The Office of the Deputy Prime Minister (ODPM) announced yesterday that the average council tax paid by Band D properties will rise by 4.5% over the 2006-07 financial year, sparking criticism from pensioners groups angered by the above-inflation increases.

The ODPM said the average council tax for a band D property would be £1,268, up from £1,214 in 2005-06.  This 4.5% increase would only be 4.2% if the levy on London homes to fund the 2012 Olympics were excluded.  The ODPM added that the average bill per house in England would be £1,056, up 4.7 percent.

Tug-of-war between local and central government

Local Government Minister Phil Woolas said that above inflation grant increases from central Government and the continued threat of tough capping action against local authorities who put up bills by more than 5 percent have led to one of the lowest council tax increases in over a decade.

“The achievement of another historically low increase is a tribute to  the way in  which local authorities have contained their costs and budgeted prudently," he said.  “It also reflects the substantial additional support that the Government has provided for authorities and, of course, the fact that we have made clear our readiness to use our capping powers to protect council tax payers from excessive increases.”

Only two local authorities have been "designated" with a view to future capping: these are York City Council and Medway Borough Council.

But the Local Government Association (LGA), which represents local councils, said the government had failed to provide local authorities with enough money meaning that some services, such as those providing care for the elderly and those with mental or physical disabilities, would suffer.

Gloomy outlook for struggling pensioners

Retirement housing specialist Economic Lifestyle has criticised the Chancellor's failure to renew the £200 council tax rebate for pensioners in last week's budget, sentiments echoed by LGA chairman Sandy Bruce-Lockhart.  The £200 allowance was introduced last year for the first time to appease growing discontent among pensioners which had led some, including jailed 73-year-old Sylvia Hardy, to refuse to pay the above-inflation rise element of their bills.

And with no increase in winter fuel payments either, the average pensioner will have to find the extra cash from an increasingly depleted disposable income.

"It beggars belief that the Chancellor has denied pensioners any extra help this year with their council tax bills, just as a new round of bills is set to cause anxiety for millions," Age Concern said after Brown's speech.  "Council tax is a huge financial burden for many pensioners who are living on a low, fixed income."