South-East loses out as council tax soars

The full picture of how council tax payers in London and the South-East are losing out compared with other parts of the country emerged today.

An Audit Commission investigation shows how the capital's householders saw their bills rocket by more than 18 per cent on average.

This was mainly a result of London councils getting the secondworst level of funding from the Government, the report says.

The South-East outside London also suffered, with bills increasing by almost 16per cent. Bills in the North-East rose by nine per cent, with the national average increase remaining under 13 per cent.

Today's report blames "fundamental flaws" in the way council tax is calculated for the soaring bills, which broke the £1,000 barrier for an average London household in April.

Claiming a variety of factors caused the increases - which peaked with a 45 per cent rise in Wandsworth - the Audit Commission says inflation plus increased pensions and National Insurance contributions for town hall staff were mainly to blame.

There was also growing pressure to care for more elderly, increase school funding, meet government targets on recycling and spend more on road maintenance.

Thirteen of the country's biggest increases in England were blamed on police authorities, which are not directly elected by the public and hence less accountable.

In London, the portion of the council tax that goes to Mayor Ken Livingstone to help pay for the Metropolitan Police and other services jumped by 29 per cent.

Nicholas True, deputy leader of Tory-controlled Richmond council, which set the capital's highest bills at £1,268 for a benchmark Band D home, said: "Here is an independent authority telling the facts that most Londoners believe - that the buck lies with the Government."

He warned that above-inflation rises next year were "inevitable" in Richmond after the Government pegged the borough's funding from April to a 4.5 per cent increase.

Ed Davey, Liberal Democrat council tax spokesman, said the report left the Government with "nowhere to hide" for the huge increases in bills.

Local government minister Nick Raynsford repeated previous warnings to cap "excessive increases" in council tax next year.

A Balance of Funding Review is already under way to look at the balance between the amount of tax raised locally and the proportion of funds provided from the national pot. The entire scheme is due to be overhauled in 2007 when a revaluation of homes takes effect.

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