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Government sets out capping decisions

Two local authorities in England will be set a notional budget for 2006-07 that will reduce their capacity to increase council tax for next year and beyond, Local Government Minister Phil Woolas has announced.

Two local authorities in England will be set a notional budget for 2006-07 that will reduce their capacity to increase council tax for next year and beyond, Local Government Minister Phil Woolas has announced.

In March, Mr Woolas announced to Parliament that the Government proposed to take in-year capping action against York City Council and Medway Borough Council. The decision to cancel the designation for in-year capping and nominate instead will enable the authorities to avoid rebilling for this year.

Mr Woolas said:

 "The two authorities should be under no illusions - this is a serious step to take
and we are disappointed that the actions of York and Medway  have made it
necessary.

 "The notional budgets which we propose setting will be used in future  capping comparisons. The authorities will have their budget increases  next year measured against the notional budgets rather than their  actual,
higher budgets. This will provide their council-tax payers with  extra
protection next year."

Today's announcement follows 10 successive years of above-inflation grant increases from Government - and a continued threat of tough capping action - that have contributed to one of the lowest council tax increases in over a decade.

Mr Woolas continued:

 "The Government has already made it clear that it expects an average  council tax increase in England of less than 5 per cent in 2007-08.

 "Authorities should remain in no doubt that the Government will not  hesitate to use its capping powers to deal with excessive increases in  future years, including requiring them to  rebill, if this proves  necessary."

Both authorities will have 21 days from receipt of the notification of nomination in which to challenge their proposed notional budgets, which are at the level of the maximum budgets originally proposed when they were designated.  The Secretary of State will then carefully consider any challenge that they make.

Notes to editors

1. On 27 March 2006, the Government announced that it was designating Medway Borough Council and York City Council with a view to capping the authorities in year.  Both authorities took up their right to challenge the maximum budgets proposed and provided the Government with the information it had requested.

2. The notional 2006-07 budget requirements which the Government proposes to set are £148,101,000 for Medway Borough Council and £97,484,000  for York City Council.  In Medway's case the proposed notional budget is £382,000 lower than their actual 2006-07 budget requirement and in York's case it is £285,000 lower.
 
3. The authorities have 21 days in which to challenge their nomination.  A final decision will be taken in the light of any challenge the authorities may make.

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