are quids in. In Hampshire the Government grant this year is £112 per head of population, in Durham £325 per head of population. In Fife? Just about £900 per head.
The continual use of average band D paints a false picture. In some counties most of the properties fall into A band and in others only about 5% fall into this band.
Council tax can never be fair while the present system of banding exisits. The whole system has to be reformed and a fair tax for all must be introduced.
Christine Melsom, Isitfair, Headley, Hampshire
We do not yet know what the rise consists of in Coventry, but I received a letter this week telling me that instead of paying from May to February, I know have to pay from April to January. I called to say that I have not budget for an April payment, and was told that I had no choice and if I did not pay it I would be liable for the full amount. Eventually after much arguing I got them to agree to leave the payments as they are for this year, but only because they made a mistake and didn't start taking my money until June last year. I am very angry about this - it seems that Councils can arbitrarily decide to rake in a substantial sum of money a month early, and we have no choice about it.
Jane, Coventry,
Yes, council tax has doubled under Labour, but the fact of the matter is the money raised has been invested wisely. All our roads are in an excellent state of repair, everyone has access to an NHS dentist, hospital wards are no longer mixed-sex and they are clean and well staffed. Indeed, the NHS, like state education, is a wonder of the modern world. With crime almost non-existant, drug- and drink-related crime a thing of the past, our streets safe and our armed forces in good morale and fully equipped for any eventuality, people of other nations can only look in awe and envy at Cool Britannia, at the resounding success of nearly eleven years of Labour's socialism.
Now get back to work, there's a crippling national debt to pay off.
Mike, Brighton, England
Just to wind things up don't forget you've already paid 22% income tax and 11% National Insurance before you fork out your £1374 on Band D Council Tax. At standard rate you're actually looking to earn some £2000 to pay it off , it`s a wonder Gordie has n't thought of putting 17,5% VAT on it as well.
JGD, Preston, overtaxed UK
Why would ANYONE vote labour now? Almost daily we see in newspapers healdines that: "council tax/petrol/gas/water/houses (until recently) are due for above inflation increases". How is inflation acually calculated? Government ministers just say the problem doesn't exist, and that the rate of inflation is low etc.-their heavily massaged figures brought out to justify this claim, whilst at street level the British people are treat by governments and so called 'service' providers like a sort of oil well that can be pumped dry! Truly in this country now we can expect "basic services for luxury prices" whilst business profit margins go through the roof! Just when will the population of the UK wake up and start to ask "what are we getting for all of this?". The so-called bank of equity that home owners can take comfort in is actually a pretty abstract figure and no doubt we will soon be seeing that can go down too! There is no-accountability at the higher echelons in the UK at all!
Simon, Leeds, West Yorkshire
I think people in this forum are judging Labour to harshly. Just look at the massive equity wealth the government has helped create in our houses. My property has more than doubled in value thanks to this government. I can release the equity and use it to pay my council tax for the rest of my life. No complaints here, keep up the good work Gordon
A Harris, Kettering, UK
Inflation-busting tax rises highlight the greed and inequity of our socialist Labour government. To add insult to injury, Gordon Brown has the cheek to ask us in the private sector to keep pay rises below government inflation targets (which exclude most costly expenses such as mortgages), at the same time funding thier ridiculously generous pensions.
This is a government of crooks and thieves that has no interest in social justice, just interest in clinging to power and fleecing the citizens of this country.
Peter, quetzal,
Unfortunately Britain has got what it deserves by voting Labour 3 times in a row. the cost of living rising dramatically was to be expected by voting for a tax and spend mob.
Brown needs to be voted out in the same way Major was in 1997.
The only people voting Labour in 2010 will be the spungers who the decent people in the Uk have been paying for, for the last 11 years.
The British just sit there and take it. Everyone should just pay the 1997 level of council tax. Do you think youd all go to jail?!
Look at Scotland SNP have frozen Council Tax till a better system is devised.
Vote Tory. Britain probably will not get any better but at least there should be more money in your pocket as they abolish some of these hundreds of NuLabour stealth taxes
robert, london,
So just how is this '3.9%' average calculated?. In Lincolnshire the Police have decreed that we will have to pay an extra £2 per week just for them, that amounts to a 79% uplift in Police funding and will increase council tax bills (not including the Councils increase) by some 12%...and all the time services get reduced or cut totally - just where is all this money going??
David Harrison, Grantham, UK
Labour's motto should be: take from those who don't vote for us and give it to those who do.
A Walton, Leicester, England
Why do they always compair the increase on Band D properties. If the national average house price is £180K shouldnt the band quoted be for a house priced at the national average not £100K less expensive!
Jon Derbyshire, Coventry, UK
How does the slogan go again was it - Cant pay wont pay â Somehow the poll tax dose not seem so unfair as this tax. As a single pensioner paying £2600/year I just watch my savings dwindle till I will get to the point where I will have to claim benefit after working all my life!
It is an unfair tax that reflects the fact that a person once had a family at home and a good income. To base a tax on past savings and earnings, on which tax was paid, is both immoral and unfair. To make it rise above the rate of inflation is just a final brutality. Especially when my contributions are not just for services, but to allow those already with generous secure council pensions to enjoy a better life style than I can. For those forced to contribute there life savings this is the final insult. Greed has no mercy!
Tony Woods, London, UK
On the 20th. of Feb' I attended a meeting of the South Norfolk District Council.
The principal business of the meeting was this years budget, but I had asked for leave to address the meeting with regard to, congratulating the full council on keeping the tax at the same rate for 08, as it was in2007.
I went on to descibe a system of Taxation that is controlled by the TaxPayers and is based on the Parish, Town, District and County Council. But, excluding Westminster and Whitehall.
This morning, you have an article about commercial property being registered off-shore. This is the first step on the road to controlling Taxation. The next step is to Employ and Pay, the Company Staff, through an off-shore Agency so that all Direct Taxation is the responsibility of the Employee. And then the Employee can, after notifying his local HMRC office, claim 100% tax relief on all off-shore money. There is a bit more to it than this, but nothing drastic. Just a simple manoeuvre
Regard, ATFlynn
ATFlynn, Nr. Diss. Norfolk, Norfolk.
All council tax was frozen in Scotland until a more fairer system can be devised....That is the one reason I voted for the SNP.
m alexander, stonehaven, scotland
When is somebody going to address the heinous misuse of public money by local authority staff, especially the "executives", who deem it fit to entertain themselves lavishly at our expense. First class flights around the world, expensive restaurants, the list goes on. Until they can remove their snouts from the trough, how can Council Tax be bought back under control and the public have value for their very hard earned money?
JD, London, UK
peterj, Aberdeen, Despite the freeze in council tax in Scotland, which will actually see a reduction in services in some areas, the main probelm for councils is that central government decides what services have to be provided. This is done by way of legislation, so the law says that Aberdeen Council has to provide free care for the elderly, childrens services, road repairs, schooling, the police and fire service precept and so on. However, and free care for the elderly is a good example, the monet allocated from central government to pay for all of this is done in a piecemeal fashion, where central government haven't taken into acount what councils say they need. If council tax bills in England are going up, you can blame central, not local, government.
David Leslie, Perth, Scotland
ha ha ..the snp gov has imposed a free on council tax in scotland and removed all the ring fenced malarkey that labour imposed and they now allow them to keep any savings they may find via efficiency improvements.
You guys in england need to get rid of the labour gov ..they have changed from rob the rich to pay the poor the rob everyone to waste the lot
maximus, aberdeen,
Can anyone really afford to vote labour back in ? Election now !
Benzo, Nr Chelmsford,
Ve La Revolution! God knows it's time for one!
Mr w Jones, Liverpool, England
With fortnightly bin emptyings in my area I make it that it costs me £50 for each time they empty my bin.
And don't tell me most of my Council Tax goes on financing the Police as trying to get a Policeman in my area is like conjuring up a ghost.
Bry Barnes, Somerset, Uk
Children. Inflation is 2%. Tractor production rises for the 50th quarter in a row. The Dear Leader watches over us. All is well. We have always been at war with Eurasia
Jeremy Poynton, Frome, Somerset
get rid of Labours, and you will get rid of all these taxes!
riccardo, brussels,
The main reason that nobody is protecting us from these excesses is that we vote for parties that won't protect us from these excesses. When we stop voting for the Liberal Labourtory Bureaucratic Party we might have a chance - until then so long as we (the electorate) continue to vote for the 3 main parties - we should quit moaning and lap up the wonderful government we are bequeathing on ourselves.
Rob, sevenoaks, Kent
Don't worry though, as inflation is only 2.1%.
With food costs jumping higher, just wait for the new Government inflation measure which excludes food...
Jon Burgess, Douglas, Isle of Man
If you look at the Audit Commission report for council tax expenditure you would note that a significant proportion of the tax that is paid to the local authorities is not spent on services provided to residents living in that area, but on early retirement, final salary pension schemes.
J Williams, Manchester,
Things will get a lot worse in future as burgeoning social care is astonishingly expensive. Take just one example from our area. Young offenders are looked after by a commercial care company at around £4,000 per kid per week. That's £200k per year for up to 5 years, or £1m spent on one kid. Each year that kid costs the council tax of 200 households! No one in the council is asking about value for money, the company is coining it. The cost of road and building works is truly amazing and those in charge are clearly taking the easy path and avoiding all negotiations. We need a really tough, street wise audit function that will personally sanction officials who sign poor-value contracts. Even then, we can expect soaring bills because of huge pensions and growing care needs, plus rising police and fire costs. A better way of funding is desperately needed.
Colin , Shrewsbury,
For a business to survive during lean times it must reduce its cost base. It is high time that councils learned about real world finances and did the same. My council tax has risen approximately 10% p.a. which corresponds exactly to its increase in headcount pa. ...and when 25% of council expenditure is allocated to social work and housing the alarm bells should start to ring! We must all demand accountability of our local councils. Count the number of people on each bus - Bus companies require huge subsidies to run empty buses, and this again is paid with council tax! Every inefficiency you witness in your day to day life is paid for by council tax - whether it be road workers looking at a hole in the ground, police sitting behind desks, windows broken by vandals, pavements where no houses exist. Accountablity, accountability, accountability...!!!
peterj, aberdeen, uk
Bravo, but now will there be an opology for past excessive rises and moderation of the benefits councils give their workers above those that fund them.
Councils forget they are a service not a wealth generating industry or business, there is a big difference.
wayne, huntingdon, cambridgeshire
Why nobody is protecting the public against government and energy, petrol and water companie's abuse? We have been let down by everybody. Even the organisations who suppose to protect consumer interests are speaking on behalf of the suppliers. Ofwat is one example of this.
polly, northants, uk