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Osborne costs tax freeze at£1.5bn

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George Osborne has calculated that the cost of the Conservatives’ proposed council tax freeze will be£1.5bn to the public purse.

The shadow chancellor of the exchequer said the cost would be£500m in the first year of the scheme’s operation, rising to£1bn in the second. He said the figures had been checked by Institute for Fiscal Studies.

Under the Tories proposal, if a council is able to hold its council tax increase to 2.5% or less, central government will supply the cash to reduce it by a further 2.5%, representing a freeze or cut.

He claimed a future Tory administration would find the money through slashing advertising and consultancy budgets.

Individual councils free to accept or decline the offer. Those that decline will be free to set their own council tax levels subject to previously announced policy of having to hold local referenda on excessive increases.

In a press briefing after the speech, Mr Osborne said he was “assuming 100% take-up so these are cautious estimates. I can’t believe there would be a council who when offered this deal won’t take this up.”

“All the discussions we’ve had with leaders of Conservative authorities and LGA leadership - they are very interested in the deal.”

“We think there is the opportunity at the local level in town hall to make these savings. We are confident that a local authority interested in keeping council tax levels to 2.5% will be able to do so.

“I think there’s plenty of opportunity to make these savings. We haven’t even talked about advertising and consultancy spending at local levels.”

Money would be transferred to the block grant provided to local authorities and would apply to every council in England.

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