Prescott warns councils over budgets

Three High Spending Councils Capped

Oxfordshire, Somerset and Warwickshire have 28 days to accept or challenge the decision.

The decision to cap the three councils was announced by the Environment Secretary and Deputy Prime Minister, John Prescott.

"The vast majority of authorities have set budgets and council taxes within the limits set by my predecessor, in only three cases out of 436 authorities am I proposing cap limits which would require authorities to reduce their budget equirements," Mr Prescott told MPs in a Commons reply.

Warning that care for elderly could suffer

He said the caps he was proposing were reasonable and achievable. "If they accept my proposed caps they will be able to issue new lower bills without delay."

Mr Prescott said his decision demonstrated the Government was taking its spending pledges very seriously. "The budgets we are proposing imply reductions of £6 million for Oxfordshire, £3.339 million for Somerset and £2 million for Warwickshire," he said.

"If an authority challenges, it must propose an alternative amount together with its reasons for doing so and will have the opportunity to meet us to explain its case," he continued.

"Once we have considered all the available information we shall propose final caps which will be included in an Order, a draft of which is debated by the Commons," he said.

The three councils have reacted with dismay. Oxfordshire warned that if their spending was forced down they would have to lose teachers, cut down on road repairs and close libraries.

Council tax bills likely to fall

"The affect on local services will be very serious indeed, and services which are important to local people, which affect their lives and their ability to learn, the way their children are taught," said the chief executive of Oxfordshire County Council, John Harwood.

The decision to cap three councils was denounced by the Liberal Democrats.

"Today's announcement is an appalling and immediate reversal of Labour's pledge to abolish capping," said the Liberal Democrat local government spokesman David Rendel.

"It is an absurd decision - the bills have already gone out and are being paid on the basis of the council's budget," he continued.

"All this will do is increase the cost of bureaucracy for the councils involved, who will now have to rebill all their council taxpayers. It goes against everything Tony Blair has said about his priorities being education, education and education," said Mr Rendel.