Cameron: I'll let London veto big council tax rises

Unveiling a new Tory approach to town halls, Mr Cameron said city leaders like the Mayor should be free to raise money as they like - providing they can win a referendum of locals.

If residents voted against the rise, the Mayor would have to abandon his extra spending plans. "We will give power to the people to stop high council tax bills," declared the Tory leader. Mr Livingstone's budgets were singled out by Mr Cameron as an example of what the Tories claimed are "excessive council tax increases".

They claimed the Mayor's demands on council taxpayers had almost trebled since 2000, from £123 to £284 for a band D property.

In addition to voting on the Mayor's share of the council tax bill, Londoners would get a simultaneous vote whenever their local borough wanted to raise bills significantly. Mr Cameron said referendums should replace the current system of "capping", in which Whitehall can veto rises deemed to be excessive.

"The next Conservative government will require councils that want to introduce high council tax rises to submit their plans to a local referendum," said the Tory leader.

"They must explain to local taxpayers why they want to raise taxes by so much and they must show what they would do - a shadow budget - in the event of their plans being rejected."

Under the scheme, Parliament would vote on a standard council tax rise that city leaders could adopt without needing to call a referendum.

Only those who wanted to spend more would have to submit themselves to a vote. Voting papers would be sent out with the annual council tax bill with two budgets - one showing how the money would be spent if approved and the other setting out how the council would manage if it was blocked.

Council taxes have soared in the past decade, from an average £688 for a band D home to £1,321. Mr Cameron said it had become one of the most unpopular taxes in the land, "not because of the principle of tax, but because of the large hikes every year".

He said the Tories had made the mistake in the past of trying to force councils to spend less but he now believed the answer was to use "direct democracy to control council tax bills".

Councils complain they are not solely to blame for high tax increases. Some accuse Gordon Brown of using town halls as a form of stealth tax by loading new responsibilities on councils without raising central government grants in line with them.

Council tax revenues have risen 114 per cent from £11 billion a decade ago to £23.5 billion - the equivalent of four pence on income tax.

But Mr Cameron's plans ran into opposition from the Tory-dominated Local Government Association. A spokesman said: "If local people are unhappy with their council tax levels they can hold local politicians to account by voting them out in elections."

Communities Secretary Hazel Blears said: "The fact is that any local council can hold a local community vote on the level of council tax increase, and some of them already do. You don't need some new law to allow local councils to hold these referenda. It is just another empty David Cameron gimmick."