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Frozen smiles on tax

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LGC's political editor on the Tory policy that's surprised local government.

On the Monday of last year’s Conservative party conference, shadow chancellor George Osborne made the speech that has arguably set the political scene for the past 12 months.

By raising the threshold on inheritance tax, he spooked the prime minister into cancelling the planned general election and created the narrative of Gordon Brown the ditherer.

A year on, and with Mr Brown nurturing the beginnings of a mini fight-back, it was down to Mr Osborne to produce another crowd-pleaser to nip it in the bud.

This year’s trick was to offer councils the means to freeze council tax for the next two years. Limit your tax rise to 2.5%, the deal went, and we’ll give you enough cash to take it all the way down to zero.

The resultant scrum as Mr Osborne briefed the press corps threw up a few points of interest.

Chief amongst them was Mr Osborne’s assertion that the proposals had received the backing of Tory councils and the Local Government Association.

Later in the main conference bar, a different story emerged. Leaders of large county councils, major London boroughs all said the announcement had taken them by complete surprise.

There was even speculation as to whether Margaret Eaton, the newly elected LGA chairman, had been kept in the loop.

Some were phlegmatic - the secrecy an inevitable consequence of such a big announcement. But for others there was a sense of genuine anger that Conservative councils had been kept in the dark once again about such a crucial policy development.

At one leaders’ dinner the consensus was that a new Tory government will either have to pony up, and supply generous enough grant settlements to make the tax freeze possible, or be prepared to see spending on front line services cut.

Mr Osborne may have secured favourable press coverage, but he could have stored up a few problems in doing so.

See also

Sunday with the Tories

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