Beside themselves at the seaside

This year, the typical council tax bill will jump by £72 to £963, a rise of 8% - more than three times the general rate of inflation. But pity the poor householders of Blackpool, where the rise will be 17.3%.

The news will come as a slap in the face for residents of the seaside town, already plagued by worrying economic indicators. In recent weeks it has come at, or near the bottom of national tables ranging from house price growth to average earnings.

The average council tax bill for a band D property (valued at £68,000 to £88,000) in the town will jump to £950.89 a year. Wellingborough, Swindon and Bournemouth are also at the top of the percentage increase list, all with rises of 14% to 17%.

Experts had been expecting the tax rises to average around 7% - a rise of roughly three times the rate of inflation. But this week's figures from the Chartered Institute of Public Finance and Accountancy (CIPFA) put the increase even higher, at 8.1%.

CIPFA says the increase is the highest "for several years." A lucky few authori ties will reduce their bills, but a high proportion of council tax payers will see bills in excess of £1,000 land on their doormats.

Top of the list of offenders in terms of the overall charge this year is Tony Blair's Sedgefield constituency, with a rate of £1,194 for a Band D property.

"This year's average council tax increase is higher than we have seen for several years," says Steve Freer, CIPFA chief executive.

The finger of blame points at central government, whose grants make up 75% of local government spending. Councils argue that they are not increasing fast enough, leaving them to fill any shortfall.

"Local spending budgets are rising at just over 5%," Mr Freer says, "but at the same time grants and other financial support from government and national sources is set to rise at a little over 4%. The equation creates a need to raise an extra £1.4 billion from council tax payers, equivalent to an average increase of 8.1%."

A new factor is pensions - and the need for councils to top up shortfalls in the funds because of the fall in stock markets. Council workers are guaranteed a fixed annual pension depending on time served and regardless of how the market is performing, so if funds continue to disappoint, the shortfall could have to be met by the taxpayer for some time to come.

An LGA spokesman says: "The LGA has repeatedly warned the government that local authorities face a number of pressures - such as teachers' pay, social care budgets and increased pension contributions - that are likely to impact on local spending decisions."

What will surprise many people is that larger metropolitan areas are not necessarily those with the highest council tax or the biggest rises. Greater London, for example, will see average increases of £51 per band D household, bringing the annual total to £892 - well below the national average. Yet smaller towns are pricier; for example Newark & Sherwood in Nottinghamshire has a charge of £1,176.

Blackpool council says its sharply rising levy is to pay for improved services. "The council is facing a significant number of spending pressures," a spokeswoman says. Blackpool actually has the lowest council tax in Lancashire even with the increase, she adds, but it is unable to avoid a large increase.

"The council's strategy is to spend more money on frontline services such as education, social services and cleansing and environmental service," she adds.

Council tax is a notoriously complex and controversial tax, not least because it is very expensive to administer. Figures from the Department of the Environment, Trans port and the Regions (DETR) for 1999-2000 show that nationally, local authorities collected £10.9 billion in council tax but that £309 million of this was soaked up by the cost of collecting the tax.

Many councils have heavily staffed departments which process claims, chase non-payment and deal with applications for discounts, yet thousands of taxpayers encounter problems every year, such as being wrongly charged.

One age-old frustration is that neighbours on the same street can pay wildly different taxes because they fall under different councils.

Wandsworth and Richmond-upon-Thames in London are a case in point. They share a border but while residents in Wandsworth will have the lowest council tax in the country next year - £406 for band D - their counterparts in Richmond must pay £1,097, up almost 10%. Wandsworth is one of the few councils to cut bills, by 11.7%.

A further frustration - amplified by recent surges in house prices, especially in London and the south east - lies in the way council tax bands are classified. In simple terms, the amount you pay depends on property val uations made in 1991.

There are eight bands, from Band A for properties with a value of £40,000, up to band H, which includes property valued at £320,000 or more.

Critics say the system is well overdue for an overhaul, not only because the bands no longer reflect the actual value of a property, but also because there are now a significant number of properties worth well over £320,000, for which the amount of tax paid is capped.

Band D is for properties valued at £68,001 to £88,000 in 1991, but depending on where the property is in the country the value could have changed dramatically.

On a brighter note, the Local Government Association says the government has indicated that it is willing to reform the system of calculating and allocating government grants.

The government says it aims to begin revaluing the bands in 2005, with a completion date of 2007. The LGA believes there is a possibility of more bands being added and adjustment to the top band.

But that's little consolation to those whose bills will be landing on the doormat in the meantime.