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Council tax predicted to soar by 3%

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Council tax is set to rocket next year with top local government officers forecasting rises of more than 3% despite plummeting inflation, an LGC survey has revealed.

As many as 71% of LGC’s 111 respondents said their authority’s council tax will rise by more than 3%. And 9% of those surveyed predicted rises of over 5% - potentially triggering capping.

The Bank of England has announced that inflation may drop below 1% next year, making substantial council tax hikes a difficult proposition for councillors.

Finance specialists said the economic downturn increased demand for services such as housing but reduced authorities’ income, forcing them to consider council tax hikes.

Stephen Jones, head of finance at the Local Government Association , said: “The reduction in income coincides with an increase in the demand for some services.

Stephen Jones, head of finance at the Local Government Association , said: “The reduction in income coincides with an increase in the demand for some services.

“Many councils are seeing increases in numbers of benefit claimants and will have to work out how best to cope with that.”

Local government minister John Healey last month described the financial settlement funding increase of 4.2% as tight, but fair.

A Department for Communities and Local Government spokesman said: “There is no excuse for excessive council tax increases - we have made it clear to all authorities that we expect the average council tax increase in England in 2009/10 to be substantially below 5%.”

Residents face double whammy

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