Press release

Council tax freeze

The Chancellor of the Exchequer has today announced new support for local authorities to help them freeze council tax next year.

The Chancellor of the Exchequer has today announced new support for local authorities to help them freeze council tax next year.

The Government has set aside an extra £805 million to help freeze council tax bills for hardworking families. The support for local authorities, on top of the existing freeze, means that taxpayers living in an average Band D home in England could save up to £72 on a five per cent rise in council tax.

A second year’s council tax freeze will give real help to households in difficult times and this extra funding will make a positive contribution to those local authorities who wish to keep council tax down.

A new grant scheme will be open to all billing and major precepting authorities, including police and fire authorities, which decide to freeze or reduce their council tax next year. If they do, councils will receive additional funding, equivalent to raising their 2011-12 council tax by 2.5 per cent. Police and fire authorities will receive additional funding equivalent to raising their 2011-12 council tax by 3 per cent.

Notes for Editors

  1. A freeze in council tax this year will save families £72 compared to a 5 per cent rise, on top of the savings already made this year.

  2. The Department for Communities and Local Government will shortly write to all English local authorities with full details of the scheme, including providing an indicative breakdown of estimated grants to help local authorities with budget planning.

  3. The council tax freeze offer will apply separately to each billing and major precepting authority in England (rather than to each council tax bill issued). Billing authorities include shire districts, metropolitan districts, London Boroughs and unitary authorities and major precepting authorities include county councils, fire & rescue authorities, police authorities and the Greater London Authority.

  4. If an authority sets its basic amount of council tax (i.e. its Band D council tax) in 2012-13 at a level which is no more than its basic amount of council tax in 2011-12, it will receive a one-off grant equivalent to a 2.5 per cent increase. Police and fire authorities will receive a grant equivalent to 3 per cent of their 2011-12 basic amount of council tax.

  5. An unringfenced grant in support of the scheme will be paid to each eligible billing and major precepting authority based on the formula. Payments to authorities will be made through the grant-making powers in section 31 of the Local Government Act 2003.

  6. Local authorities who wish to reduce their council tax in absolute cash terms are still also eligible to receive the grant. Local authorities who choose to increase their council tax will not be eligible for the grant scheme.

  7. The Spending Review already provided £650 million a year of funding to local authorities to freeze their council tax in 2011-12. All local authorities (including police and fire authorities) took up the grant scheme, meaning there was no increase in the average band D amount households had to pay.

  8. Devolved Administrations will receive Barnett consequentials for this additional spending.

Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hmtreasury.gsi.gov.uk

Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.

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