He confirmed that grants will total£62bn next year and£65bn in 2007/08, increases of 4.5% and 5% respectively (LGC, 8 December 2005). Inflation is at 2%.
Mr Woolas said: 'Given this substantial investment, we expect all authorities to budget prudently and not place excessive demands on council taxpayers.'
He warned they could have tax increases capped if these exceeded 5%.
It says 78% are planning tax rises of between 3-5%, and 28% expect to cut jobs and front line service to hold down increases.
LGA chairman Sir Sandy Bruce-Lockhart (Con) said the grant levels took no account of increased spending pressures.