Chancellor Gordon Brown is resisting requests from his cabinet colleagues to reduce the impact of above-inflation council tax rises. With Labour MPs in marginal constituencies worrying that the issue may cost them their seats, Lord Falconer of Thoroton is trying to break the deadlock between the Treasury and John Prescott's Department of the Environment, Transport and Regions. The government must tell local authorities the value of their grants at the end of this month.

Meanwhile, local authorities in Yorkshire meeting in the regional flood defence committee have refused to back calls by the Environment Agency for an extra £10.8 million to strengthen local river defences. The move could add £7 per house to council tax bills in the region.