Labour has come under fire over plans to slash funding for councils that set lower tax bills.
Communities Secretary Angela Rayner has introduced new rules under which town halls that keep bills down will receive less in government grants than those with high bills.
Her department has said it would be wrong to “reward places that have been able to keep council tax levels low”.
But the Tories accused the Deputy Prime Minister of “classic socialist redistribution” and warned the move would encourage local authorities to increase bills by the maximum 5%.
Shadow communities secretary Kevin Hollinrake said: “Labour’s plans will devastate councils that have worked hard to keep taxes low and services efficient.
“It is a classic socialist redistribution from areas that have worked hard to keep bills down to councils who may have not.
“It could mean tens of millions of pounds being taken from thrifty councils and given to spendthrift ones.
“By punishing responsible councils and rewarding those who raise taxes, this Government is actively encouraging higher bills for hardworking families.
“This proves yet again that Labour’s idea of fairness is filling their pals’ boots in areas they represent with taxpayers’ cash raised in areas that they don’t.”
John O’Connell, the chief executive of the TaxPayers’ Alliance, added that taxpayers would be “absolutely astonished to see Angela Rayner target local authorities who have done the right thing and kept their rates low”.
He said: “This vicious Labour Government looks like it is actively planning to punish responsible councils, thereby hammering many households already barely keeping their heads above water, all to subsidise reckless town halls who fail to live within their means.
“Ministers should immediately rule out this disgraceful plan and reward authorities for taking the right decisions, not offer extra cash for failure.”
The reforms – the details of which are open to consultation – are expected to be brought in by 2026-27.
A consultation paper published by Ms Rayner’s department last month states: “By making uniform assumptions, this approach will be simpler than perfectly reflecting each local authorities’ actual council tax resources through bespoke adjustments for each authority.
“It will be fairer to local authorities and their residents where they have had to take difficult decisions historically on council tax, often due to having weaker tax bases, as we will remove the impact of these local decisions on council tax allocations.
“This will avoid perverse incentives and ensure that government doesn’t reward places that have been able to keep council tax levels low due to having stronger tax bases.”
