The Government said that no local authority in England would have its spending capped this year. But John Prescott, deputy prime minister, has warned Herefordshire, Milton Keynes, Norfolk, Shropshire, Torbay and the London borough of Kingston that they are "on warning for next year". By then new legislation will allow him to take into account the two last financial years when exercising capping powers.
Kevin Wilson, leader of Milton Keynes Council, said he was relieved the Government would not cap its budget which rose by 9.8 per cent. The increase was backed by a local referendum, which attracted a turnout of 45 per cent.
"Difficult decisions led the council and the people of Milton Keynes to conclude that an increase of this nature was necessary to avoid deep and damaging cuts," he said.