ROOF Blog

Council taxes will rise in the next financial year by 1.8%, the lowest figure since the levy was introduced nearly two decades ago. John Denham, communities secretary, claimed that the slightly below-inflation rise had been made possible by a 4% increase in central funding for councils from next month. But he acknowledged that there would be growing pressures on town hall budgets in the coming months against the wider backdrop of the UK’s large deficit. ‘Local people will rightly be intolerant of any council if they are told that care, libraries or youth services will be cut because they have not followed our radical reforms to protect the frontline services, which matter most to people,’ he said. The increase, the most modest since the tax was introduced in 1993-94, brings the bill for an average band D property to £1,439, from £1,414 this year.

Windsor and Maidenhead council will announce today a four per cent cut in the charge from April. This will bring the average council tax for a band D property to £996 2010/11, down by £41 from 2009/10. The Local Government Association said that Windsor and Maidenhead’s tax cut was the biggest ever. Most councils are set to increase the charge by between 2.5 per cent and 3 per cent from April. The RPI measure of inflation is currently 2.4 per cent. The local authority has cut more than £1million off the local authority’s budget between 2009/10 and 2010/11 - and handed the saving directly onto council tax payers. Windsor and Maidenhead councillors said they were hoping that the radical overhaul of its finances could form a blueprint for other councils across the UK to cut council tax. David Burbage, the council’s leader, said: ‘We are showing that council tax can go down as well as up. For too long council tax bills have inexorably risen, and there is no correlation between high council tax and good services.’

The immediate prospects for Britain’s economy are grimmer than in any previous forecast and output is unlikely to revert to pre-crisis levels before 2011, the Bank of England said in a stern warning yesterday.

Presenting the Bank’s quarterly Inflation Report, the Governor, Mervyn King, was at pains to stress that, while the economy might soon return to modest growth, that was not necessarily a cause for ‘bunting and celebration’.

The fall in GDP of about six per cent had been severe and the ‘prolonged period of balance-sheet adjustment’ now beginning would hold back growth, Mr King said, adding that output was ‘unlikely, at least for a considerable period, to return to a level consistent with a continuation of its pre-crisis trend’.

The economy, he said, had ‘only just started on the road to recovery’ and the Bank believed that inflation was ‘on balance more likely to be below the target than above it for most of the forecast period, though by the end the risks are broadly balanced’.