Ministers are anxious to avoid high council tax rises next spring, with a general election widely thought to be planned for May.Philip Hammond, the shadow Local Government minister, said: “What the Government has done is apply a sticking plaster to a gaping wound. They can either press for the cap to be lifted altogether or argue for action to be postponed until next year’s budget settlement.Senior local government figures accused ministers of “tinkering around the edges”, arguing that Telford and Wrekin had been asked to cut £31,000 from their budget, a move that would cost around £100,000 to implement. The Labour-led Nottingham City Council faces sending out new bills to impose a cut of just £180,000 on a budget of £330m “It’s ludicrous and ridiculous. We’re talking about shillings and pence here,” said one source.But Mr Raynsford insisted that all authorities had been given ample warning that ministers were prepared to cap budgets to keep council tax rises below the average rise of nearly 13 per cent recorded last year.He said: “We have always said we would use our capping powers if authorities set excessive budgets. Cumbria, Northamptonshire and West Mercia police are all included, along with Bedfordshire, Durham, Essex and Nottingham fire authorities. Ministers will either cap their budgets next year or limit spending by using a low estimate to calculate their government grants in next year’s settlement.All the authorities have 21 days to argue against the decision, which will not be announced formally until after the local elections on 10 June. For the first time a fire authority, Hereford and Worcester, was also singled out for capping.In an unprecedented move, another seven fire and police authorities face possible curbs on spending next year.

Fourteen local authorities were threatened with council tax capping yesterday as ministers imposed a limit on council budgets for the first time since Labour came to power. Blair allies say his U-turn was leaked by cabinet supporters of a referendum, led by Jack Straw, the Foreign Secretary.Mr Blair has been alarmed by ministers making policy “on the hoof” without consulting the Cabinet. Mr Prescott recently rebuked David Blunkett, the Home Secretary, for announcing new anti-terrorist measures while he was on a visit to India.”John will have a bigger role in knocking heads together,” one Blair ally said yesterday. “He has done it on an ad-hoc basis but now it will be done in a more systematic way.”At a meeting of the Cabinet yesterday, several ministers backed Mr Blair’s referendum decision as they sought to end the controversy.

But John Reid, the Health Secretary, admitted that the announcement was not handled well.He said: “It would have been helpful if the decision had not been leaked and the process had been rather more coherent.. Nevertheless, that was not the Prime Minister’s fault.”. He will not be formally called the Cabinet’s “enforcer”, as were Mo Mowlam and Jack Cunningham. But he will perform a similar role, ensuring that ministers clear policy with Downing Street.
The move comes amid criticism of the way Mr Blair took his decision to offer a referendum on the EU constitution without consulting most of his Cabinet. John Prescott has been given a key role by Tony Blair as the Cabinet’s “progress chaser” to ensure that ministers act in a co-ordinated way in the run-up to the next general election. Anthony Giddens, the former director of the LSE who came up with the theory of the third way is also expected to be enobled.Several union officials are also expected to boost Labour numbers in the Lords. They include Margaret Prosser of the TGWU, Richard Rosser of the TSSA and Margaret Wall of Amicus.

A clutch of ex-Labour MPs including Gerry Bermingham who stood down from his St Helens seat for Shaun Woodward the Tory defector, will also find a place on the Labour benches.. Since their appointment several have faced criticism for failing to turn up to vote.The Tories are also to face criticism because three of their five peerages will be given to party donors. They include Sir Stanley Kalms, the Dixons millionaire, Leonard Steinberg, the founder of the betting shop chain Stanley leisure, and the businessman Irvine Laidlaw a tax exile who gave about £1.5m to the Conservative party, personally and though his conferences company, the Institute for International Research.Mr Laidlaw is reported to have agreed to renounce his status as a tax exile and return from Monaco to the UK to take up his title. But his nomination delayed the announcement of the new peers while the Lords Appointment Commission examined his tax status.The new Tory peers will also include Greville Howard, a Eurosceptic who paid Iain Duncan Smith consultancy payments of up to £100,000 and allowed his house to be used for his campaign headquarters in 2001. Mr Howard is a member of one of Britain’s grandest aristocratic families.