Council tax freeze expected in Budget

Government plans to freeze council tax for one year will be confirmed in tomorrow’s emergency budget, chancellor George Osborne has said.

Although central government can not force local authorities to freeze council tax, according to reports Osborne has promised local councils will be compensated from Whitehall if they keep their rises low.

The Conservative party manifesto originally promised to freeze council tax for two years. However, this pledge was reduced to one year in the coalition agreement, with the possibility of extending the freeze for another year at a later date left open.

The freeze is expected to come into effect in April next year.

Prime minister David Cameron and deputy prime minister Nick Clegg met with Osborne and other senior coalition ministers on Friday to sign off the Budget.

Speaking on the BBC’s Andrew Marr Show, Osborne said: ‘As a new government we have inherited a truly awful financial situation’.

He said: ‘No incoming chancellor has ever faced a set of public finances like this. And unless we take the determined and concerted action to deal with that then I am afraid we will find our country on the road to ruin’.

Osborne has already confirmed there will be an increase in non-business capital gains tax, moving it into line with income tax.

The budget is also likely to include an increase in VAT from 17.5% to as much as 20%, a banking levy, a freeze in public sector pay, the removal of child tax credit from middle class families and an increase in alcohol and tobacco tax.

Osborne has also announced that John Hutton, former Labour pensions minister, will head an inquiry into public sector pensions.