JOHN Prescott has officially lifted the threat of "capping" from Swindon Council.The deputy prime minister announced he would not be forcibly reducing the authority's bill hike of 7.3 per cent.

The decision means the council has escaped the expense of recalculating and reprinting tax demands, which were sent out several weeks ago.

In February, Labour and Liberal Democrat councillors overturned the Conservatives' proposed tax increase of 6.3 per cent and replaced it with a rise of 7.3 per cent, which will now stand.

Council leader Mike Bawden (Con, Old Town and Lawn) said he was bewildered that the Government had threatened to cap Swindon Council for proposing a rise above five per cent, only to accept a Labour and Liberal Democrat budget of 7.3 per cent.

He said: "We can only assume that the Government cannot be trusted on council tax."

Coun Bawden said the Conservatives would continue to run the council's budget as tightly as possible to ensure the lowest possible tax increase next year.

Labour leader Kevin Small welcomed the government's decision and said he had been confident the council would escape capping.

"The Lab/Lib budget added one per cent or £10 on the average council tax, so I couldn't see the Government calling it in," he said.

"The decision means we don't have to change our financial plans, and our budget to stop Tory cuts has been endorsed by central government."

But Frank Avenell, secretary of the Swindon Fairness for Pensioners group, said he was extremely disappointed the tax had not been capped.

"Originally the council was mooting a 13 per cent increase so we can take comfort in the fact that we have kept the rise this low," he said. "We are almost certain that council tax as we know it will be scrapped by next year but we will be keeping up the pressure."

Yesterday, Mr Prescott announced he would be capping six local authorities, all of which had gone for a bill hike of more than 8.5 per cent.

The authorities were Fenland, Herefordshire, Nottingham, Shepway, Telford & Wrekin and Torbay.

The prospect of capping would have left finance bosses in Swindon facing a huge bureaucratic headache.

They would have had to send new bills to every household explaining the decision and giving a new total payment.

Direct debits for residents who pay monthly would have had to be adjusted, while any householder who had paid the total up front would have been entitled to a rebate.

The cost of sending out new bills alone could have run to thousands of pounds.

Andy Tate