Ministers accused of total 'funk

Ministers brushed aside a 15-month study into the future of council tax, so defusing the issue for the general election, by appointing Sir Michael Lyons to conduct a fresh review into reform options.

The study, involving all political parties and chaired by the local government minister, Nick Raynsford, concluded that the council tax should be kept, but reformed, probably by adding to the number of bands, or forming regional bands to reflect the sharp contrast in house prices.

It also suggests that the only way to achieve a major shift in the balance of funding between central and local government is through a supplementary local income tax and letting councils set business rates, a decision that angered the CBI yesterday.

The opposition parties accused the government of a "complete funk", and of preparing to prime huge council tax rises after the general election, through extra council tax bands and a rate revaluation. Local government and pensioner groups derided the delay, predicting another council tax rise next year.

Phillip Hammond, the shadow local government minister, argued that the government was heading for a retained council tax system, but with large rises for high-value properties. Ed Davey, the Liberal Democrat local government spokesman, said the government went to war on the flimsiest of evidence, yet after 15 months could not decide how to reform the council tax.