George Osborne extends council tax freeze

 

George Osborne: "This government is absolutely committed to helping people through these times"

Money to extend a council tax freeze in England to 2012-13 has been unveiled by Chancellor George Osborne.

The government cannot force councils to freeze bills but it is offering to give those that limit spending rises to 2.5% the money they need.

Money would also be offered to the Scottish and Welsh administrations, which will choose how it is spent.

The £805m move will be funded by efficiency savings but Labour said it would save people just £72 a year.

A similar pledge was included in the coalition agreement and resulted in all local authorities in England freezing or reducing their council tax bills in 2011-12.

'Not awash with money'

Mr Osborne, who is making his big speech to the Conservative Party conference in Manchester at about midday, had promised to freeze council tax for two years when the party was in opposition.

He told BBC Radio 4's Today programme the government was showing it could help families "where we can" in difficult times, despite the government not being "awash with money" as it tackles the budget deficit.

Start Quote

We are doing what we can to support jobs, support enterprise, support infrastructure”

End Quote George Osborne

He said, halfway through the financial year, it was apparent Whitehall departments were going to spend "a little way short" of the £350bn expected.

"This is often the case but sometimes government has just sat on that money because it hasn't mattered so much. I think at times like this if we've got anything spare, we should spend it."

Scotland will get an extra £67.5m in its block grant but ministers are still deciding how to spend it. The SNP has already pledged to freeze council tax for five years.

The chancellor is under pressure to spell out detailed plans to get the UK economy growing again amid mounting criticism from Labour and senior figures in his own party.

He told the BBC he would also be announcing "major investment in cutting-edge science", involving the material graphene in high performance computing, as well as a programme to extend mobile phone coverage to six million people and transport infrastructure investments.

'Can-do attitude'

The government had "activist" policies on dealing with the deficit, keeping interest rates low and cutting corporate taxes and more investment in apprenticeships, he said.

ANALYSIS

As George Osborne put it, the government is not exactly awash with money at the moment so how has it found £800m to freeze council tax plus £200m to invest in science?

The chancellor has told us he's using the "underspend" from government departments which have been "eliminating waste and inefficiency".

The explanation is that half way through the financial year the Treasury has been able to assess whether Whitehall departments are on course to spend the total of £350bn allocated for this year.

It is not unusual for some to spend less than expected and this time the chancellor will seize the money to ease household bills.

The key point from the Treasury's point of view is that this does not change the overall spending plans or the deficit reduction strategy.

He cited the increase in time an employee has to work before they can claim unfair dismissal as an example of how the government will lift the burden on business.

But in his BBC interview he reiterated that his "substantial strategy to deal with Britain's debts in a global debt storm" was essential to keep interest rates down.

Mr Osborne, who will leave the conference early to attend a meeting of European finance ministers in Luxembourg, also said a resolution to the eurozone crisis "would do more to boost the UK economy than anything else in the world at the moment".

With business groups calling for further help, Mr Osborne said his corporation tax cut from 28% to 23% - announced in March's Budget - was a "real sign of our commitment to getting business growing."

The Institute of Directors has called for corporation tax to be cut to 15%.

And on Saturday senior Conservative backbencher Andrew Tyrie said the government was not doing enough to promote economic growth.

The bulk of Mr Osborne's plans will not be announced until November in the second phase of the government's growth review.

For Labour, shadow Treasury minister Chris Leslie said: "Out-of-touch ministers don't seem to understand that people are struggling with rising prices and energy bills now, but this policy means no help for another six months.

"It would mean just £72 for a typical household, which is a fraction of the extra £450 a year the Tory VAT rise alone is costing a couple with children."

And Dave Prentis, head of the union Unison, accused the Conservatives of "playing to the gallery".

"They have found millions by making public sector workers tighten their belts. Workers who have had their pay frozen for two years and are being forced to pay more for a smaller pension. These workers are council taxpayers too."

 

Comments

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  • rate this
    +1

    Comment number 28.

    Council tax is a regressive tax, therefore the freeze benefits the richest in society.

    A person in a band H property would save about £80 p.a. whereas a personal in a band A property would save £26 p.a.

    Any pensioners on a low income who receive even a small amount of say £1 or £2 council tax benefit, will gain no advantage from the freeze, as the freeze would just reduce their benefit

  • rate this
    -2

    Comment number 27.

    I don't think this will make a lot of difference to most. Wouldn't it be far better to cut VAT instead?

  • rate this
    +10

    Comment number 26.

    As a former parish councillor (unpaid, unexpensed), I've had dealings with both district and county council operation. Being polite, they haven't a clue. If you want to waste money, give it to them. If you want good money poured after bad, call them. Local government is a bad joke. Sadly, it's on us.

  • rate this
    +3

    Comment number 25.

    A freeze in council tax is great for householders but what about local businesses? Where I live, they faced a massive hike last year, whilst houseowners had no increase - do we not value small local entrepreneurs who already face massive problems on the high street?

  • rate this
    +6

    Comment number 24.

    Curring business taxes across the board makes no sense. It would be better to keep them high and bring in new more generous capital allowances for firms who invest which would substantially lower the firms effective tax rate.

    That way companies face a dilema, don't invest and pay hefty tax, invest and receive major tax relief.

    It is common sense really

  • rate this
    +10

    Comment number 23.

    This will be good news to all those losing their jobs at councils because of spending cuts.

  • rate this
    +7

    Comment number 22.

    No pensioner in this country should go without or be denied care, shelter, food or warmth. Convicted criminals get better benefits in this country than some of our pensioners.

  • rate this
    -1

    Comment number 21.

    Clueless. All the evidence we have says that you need to spend, so what are you doing?

  • rate this
    -1

    Comment number 20.

    If you get council tax benefits then if you get more pension they want 20% of any increase above what they say you need to live on, about £136 a week so it is not frozen for pensioners

  • rate this
    +3

    Comment number 19.

    13.
    Nullus Querror
    I have to say, I'm with the walrus on this one
    ___

    I'm with Passive...

    Im very sceptical about this, there are things that just don't add up at all, like with the BAE sites being made into enterprise zones... Yes thats a good thing, but there are areas in this country that fare far worse. IMO Britain should be an enterprise zone for all small businesses.

  • rate this
    +17

    Comment number 18.

    The Conservatives need to stop "Self Loving" themselves with a pat on the back every time they get one over on the Labour party, stop using that childish phrase "Problems We Inherited" and tackle the real problems everyone faces right now...that this country is TOO expensive to live in. Tackle that, and we'll all have a little disposable income to sink back into the economy.

  • rate this
    +6

    Comment number 17.

    Many pensioners on a fixed income would be delighted to have a 2.5% increase funded by the government's clever underspending of the taxes which were taken from us.

    Any way to reverse the last government's removal of tax credits on pension investments which did so much damage to pension funds?

    Probably not from £805m but it would be a start.

  • rate this
    +5

    Comment number 16.

    More pathetic words from a politician grasping at straws.
    Are they suggesting councils should follow the example of HMG with quantitive easing ie. printing money to pay for the services ?
    I am not a member of any party because I cannot abide the stupidity of the politicians on offer.
    We desperately need another Cromwell.

  • rate this
    -3

    Comment number 15.

    This is good news for the general public, but the government still hasn't done a lot to pave the way for us younger generation. Would like to think Mr PM will make some consideration for us in his spending review.

  • rate this
    -2

    Comment number 14.

    Have the Tories stolen the SNP manifesto? Having frozen council tax for years and a promise to build new social housing to replace those purchased...it won't work - David Cameron is no Alex Salmond and Osborne is no John Swinney....but I'm sure that they will use the Scottish consequential of this additional spend wisely.

  • rate this
    -2

    Comment number 13.

    #7 passive smoking.

    I have to say, I'm with the walrus on this one.

  • rate this
    +3

    Comment number 12.

    Whitehall has an UNDERSPEND? Even with this 'defecit' that we have in Britain, the one thats currently INCREASING?

    I agree with CT freezes, but there seems to be a huge slight of hand with any information about public money here...

  • rate this
    +27

    Comment number 11.

    Cant believe we fall for this meaningless pledge. Our local councils get LESS to spend on services, but we still have to pay the same Tax. How on earth can this be great for families who are already struggling...it makes no difference at all. Our local services will be cut in size and performance, but we will all still pay the same, but for a reduced service. Commonly known as a stitch up.

  • rate this
    -9

    Comment number 10.

    A wise and clever move by the government, to help curtail the appalling waste and overspend by local councils.

  • rate this
    0

    Comment number 9.

    45% of my council tax in the Chester and Cheshire west area goes towards paying pensions for people in the civil service for the council or what not. It's the truth, why?

 

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