CITY leaders are considering a U-turn on plans to increase the council tax next year.

Liverpool council had suggested it would reject the Government’s offer of around £4m in place of putting up the local levy.

But, ahead of an emergency budget meeting tonight, where around £30m of cuts will be agreed, council finance chiefs said the Government’s proposal was being “actively considered”.

To accept the sum will mean the local authority will face a £4m cut in real terms in its 2013/14 budget and have to make extra savings then.

Town hall insiders told the Daily Post that, in early private budget meetings, the authority was heading towards rejecting the one-off hand-out. When news of the latest round of cuts was announced, council leader Cllr Joe Anderson identified many problems with accepting the government offer, but no advantages.

Opposition figures said to not take the government up on its offer would be a “political decision” and not in the interests of city taxpayers.

And, ahead of tonight’s meeting, the Liberal group came out in support of the council tax freeze.

Taking the cash would be at odds with campaigns being run by major unions Unison and the Trades Union Congress, who are urging councils to reject the offer.

Labour deputy leader and finance chief Cllr Paul Brant said: “It stores up problems for the future.

“It’s under active consideration, but it does mean we will have to find £4m more of cuts or raise it by an additional 2.5% the next year.”

The reason the Government’s offer is seen as creating problems for the future is because it prevents the council from growing its tax base. The Government’s offer is equivalent to around a 2.5% increase for 2012/13.

In order to grow that figure by an equal amount in 2013/14, the council would have to increase tax by 5% or face collecting £4m less.

Communities and Local Government Secretary Eric Pickles said last week that councils could reject the freeze, but if they wanted to raise the levy beyond 3.5% they would have to hold a referendum.

Mr Pickles’s department told the Daily Post the move was “so taxpayers do not get walloped” without having a say. But Cllr Brant poured scorn on the idea, adding: “The whole policy is crazy, because you would have to come up with two budgets, one at the capped level and one not. It would have a huge cost and the vote would come in after the beginning of the financial year, so you can’t really plan.”

Liberal group leader Cllr Steve Radford, whose group has been working with the Labour administration on setting next year’s budget, added he was confident the council would accept the government offer. He added: “When the Labour group suggested they were not going to take it, we said it should be considered.

“We believe it’s important to keep the council tax down and that they will do that.

“Our view is that next year we would have the breathing space to find further savings to cover for it.” Liberal Democrat group leader Cllr Paula Keaveney – who pulled out of the joint budget talks – added: “To not accept it would be the Government offering us money and we knocking it back, so I think it’s the sensible thing to do to accept it.”

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