Businesses facing new council tax

But Chancellor Alistair Darling's Comprehensive Spending Review also had bad news for the city.

Local authorities are likely to be awarded only a one per cent increase in their annual grant for the next three years, just over a third of the current 2.7 per cent inflation.

This means only 2.5 million more on Sheffield Council's annual grant of almost 250 million, which provides most of its funding.

The extra money is more than council bosses feared.

A Financial and Service Strategy for four years, approved by the council cabinet yesterday, assumed the grant would not increase at all and proposed cuts totalling 71.2 million.

Sheffield Council leader Coun Jan Wilson pledged not to cut jobs or front line services and to keep tax rises to a minimum. The council aims for savings through better value contracts and efficiency.

Mr Darling demanded that councils reduce spending by 3pc a year. They have had to save about 2.5pc a year for the last three years.

Regeneration body York-shire Forward is one of nine regional agencies to lose almost 6pc of funds by 2011.

The Local Government Association described the proposed settlement, up for final approval in December, as 'the worst in a decade.'

Council Green Party leader Coun Jillian Creasy said departments were turning into 'Cinderella services.'

Business rate powers, allowing councils to impose a levy of 2p in the on firms with property with a rateable value above 50,000, were welcomed.

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