Bloomberg News

Osborne to Pledge 850 Million-Pound U.K. Council-Tax Freeze

October 03, 2011

(Updates with science spending starting in sixth paragraph.)

Oct. 3 (Bloomberg) -- Chancellor of the Exchequer George Osborne will pledge to freeze local taxes for a second straight year as he seeks to show that Britain’s Conservative Party is ready to help voters struggling with falling living standards.

Speaking today to the Tories’ annual conference in Manchester, northwest England, Osborne will say that the measure will save families an average 72 pounds ($112) a year, costing the Treasury 850 million pounds, according to remarks released by his office. The money will come from savings in central- government departments.

“I wanted to help families and pensioners with the daily cost of living,” Osborne will say.

Osborne is facing pressure from within his own party and from its Liberal Democrat coalition partners to find ways to ease the pain felt by voters as the economy struggles to grow. A plan to eliminate the budget deficit by introducing the deepest public spending cuts since World War II has been the centerpiece of the government’s policy, drawing criticism from the opposition Labour Party and unions, which says they’re leading to stagnation.

Today’s initiative will take effect next April. Conservatives say the local levy on properties, known as council tax, was allowed to balloon under previous Labour administrations, more than doubling while Tony Blair and Gordon Brown were prime ministers from 1997 to 2010.

Science Spending

Osborne will also announce an extra 195 million pounds in expenditure on scientific research and infrastructure, funded from underspending across government and an advance on the proceeds of next year’s sale of electromagnetic spectrum.

A team of physicists based in Manchester who last year won the Nobel Prize for their work on graphene, a one-atom thick form of carbon graphite, will get 50 million pounds to continue their work. The remaining 145 million will go to pay for more powerful computers and higher-capacity high-speed connections.

Osborne will speak to the conference today after economic strategy was attacked by a senior member of his own party. In a pamphlet for the Centre for Policy Studies research organization, Andrew Tyrie, who heads Parliament’s cross-party Treasury Committee, said the coalition government still lacked a “coherent and credible” plan for growth 17 months after taking office.

‘Incoherent, Inconsistent’

“There is much to do, and it is not just a question of gaps in policy; in places it is inconsistent, even incoherent,” Tyrie wrote.

The International Monetary Fund cut its forecasts for U.K. economic growth last month to 1.1 percent this year and 1.6 percent in 2012 from previous projections of 1.5 percent and 2.3 percent respectively. U.K. consumer confidence fell to a four- month low in August as Britons grew more pessimistic about the outlook for the economy, Nationwide Building Society said.

About 30,000 people joined a “March for the alternative: jobs, growth, justice,” organized by the Trades Union Congress, Britain’s umbrella labor movement, outside the conference center yesterday, Greater Manchester Police said. Demonstrators, who shouted “Tory scum” at delegates, called on the coalition to reverse its spending cuts.

Prime Minister David Cameron said yesterday the government is determined to do everything it can within its deficit- reduction rules to restore growth.

“We need to do everything we can to fire up the engine of the British economy,” Cameron told BBC Television’s “Andrew Marr Show.” “There’s a step-change taking place right now.”

The premier cited proposed changes to planning rules and a new proposal to allow developers to build on unused government land without making advance payments as examples of the sort of action he is considering.

--With assistance from Robert Hutton and Thomas Penny in Manchester, England. Editors: Eddie Buckle, John Simpson

To contact the reporter on this story: Gonzalo Vina in London at

To contact the editor responsible for this story: James Hertling at

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