COUNCIL tax will rise by at least 12.5 per cent next year unless the Government gives local authorities and police forces an extra £1.3 billion, the Treasury was warned yesterday.

Sir Sandy Bruce-Lockhart, chairman of the Local Government Association, has written to Paul Boateng, the Chief Secretary to the Treasury, arguing that councils are facing a £1 billion shortfall, which will lead to swingeing cuts in services or higher council tax.

Sir Sandy said that it would be impossible to keep council tax down to low single figures, as Tony Blair and John Prescott, the Deputy Prime Minister, have directed, without the emergency extra funding. Mr Prescott has already made clear that further councils will be capped if they fail to keep council tax down next year.

Sir Sandy, the Conservative leader of Kent County Council, predicted that council tax would have to rise an average of at least 11 per cent if the shortfall were not made up when council grants are allocated next month.

The warning came as police chiefs claimed that forces needed an extra £350 million next year to avoid cutting officers on the beat or raising council tax. A delegation of policemen and councillors lobbied MPs at Westminster yesterday, arguing that forces needed a 5.7 per cent cash increase, nearly double that allocated. If they did not get the money they would cut the number of officers or raise the police council tax precept by 16 per cent.

Both moves suggest that the Treasury will be put under increasing pressure to provide emergency funding for a second year to avoid politically damaging council tax rises next April, just before an expected general election.

Sir Sandy has told Mr Boateng that the Treasury is already basing its plans for the coming year on the assumption that councils will set tax at 6.7 per cent. A shortfall in pension funds, extra costs of waste disposal and the Government’s refusal to make last year’s £340 million emergency grant recurrent will, however, add a further 5 per cent to the bill, he said.

“The Government is underfunding public services while knowing its promises can only be delivered through higher council tax,” Sir Sandy said. “It hopes the public will not notice the effects on services until after a general election.”

The letter includes a detailed breakdown of costings, which show that this year councils were expected to increase their overall spending by 5.2 per cent but were only given a cash increase of 4.6 per cent to do so, with the rest to be raised through council tax.

Councils managed to bring tax rises down to an average of 5.9 per cent after persistent government threats that they would be capped. Six authorities were capped and others threatened for next year if they failed to keep rises down.

Sir Sandy told The Times that pension funds and waste disposal are the two big pressures facing councils. After the reassessment of pension funds later this year, authorities are expected to have to pay extra contibutions to make up shortfalls. Councils also have costly expenses in meeting EU requirements for waste disposal, including recycling and disposing of electrical household goods.

He said that with the schools budget set centrally, councils would lose their flexibility in allocating resources. “With school spending now heavily ring-fenced, many councils will conclude that cuts in vital services, such as roads, environmental services and libraries, are the only alternative.”

The Association of Police Authorities said that a survey by treasurers in the 43 forces in England and Wales showed that the police council tax precept would have to rise by an average of 16 per cent if the police get only a 3 per cent rise in funds from Whitehall. Last year the police portion of the council tax rose by up to 11 per cent. Every 10 per cent on the precept adds about 1.5 per cent to household council tax bills.

TODAY IN PARLIAMENT

Commons: 11.30am Environment, Food and Rural Affairs Questions; debates on defence in the world and on child trafficking.

Westminster Hall: 2.30pm Debate on social cohesion.

Lords: 11am Highways (Obstruction by Body Corporate) Bill, committee; Civil Contingencies Bill, committee; Companies Bill, Commons amendments. www.parliament.uk

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