TOWN halls are cutting funds to voluntary groups and small charities to keep council-tax rises down and avoid government capping.

Wandsworth Borough Council, in London, has this week written to eight voluntary bodies, including a cancer charity, telling them it plans to withdraw all their grants.

The Cancer Resource Centre, which provides therapy and counselling services, gave warning yesterday that it might have to close because the council is to withdraw its £37,000 grant.

Wandsworth, which imposed a 45 per cent increase in council tax last year but wants to contain this year’s rise to 5 per cent, plans to cut back £200,000 in grants.

Leicester City Council has also disclosed plans to withdraw £3.5 million from 100 voluntary groups in the city to keep rates down. Swindon Borough Council is reviewing all its voluntary sector grants.

Local government experts admitted yesterday that the threat to impose a cap on council tax rises over 5 per cent could squeeze voluntary groups across the country.

Tony Travers, of the London School of Economics, said that non-statutory services such as charities would be hit first as councils tried to shave an extra 2 to 3 per cent off proposed tax rises equivalent to over £500 million nationwide.

“If the Government wants to squeeze council tax down by a further 2 to 3 per cent . . . then millions of pounds will have to be found from local authority budgets,” Mr Travers said. “They can’t cut education, because otherwise they will have the wrath of Charles Clarke (the Education Secretary) upon them. Therefore, they will have to find the savings from the non-statutory services such as voluntary groups, parks and gardens, and street lighting.”

The proposals coincide with two new surveys which suggest that dozens of councils are expected to impose council tax rises of above 5 per cent. The Local Government Chronicle will today publish details of a survey showing that 75 per cent of unitary authorities and 70 per cent of county councils who responded plan to do so. Many of them plan double-digit rises. District and metropolitan authorities, many of which are Labour-controlled, plan smaller rises.

The finance director of the Local Government Association also told councillors yesterday that his initial soundings from councils suggested that tax rises would range from 2.5 to 32 per cent in districts, from 3.6 to 8.5 per cent in county councils and from 1.5 to 6 per cent in metropolitan authorities. Both sets of results suggest that councils may have to take further draconian steps to find savings to avoid being capped.

The letter from Wandsworth council to the Cancer Research Centre states explicitly that funding is being cut to keep down council tax. “All schemes being supported by the voluntary sector funding programme have been reviewed in order to ensure the cost effectiveness of the programme . . . whilst maintaining a low council tax,” it states. The letter promises to maintain funding for the next six months before cutting funding entirely.

Charity organisations gave warning that residents using voluntary services would be the new victims of council tax. Stuart Etherington, chief executive of the National Council for Voluntary Organisations, said: “Small and medium sized voluntary organisations are currently experiencing a real squeeze on their incomes. The situation will be made far worse by councils who view charities as fair game when looking to make savings in order to avoid raising council tax.

“But charities provide essential services to the most disadvantaged in our communities and by cutting their funding local residents will be the ones to suffer.”

Apart from the Cancer Resource Centre, organisations that are set to lose funding in Wandsworth include a bereavement service, lunch clubs for the elderly, a Parkinson’s Disease Society branch and an African families’ befriending scheme.

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