Referendum plan for big council tax rises

The public will be given the power to veto excessive council tax rises, the Government said today.

Under plans announced by Local Government Secretary Eric Pickles, local people will have the right to decide whether to allow increases above a set ceiling, by holding referendums.

Any council that set its increase above the ceiling, approved by Parliament each year, would trigger an automatic referendum of all registered electors in its area.

Residents would be asked to choose between the proposed rise and a "shadow budget", which the council must also prepare within the defined limit. A no vote would leave councils having to refund taxpayers or give a credit at the end of the tax year.

Council tax bills across England have doubled since 1997, pushing the average bill to £120 a month on a Band D home, the Department for Communities and Local Government said.

The unaccountable police authority levy imposed on council tax has trebled since 1997, it added.

The new system would replace capping by Whitehall.

Mr Pickles said: "Hardworking families and pensioners were left feeling powerless and frustrated under the previous government, as council tax bills doubled while their frontline services like weekly bin collections were halved.

"If councils want to increase council tax further, they will have to prove the case to the electorate. Let the people decide.

"The new Government is committed to tackling the fiddled funding which drove up council tax, but such reforms must go hand in hand with measures to protect the interests of local taxpayers.

"This is a radical extension of direct democracy, as part of a wider programme of decentralising power to local communities. Power should not just be given to councils, but be devolved further down to neighbourhoods and citizens."

The previous government stepped in to take capping action against 36 authorities which set excessive rises, the department said.

Some of the highest rises were South Cambridgeshire, which tried to set a 100% increase in 2005/06, and Lincolnshire Police Authority a 79% increase in 2008/09.

Council tax bills hit £1,439 on Band D in England in 2010/11.

By contrast, it was £688 in 1997/98.

This means council tax in this period has risen 109% - or an extra £751 a year on a Band D home.

Since all other bands are set as a percentage of Band D, every type of home has seen their bill double.

The average police precept on council tax in England has trebled from £54 on Band D in 1997/98 to £161 in 2010/11.

Westminster Council, which sets the second lowest council tax in the country, welcomed the move.

Council leader Colin Barrow said: "It is often said that the public is in favour of more spending. It is quite another thing to make the case for higher taxes.

"This measure is an important step towards a grown-up debate about the size of the public sector."

Shadow communities secretary John Denham said: "Eric Pickles is already making council tax-payers pay over the odds for local services.

"The cut of over £1 billion he has forced on English councils this year means everyone is paying more for lower levels of service than they got last year.

"Labour had already reduced council tax increases to their lowest ever levels and it is years since any council needed to be capped.

"His referendum is claiming to solve a problem that need not exist."