Council tax bills 'set to soar as budgets are cut'

COUNCIL TAX bills could soar as a result of cuts in public expenditure being sought by the Treasury, according to Cabinet sources, writes Colin Brown.

Cabinet ministers defending their budgets are pointing to the pounds 340m transitional relief provided by the Chancellor to subsidise the council tax as a prime candidate for cuts.

'To be cynical about it, if the council tax rockets next April, people will blame their local authorities for the rise, not the Government,' one ministerial source said.

Michael Howard, Secretary of State for the Environment, will resist pressure to cut the transitional relief from his budget for next year, when elections for the metropolitan councils take place. His department has said the transitional relief, introduced with the next tax in April, will run for two years.

Norman Lamont, the Chancellor, raised VAT by 2.5 per cent to 17.5 per cent in his 1991 Budget, producing pounds 3.9bn to lower poll tax bills before the 1992 general election. Transitional relief was introduced to prevent the council tax becoming a similar disaster.

Controversy over threats of piecemeal cuts in health and social security has forced the Treasury into retreat, intensifying pressure to make substantial savings in a few areas.