John Andrew BBC political correspondent

Council tax rises 'not affected by politics', commission says

This year's rises - an average of nearly 13% across England - were the highest since the tax replaced the poll tax 10 years ago.

The commission felt it had to investigate why the rises were so high. It says the decision to do so was its own - it did not come under pressure from the government. It says it wanted to shed more light than heat on to the debate.

It is rare for the commission to get involved in such a politically charged area.

Who is having the finger pointed at them for causing the rise and why?

The commission does not explicitly point the finger at either councils or government.

But the balance of their findings is weighted against the government. It says the new formula for distributing grants shifted extra resources from the South to the North and Midlands - and the highest rises were in the South, where councils got the lowest grant increases.

It also says that extra council spending was justifiable because of extra pressures like pay, pensions and National Insurance costs - though it says some councils did not do enough to find savings.

Above all it criticises the "fundamentally flawed" system of funding councils which depend for 75% of their income on the government.

It says there should be a better balance of funding - a problem the government is already looking at. Its findings will be published next summer.

What is causing the north/south divide in the level of council tax?

This year the government introduced a new formula for distributing grants which it described as "fairer, more transparent and more just".

The effect was to start moving extra resources from prosperous areas of the South and South West to more needy areas in the Midlands and the North.

The Audit Commission says: "We found a clear association between the size of grant increases a council received and their increase in council tax."

If the tax increases again next year, what problems will local and central government face?

Let's be clear - council taxes WILL go up again next year and almost certainly above the rate of inflation.

However, both government and councils are under heavy pressure to keep rises to a minimum after the huge row caused by this year's record levels.

The government has tweaked the grant formula this year so there is not such a gap in extra funding between councils in the south and north.

This, together with less pressure on costs - including a lower teachers' pay award - should keep rises lower than this year.

The government has also made it clear it will use its capping powers to reduce excessive rises.

It expects percentage rises to be "in low single figures", although it is hard to see how many councils can deliver this.

Is the death knell being sounded for this controversial tax?

It is too early to talk about the death of the council tax. Until this year it functioned relatively well and has much higher collection rates than the hated poll tax.

However, in some parts of the country - and among lower income groups - it is proving highly unpopular.

Hundreds of pensioners in the South West are refusing to pay the full increase.

The government has admitted that the tax is reaching the limit of public acceptability.

Reform is inevitable, including perhaps adding extra council tax bands so that people in the most expensive homes pay more.

But this and other reforms are long-term and unlikely ahead of the next general election.

One thing is clear though - politically the government cannot afford another year of very high rises.