Council tax 'will rise'

London families face huge increases in council tax after the election, a report to council leaders reveals today.

It warns of "potentially serious consequences" for the capital when the council tax system is updated to take account of higher house prices.

The paper, written by the Association of London Government for a meeting next week, predicts most households will go into a higher tax band - adding hundreds of pounds to the average bill.

Moreover, the capital's hardpressed borough councils could lose government grants totalling £320 million in the shake-up, with the lost money being taken from families in the form of higher bills. The document reveals that council leaders are so worried they have begun lobbying ministers to overhaul the system before it is too late.

MPs were debating local government finance today and the Tories seized on the report, describing it as a "bombshell for London".

They produced figures claiming that typical families in a band D home would pay nearly £300 more.

An average home in Dagenham worth £143,499 would move from band D to band E, costing about £267 more, according to the Tory figures. In Ruislip, the average home worth £249,691 would move to band G, costing an extra £279.

Current council tax bills are based on valuations made in 1991, before the price boom.

Caroline Spelman, the Conservative shadow minister for local government, said: "Council tax revaluation will be used to increase local tax bills by stealth. Families and pensioners will face soaring bills without any improvements in local services."