Council tax is set to be frozen in Birmingham as the authority takes advantage of Government plans to give authorities a bonus grant if they keep taxes down.

Officials are putting the finishing touches to a budget that will freeze council tax at the current rate of £1,113.67 for a band D property.

It follows a Government pledge that councils which freeze taxes will receive a share of a £650 million fund.

Birmingham is set to receive around £8.3 million, although this is dwarfed by the £105 million cut in central government grant which the authority will be forced to cope with.

Treasury funding for the city council, including the basic “formula grant” and other specific grants, is to fall from £932.6 million in 2010-11 to £827.2 million in 2011-12, a reduction of £105.4 million.