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 388.

    5 Minutes ago
    "Mr Osborne, who will make his big speech to the Conservative Party conference in Manchester at around midday. . . "
    Thank you for that, BBC: now I know when I'll be sauntering into town for my lunch break!
    Hope you are going to “This and That” or “The Kabana” or a couple of Holt’s.
    Keep the money in the local economy.

  • rate this

    Comment number 387.

    Dale Farm is leading the way at the moment not George and Dave.

    If the travellers can knock over the planning laws then perhaps the government can follow this initiative with their own green belt plans, reviving the economy. Gated compounds for the well off, etc. Looks about the same level to me, but the travellers are better at it.

    Score so far is

    Travellers 100

    George and Dave. Nil

  • rate this

    Comment number 386.


    "315. milvusvestal
    The best option is to introduce a poll tax on everyone over 18 years of age. . .

    Is you memory so poor that you cannot remember what happened last time that was tried? It was so grossly unfair that it as good as cost Margeret Thather here premiership."

    Well: at least some good came of it. Pity she came back six years later disguised as Tony Blair.

  • rate this

    Comment number 385.

    Yet more Tory destruction disguised as a gift to the people. Less services to the elderly, millions more from the public sector claiming unemployment.
    How does a freeze in council tax do that?

  • rate this

    Comment number 384.

    #82 & Editor's Pick

    How will that change the value as at 1st April 1991?

  • rate this

    Comment number 383.

    Sweet, at least that's one bill that won't go up for me this year! ...... How can people moan about bills not going up! Some people really do live to moan.

  • rate this

    Comment number 382.

    I am interested in knowing how the Cancellor defines a freeze in council tax. This year Shropshire put the council tax up, which given there was meant to have been a freeze was a bit of a surprise, so presumably the government have a different definition for "freeze" to the rest of us who have to pay this tax. If they have actually frozen the tax do I have a right not to pay the increase?

  • rate this

    Comment number 381.

    361. LILLIAN
    13 Minutes ago

    If that is a pensioner sole source if income then it isn't. In those circumstances the taxman ends up giving the pensioner money. It is only when there is a second source of income like an occupational pension that income tax clicks in and the personal allowance for a pensioners is a lot higherl.

  • rate this

    Comment number 380.

    360 Jeggy ... I'm pleased you think you use only two services funded, or part funded, by the local authority. I hope you'll refuse an ambulance should you need one or send the police packing if your house is burgled, or next time you go to the doctors demand to see one who hasn't been educated, and of course your crystal ball tells you you'll never use services for the elderly ... or a library.

  • rate this

    Comment number 379.

    250 Million for this gesture to Daily Mail politics. Annual cost of Health in Pregnancy Grant & Sure Start Maternity Grant, cut because we have 'no choice' = £225m
    This cut will make no postitive difference to me and yet will force councils to cut more. The funding mentioned is only for 2 years but councils have to sign up for five years so this will only make things worse.

  • rate this

    Comment number 378.

    A good SNP votewinning policy being copied by the Tories.

    Now Labour are finished in both Scotland AND England.

  • rate this

    Comment number 377.

    anyway - tired of this socialist diatribe

    off to wash the Range Rover

    maybe 'you lot' would melt it down to make a 'peoples car'? seem to recall this happened in the past? - was called a peoples car by Adolf Hitler!!

  • rate this

    Comment number 376.


    'The cut in corporation tax, however, is. Another 5% handout to the wealthy. I thought we were supposed to be "all in it together".

    Slightly myopic view. The cut is designed to free up more money so that businesses can employ people.

    Also you seem to think that all businesses are run by wealthy people? This is clearly not the case

  • rate this

    Comment number 375.

    It should give us folk who provide the taxes, a bit of a breather. Obviously local counils will raise money in other ways.My wife and I are both beyond retirement age and still work our socks off. Needless to say our wage packets are royally raped every month. People forget that all these services and benefits are paid for by us. Ordinary working folk.

  • rate this

    Comment number 374.


    Vincent, it's a scale. The fact is, I could settle a gambling debt with the deeds to a house - that doesn't mean anyone realistic or sensible would conclude that a house is as liquid an asset as cash.

  • rate this

    Comment number 373.

    "Mr Osborne, who will make his big speech to the Conservative Party conference in Manchester at around midday. . . "

    Thank you for that, BBC: now I know when I'll be sauntering into town for my lunch break!

  • rate this

    Comment number 372.

    Freeze and tease: well less services should be equal to less money collected from the dwellers. Revalue and rethink the Council tax! Why not to extend the band codes to collect more from the dwellers who have a bigger share of local council services? Fairness? There is none! Just look at the dwellings valued at more than 1 million pounds. Do they contribute to the big society by paying their share

  • rate this

    Comment number 371.

    locust: in the Sunday Times rich list this year, some 73 were billionaires. I find it highly implausible that these 73 keep less than 0.1% of their total wealth in cash and other liquid assets as they need liquid assets to service their lifestyle and to invest. If you know differently, please cite credible sources.

  • rate this

    Comment number 370.

    356. The_Gambler
    1 Minute Ago
    ... how contracts should be given to private British firms since Bombardier recently lost to Siemens.

    I think it should be pointed out that Bombardier is actually a Canadian company whose primary business is Aerospace. The subsidiary company manufacturing railway stock has it's headquarters in Berlin.

  • rate this

    Comment number 369.

    295.Scott Tompson I agree with you 100%! +100
    "Everyone is moaning that the council tax is frozen. You would moan if it went up. You would moan if it was cut and services would suffer".


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