Treasury officials now expect council taxes to rise by more than 10% because cash for some local government services is being 'squeezed' in the chancellor's comprehensive spending review. In nine days' time he is expected to tell parliament how much departments can spend over the next three years. Whitehall sources have revealed that increases for health, education and social services will starve other local services of cash. That would force councils to cut essential services or raise council tax.
Some Labour insiders hope councils will be blamed for soaring council tax.
Council tax rose by more than 10% last year - four times inflation. A senior Whitehall insider said: 'We are looking at a double-digit rise again this year'.
Conservative shadow chief secretary John Bercow said: 'If the government insists on piling new responsibilities on to councils that can't cope, we will keep getting rip-off prices'.
Liberal Democrat treasury spokesman Matthew Taylor said: 'Council tax has been the biggest stealth tax for the last decade. A big rise would be a double whammy for taxpayers'.