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Council tax to be capped at 3.5%

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Local authorities seeking to increase council tax by more than 3.5% for Band D properties in 2011-12 will be capped, communities secretary Eric Pickles has announced.

Mr Pickles laid out what constituted an excessive council tax rise in a statement to MPs ahead of a debate on the local government finance settlement.

It said: “The amount calculated by the authority as its Band D council tax for 2011-12 is more than 3.5% greater than the same amount calculated for 2010-11 [with some exceptions].”

See an extract from the statement below.

Different principles will however apply to the Greater London Authority and to the councils of Central Bedfordshire and Shropshire, with further details to be sent to the relevant authorities.

Local Government Information Unit chief executive Andy Sawford said the capping directions were in line with expectations.

“All the indications are that ministers intend to keep council tax rises down and clearly the level of cap they have set makes it much more likely that councils will accept the offer [of grant in exchange for a council tax freeze],” said Mr Sawford.

The news follows ministers announcing that over 130 English councils have confirmed they will accept a one-off payment in exchange for freezing their council tax.

Ministers announced last October that £650m had been set aside to fund a payment equivalent to a 2.5% council tax rise to authorities which freeze their rates for 2011-12.

An extract of that statement is here:

I am therefore now informing the House that I will consider an authority to have set an excessive increase if:

(a)             the amount calculated by the authority as its budget requirement for 2011-12 is more than 92.5% of —

(i)    the authority’s alternative notional amount; or

(ii) where no such amount has been specified for the authority, the authority’s budget requirement for 2010-11[1]; and

(b)             the amount calculated by the authority as its Band D council tax for 2011-12 is more than 3.5% greater than the same amount calculated for 2010-11 (except see below).

 

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