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 408.

    The council tax for people in the Republic of Ireland is ZERO

    And yet astonishingly...there are still policemen, parks, firemen, streetlights schools roads AND the bins get collected.

    The Council Tax in the UK can be set at zero, Ireland has never had council tax for individuals.
    This means that councils and the government can go and play with each other, instead of messing people about.

  • rate this

    Comment number 407.

    Many private companies DO pay tax but its also the biggest of Tax evaders too.
    As for faster cuts being necessary its untrue, Do you understand GDP and debt? If we could afford to build the country after WW2 in debt with lower GDP and no country, why do we have to change now with HIGHER GDP (same growth for 50yrs give or take)

    If we did this in 1945 we would have no Houses and no NHS.

  • rate this

    Comment number 406.

    You would soon complain if your house were on fire and there were no Fire Service to come and put it out or you were mugged in the street becaue there were no street lighting and there were no Police to catch the thief

    But we already pay billions for these services.Well those of us that own our own homes do.

  • rate this

    Comment number 405.

    Oh dear all the people complaining bitterly that they dont use council services so why should you pay ?. You dont use the roads ? The pavements ? You dont benefit from road sweepers ? The Police ? The cut grass verges ? The schools that keep everyone elses children out of your way ? Where is your sense of community and society ? Big or otherwise ?

  • rate this

    Comment number 404.

    "deficit-funded tax cuts" highlights what an amateur Osborn is when it comes to economics. Income tax and corporation tax cuts would boost the economy and pay for themselves.

  • rate this

    Comment number 403.

    I just heard on the radio the saving would be about £70 per year. That doesn't fill my car with petrol. I have allready lost part of my heating allowance

  • rate this

    Comment number 402.

    As for use of consultants - what do you expect when services are contracted out and new technology and resulting organisational change are required? Frankly if the service needed improvement, engage with those deliverying it now, but the reality is that their work will change. Managing and enabling that takes expertise.

  • rate this

    Comment number 401.

    "Why so many of the 'Editor's Pick's' seem to have emanated from Guardian readership themed sources."

    Maybe they should focus more on the knee jerk hysterical Daily Mail readership then? Personally I'd rather not read the misinformed scribblings of people who spend all their days being alarmed and shocked at literally everything anyone other than them choses to do.

  • rate this

    Comment number 400.

    Wise Old Bob

    Quite right. The Poll Tax tumbled Margaret and her creepy cronies good and proper!!

    I am not quite old enough to remember it personally, but my Dad told me about all the fun!!

    Watching that wicked woman's sour face when Sir Geoffrey told her what's what in parliament. Removal van at No 10 the very next day. Crowds cheering!!

  • rate this

    Comment number 399.

    What will happen once the government stops "freezing" the council tax, a larger increase than normal ?
    This is a typical tory too little too late.
    Why don't they just reduce VAT & reduce fuel duty to give consumers more spending power.

  • rate this

    Comment number 398.

    "cuts over 4 years rather than 10-15 yrs shows its political rather than an economical cuts"

    No it doesn't imply that at all; what makes you think faster cuts aren't necessary economically?

    "MORE power to corporations and private companies"

    Nightmare - you mean the ones who pay taxes? Exactly who apart from private companies generate any tax revenue?

  • rate this

    Comment number 397.

    I ask everyone to check out what you pay for in your council tax. Lets give you a vision of Mine:

    1. Gypsy Site Management - They have more money than me!!!!
    2. Parking Inspectors - Just increased parking fees by 100%
    3. Car Park Maintenance - Just increased parking fees by 100%
    4. Roads - worse roads in UK
    5. Police - Reducing
    6. Housing Benefits - and from my taxes!

    Shall i go on?

  • rate this

    Comment number 396.

    395 - "I find it incredible that people would still vote for [Labour]".

    Me too but Labour's tactics are simple. Promise things. Doesn't matter to them if the promise are realistic. As shown by the last government, when it all goes wrong, they say they have "learnt lessons", then they start promising things again.

  • rate this

    Comment number 395.

    Whatever your political view the fact is Labour spent all the money and put us in an astronomical debt situation.
    That with immigration and the EU fiasco I find it incredible that people would still vote for them. When I saw that they were ahead in the pols I thought that someone must have poisoned the water supply or some sort of collective lunacy had overtaken the nation.

  • rate this

    Comment number 394.

    Comment number 360. Jeggy
    9 Minutes ago

    don't use the bus service and do not receive ANY money from council or government.

    You would soon complain if your house were on fire and there were no Fire Service to come and put it out or you were mugged in the street becaue there were no street lighting and there were no Police to catch the thief.

  • Comment number 393.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 392.

    'I don't know whether some people think the deficit has disappeared' , and 'and claiming the Coalition has done a bad job'
    1.No 2 have they done a good job? cuts over 4 years rather than 10-15 yrs shows its political rather than an economical cuts, MORE power to corporations and private companies. Attacking the unemployed and sick because their banker buddies got greedy.

  • rate this

    Comment number 391.

    Hi Gambler.
    You are of course quite correct. I think Locust needed to brush up on basic economics. Markets are never as simple as some try to make out.
    I don't see my house as being a liquid asset. If I try to sell it the housing association may have a point of view....I'm just waiting now for someone to blame the bankers for this freeze!

  • rate this

    Comment number 390.

    If we never sold all the council houses in the first place we would not be in this position of paying ridiculous amount of private rent!

  • rate this

    Comment number 389.

    Once again the headline is different to the reality. The government is only offering to give the funding if councils keep the council tax rise to 2.5%. With inflation running at nearly twice that there will be pressure to reduce services even more. Osborne gets his conference cheers while the tax payer still suffers.


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