Council tax freeze to be extended

2 October 2011 Last updated at 17:00 ET

By Brian Wheeler Political reporter, BBC News

Mr Osborne will address concerns over UK growth

A council tax freeze in England will be extended to 2012/13 under plans to be unveiled by the chancellor on Monday.

The £805m move will be paid for by a Whitehall “underspend”, aides said.

The government cannot force councils to freeze bills – but it is offering to give those which limit spending rises to 2.5% the money they need.

All local authorities in England froze or reduced their council tax bills in 2011/12 after a similar pledge was included in the coalition agreement.

Chancellor George Osborne will announce the move, aimed at easing the rising cost of living, in a speech to the Conservative Party conference in Manchester in Monday.

The chancellor is under pressure to spell out detailed plans to get the UK economy growing again amid mounting criticism from Labour and senior figures in his own party.

He is expected to address head-on arguments for a U-turn on spending cuts and argue that his tough deficit reduction plan is even more important now because of the sovereign debt crisis in the Eurozone.

But he will say that does not mean ministers are “powerless” when it comes to boosting growth.

‘Flatlining’

Mr Osborne will cite the increase in time an employee has to work before they can claim unfair dismissal as an example of how the government will lift the burden on business.

But the bulk of his plans will not be announced until November in the second phase of the government’s growth review.

Earlier, Prime Minister David Cameron promised up to 200,000 extra affordable homes and 400,000 new jobs.

He ruled out a U-turn on spending cuts but denied he was “sitting back” in the face of economic stagnation.

Mr Cameron cited plans to boost the “right-to-buy” for council house tenants in England and release government land for development as examples of action being taken.

But Labour said the economy was “flatlining” thanks to his policies and he had run out of ideas.

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