Councillors warn of tax increases

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One senior councillor said Chancellor Alistair Darling's £2.6 billion rise in central government grants to English local authorities over the next three years would leave a black hole in funding for care of the elderly.

Mr Darling said said the deal would be enough to keep council tax hikes "substantially" below 5%.

The Comprehensive Spending Review foresees a rise in central grant to almost £26 billion in 2010/11 - a real terms increase of 1% a year.

Communities and Local Government Secretary Hazel Blears said: "This is a positive settlement for local authorities with major new freedoms that put local communities in the driving seat.

"We are delivering on our devolution promises - slashing red tape, increasing financial flexibility - to support councils in delivering personalised, responsive public services and rising local prosperity.

"This settlement means there is no excuse for excessive council tax increases."

But Sir Simon Milton, the chairman of the Local Government Association, said: "This is the worst settlement for local government in a decade.

"Councils will continue to work hard for the people they serve but they face tough choices.

"The Chancellor's announcement will mean above-inflation rises in bills for council taxpayers and businesses, and there remains a black hole in funding for the care of the elderly."