Denham: Local authorities face 'tough decisions' to keep down council tax increases

More local authorities need to take "tough decisions" to keep council tax increases low and protect frontline services, Local Government Secretary John Denham has told the House of Commons.

He accused some councils of ducking the "really hard challenges" brought on by the recession, and said taxpayers would "rightly be intolerant" if services were cut.

Hailing a "good" settlement that would see councils receive an average 4% funding increase, Mr Denham said the agreement should see Band D council tax increases fall to a 16-year-low.

It is the final year of the first three-year settlement for councils which had provided £8.6 billion in funding while red tape and targets had been cut.

"This settlement, which underpins our ambitious vision for local government, is how we will not only protect but also continue to improve local services despite the tighter financial climate," Mr Denham said.

"Local government has a good record on making efficiency savings, but the truth is we have still not seen the really hard challenges tackled consistently by every council and every area.

"And I believe that local people will rightly be intolerant if they are told by their councils that frontline services will be cut when their council hasn't taken tough decisions to introduce shared services; sharing senior staff with other authorities, primary care trusts or other providers; or through making the best use of public assets."

Mr Denham also said ministers had set guideline council housing rent increases of 3.1%, rather than the 6.1% previously agreed, as the higher figure would "not be fair or affordable to tenants".

And he confirmed an intention to impose a budget cap on police forces in Cheshire, Warwickshire and Leicestershire, limiting them to the equivalent of a 3% increase in council tax over 2009-10 and 2010-11.

The decision had been taken after "previous excessive increases" in the police precept, Mr Denham said, and the Government "would not hesitate" to cap future excessive increases.

For the Tories, Justine Greening said councils, under the Labour Government, had been subject to more "micro-management" and "diktat from Westminster" when they needed greater freedom to set their own priorities.

Ms Greening said council tax bills had doubled since 1998, bringing in £14 billion a year more from council taxpayers.

Urging a council tax freeze, she said even a 3% rise this year would add £42 to the bill for an average Band D home, pushing it up to more than £120 a month.

"A typical pensioner couple is now paying £685 more a year on Band D than they were in 1997-98."

Labour's Phyllis Starkey (Milton Keynes SW), chair of the Communities and Local Government Select Committee, attacked the Tory proposals, describing Ms Greening's comments as "risible".

For the Liberal Democrats, Julia Goldsworthy said the three-year settlement had not been controversial and had gone "according to plan".

But she raised concerns that council funding had not been set for 2011-12.

"What I don't really understand is why anyone is crowing about this amazingly stable settlement when it looks like next year we're about to disappear off the edge of a cliff and no-one is prepared to talk about what that actually means for services that haven't already explicitly been protected."

By "not coming clean", the Government was taking time away from councils to consider what they needed to prioritise.

She added: "If we don't have information as a matter of urgency now, councils will be preparing their budgets from October this year and what they will have to do is probably go through a slashing exercise on current services which Freddy Krueger would be proud of."

Both Commons motions on local government finance and council tax were approved without a vote.