Council tax warning

Local authorities in England and Wales would face a bill of more thany costs, say Tories. #250m a year because of the abolition of advance corporation tax credits for pension funds, according to the Conservative party which launched its local election campaign last week.

Sir Norman Fowler, who explained the figures were based on an actuarial survey, said the extra bill would lead to an increase in council taxes on top of the record rises coming into effect this month.

The figures come from a survey carried out by local authorities in collaboration with the Association of Consulting Actuaries and the local government pensions unit of the department of the environment, transport and the regions.

Fowler warned that London boroughs alone faced an extra bill of #47m, that the six metropolitan authorities outside the capital would have to find #72m a year more, and that the annual cost to shire counties would be #106m, with Lancashire the worst hit with a #7.2m bill.

‘The results of this survey justify our warnings that local authorities face a massive new bill because of the pensions tax,’ said Fowler. ‘Councils throughout the country face a severe loss of income through the abolition of tax credits. The extra costs will lead to further taxation on top of Labour’s record council-tax rises.’

Fowler claimed the move in chancellor Gordon Brown’s first Budget last July meant pension funds would be able to claim back less tax, have less money to invest, and that the tax increase would involve a higher level of employer contributions, leading to council tax rises.