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.


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."



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  • rate this

    Comment number 188.

    Private sector budgeting was problematical enough so I don't underestimate the challenge to Councils. However, a few moments spent on your Council's website will be quite instructive. The sheer scope of activities, departments, sub committees, research projects, services, data, etc etc. If ever there was a need to differentiate "nice", from "essential" to have, & "cost" from "value", it is now

  • rate this

    Comment number 187.

    All very nice, but if it's not matching inflation it's a tax cut. This story could be rephrased "Chancellor borrows yet another billion on behalf of the Britsh taxpayer so he can distribute it to the British taxpayers". When we finally kick this borrowing habit, we'll have to work out how to pay it back

  • rate this

    Comment number 186.

    Council tax freeze will have a greater effect on services local councils can offer, no surprise that the ones who will benefit the most is the richest. Think about it a percentage increase in council tax would be smaller for the poor and larger for the rich, yet another plan to make the rich richer.
    It's another reason both parties will be Con-Demed.

  • rate this

    Comment number 185.

    Instead of moaning about who introduced council tax and how regressive it is, perhaps the Labourites can answer why it wasnt repealed or reformed during 13 years of Labour government? Perhaps Labour had bigger fish to fry, like prosecuting two ruinous wars , abolishing boom and bust (lmao) and spending the country into an oblivion? Just a thought.

  • rate this

    Comment number 184.

    "...Are nursery fees society's biggest rip off?..."
    I feel your pain and yes nursery fees is in the top cadre of society's biggest rip off. But this has nothing to do with Government. Its a personal choice which we make. It may be helpfull with the grants labour had in place but that was very wrong and wreckless as taxpayers money is not a private subsidy fund

  • rate this

    Comment number 183.

    Familys will save £72 a year,I'm sick of hearing all parties talk about familys. I wonder when the goverment is going to do something for single people they should remember they have a vote as well

  • rate this

    Comment number 182.

    "136. Chris
    Reality check Mr Osborne -

    Loss of child benefit £200 a month"

    1) This means you (and/or spouse) are higher rate taxpayers.
    2) It hasn't happened yet

  • rate this

    Comment number 181.

    I hope that we are not going to see any rantings about peole who live in big houses should pay more council tax by the ever more vociferous " I want somebody else to pay for me crew" .

  • rate this

    Comment number 180.

    Lowest Rated
    "To all those whingers and moaners out there who are against the council tax freeze please can you give the money you save to a local charity of your choice to help your local community."

    I think you will find that those 'whingers and moaners' are merely complaining about the spins and lies being applied to this paltry sweetener in the face of widespread public service cuts.

  • rate this

    Comment number 179.

    Even though it seems not a welcome relief to some, least it is a policy which is 'helping' ease the financial pain being felt by most. I would welcome tax breaks to low earners and to those who progress too. For me it would at least encourage workers to progress and not view career progression as 'I pay more tax'
    As for proposed reduction in corporation tax, we will see extra jobs as a result?

  • rate this

    Comment number 178.

    Council domestic "rates" to used to be based on the "rateable value" of every property.
    Round about 1990 this was swept away by Maggie's Mob and replaced by the community charge (Poll Tax).
    When this evil tax blew up in the face of that government it was replaced by the current system, banding various types of property according to their value, introducing charges bases on those values.

  • rate this

    Comment number 177.

    It is in the interests of local authorities to cut front line services in any economic downturn, because if they carried on as normal and saved money by cutting their jobsworths it would make people ask why they hadn't done it as a matter of efficient practice before.

    Most councils have no need to cut services, just get rid of the non-jobs & overstaffing in inefficient/incompetent management.

  • rate this

    Comment number 176.

    Council tax in Cardiff only goes up every year for less services, I attended a citizen forum and was told this was to pay for pensions? by a P.R. spokesman. at great cost to the rate payers.The councilors Lib/dem would not face the voters 'or the council taxpayers they are useless spineless jellyfish.

  • rate this

    Comment number 175.

    This chancellor is a joke - if we want to stimulate spending and growth in the economy, the sensible thing would be to cut VAT. Freezing council tax won't be noticed with the rise in fuel, train fares and everyday purchases due to high inflation. Sorry bumbling little George, you haven't a clue

  • rate this

    Comment number 174.


    How can council tax be regressive if it is only indirectly linked to income? Just because someone inherits their parent's house which is band D doesn't mean they have a large income (or any income at all). Similarly, pensioners may have a nice house but little income.

  • rate this

    Comment number 173.

    I would rather them raise council tax its better than cutting services for the old and other people who need the help. I know this will appeal to the selfish but they end up paying by the back door in raised car park charges

  • rate this

    Comment number 172.

    So Osborne is going to use 'spare' money to help maintain a council tax freeze having just taken even more than he is offering away from councils. Spin, lies smoke and mirrors, whatever you like to call it, what the heck is spare money in this case. If it is spare, surely it would already have been absorbed in the fight against our debt? What is the purpose of money governments usually 'sit on'?

  • rate this

    Comment number 171.

    To all those whingers and moaners out there who are against the council tax freeze please can you give the money you save to a local charity of your choice to help your local community.

    Thank you.

  • rate this

    Comment number 170.

    Prices go up ... salary raises are miniscule ... an already-high council tax stays the same ... you work out the comments ... it doesn't take a genuis.
    The only ones against the freeze will be people with plenty of money and no regard for others

  • rate this

    Comment number 169.

    Its typical to note that some on here see the way forward is to increase the council tax levy on people in larger homes. Remember, no matter what the size of a persons home the council services are EXACTLY the same. Council tax banding is morally wrong and needs amending, next we'll be charging people in larger houses more to get on a bus or buy a loaf of bread.


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