Labour warns councils over spending limits

Labour councils are privately being urged by Labour leaders to set modest council tax rises in April by avoiding breaking their spending limits.

Many councils are angry with the allocations they were offered by the Government, and there were threats to carry on spending by raising council tax bills. It was estimated that council tax bills could rise by eight per cent.

If the general election takes place on 10 April, the bills could be landing on doormats a few days before polling day. The Government is ready to blame Labour councils for the increases in council tax.

Labour leaders are insisting the Government is to blame by rigging the grant support system to favour Tory authorities. But the message has gone out to Labour authorities to avoid falling into the Tory trap.

The councils have been given a clear warning that Labour will keep in place the spending clamp on councils to be forced through the Commons this month.

Frank Dobson, Labour spokesman for the environment, has warned Labour councils that an incoming Labour Government would not change the limits, which will be introduced from the new financial year on 1 April.

Councils are being told that they will not be bailed out for overspending if Labour comes into power. The message will underline Tony Blair's determination not to make promises before the election about higher spending which cannot be fulfilled.

"There is no way that any Government can tear up local government settlements or start changing the settlements through the financial year, because the authorities have got to budget to be able to meet their expenditure," Mr Dobson told The Independent.

However, Mr Dobson will be leading the Labour attack on the system for being rigged in favour of Tory councils, such as Westminster, against Labour-controlled councils, such as Manchester, which, in spite of the IRA bomb last summer, will suffer from the spending allocation provisionally announced in November.

David Curry, the local government minister, and Sir Paul Beresford, the under-secretary of state, have met 80 separate delegations to hear protests about the sums they have been offered in the provisional settlement.

The order has to be passed by Parliament by the end of the month, and the figures confirmed next month for the councils to send out their council tax bills in April.

Councils which fail to abide by the limits will face capping in March to prevent them exceeding their spending allocations. Labour leaders believe that most councils will stick by the limits, and some will spend less than they were allocated to avoid a burden being placed on the rate-payers.