At least Budget freeze on council tax is good news

Among all the Budget tax rises announced by the chancellor the one-year freeze on council tax - saving the average family £210 a year - stood out as a rare piece of sunshine in the gloom.

The one-year freeze on council tax saving the average family £210 a year will be widely welcomed as council tax now constitutes a major item of expenditure for many low income families. Single people without children are generally not eligible for council tax benefit unless they are unemployed or claiming some other benefit, while many pensioners and low income families who are eligible for benefit fail to make a claim. 

The average council tax bill for band D properties for 2010-11 is £1,439, compared with £1,414 in 2009-10 – an increase of 1.8% and the lowest increase since council tax replaced the community charge or poll tax in 1993. Average bills will be £1,309 in London, £1,399 in metropolitan areas and £1,484 in the shires. Council tax is payable on 18.2 million properties. But for a single person on the minimum wage of around £12,000 a year, a bill for £1,400 makes a very big dent in their disposable income. 

However, the freeze may not be universal. Central government will give local authorities incentives to introduce the freeze but it will not be mandatory. The government cannot force local authorities to cut council tax but any council which limits spending rises to 2.5% will be able to reclaim this from Treasury funds. It seems likely that Tory and Lib Dem controlled councils will make more of an effort to curb spending than Labour local authorities.

The Tory manifesto promised a two-year freeze, and the coalition agreement between the Conservatives and Liberal Democrats said it would be frozen for at least one year with the hope that it could be extended to two years. Council tax has more than doubled since Labour took office in 1997 and every year millions of pensioners see their pension increases wiped out by rises in council tax.