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

U.K. Chancellor of the Exchequer George Osborne
U.K. Chancellor of the Exchequer George Osborne. Photographer: Simon Dawson/Bloomberg

U.K. Chancellor of the Exchequer George Osborne will pledge to freeze local taxes for a second straight year as he seeks to show that his 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.

“Council tax has gone up year after year over the last decade and it has become a real burden for families,” Osborne told BBC Television ahead of his speech later this morning. “Where we can help, we do.”

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 inflation erodes household incomes and 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 centrepiece of the government’s policy, drawing criticism from the opposition Labour Party and unions, which say 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.

Britain will spend 150 million pounds to help roll out mobile phone masts in remote areas, improving reception for 6 million users, Osborne told BBC television today.

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.

Osborne said agreements to prevent the euro-region debt crisis spreading beyond Greece would provide the single largest boost to the U.K. economy, saying the failure to find solutions was proving “debilitating.”

Crisis Talks

European finance ministers meeting in Luxembourg today will consider how to shield banks from the debt crisis and boosting the region’s rescue fund. The Greek government yesterday approved 6.6 billion euros ($8.8 billion) of austerity measures after saying it will miss its 2012 budget-deficit target.

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. The measures will lead to the creation of 200,000 homes and 400,000 jobs, he said.

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