Council Budget (3) Council Tax increase

The current position on council tax increases is that a local authority can propose any percentage increase it wishes but the Government has imposed a rule that if the proposed rise for any authority is above 2% there must be a referendum to gain public agreement. In addition the Government has introduced a further council tax subsidy which provides that if a council freezes the council tax it will receive an increase in its Central Government grant equivalent to a 1% increase in council tax.

It is this grant which enabled us to freeze council tax on a number of occasions over recent years and whilst there were some concerns as to whether the grants would be incorporated into the Council’s funding on an ongoing basis these fears proved to be unfounded.

So what are the current Administration proposing – well they are rejecting the Government offer and seeking to increase council tax by 1.95% which will therefore be payable in its entirety by our hard pressed council tax payers. I believe this is a very poor decision.

Frankly I am opposed to the Government’s referenda cap. In my view if residents vote for a council that wants to introduce large council tax increases then so be it on the basis that if they don’t like it they can vote them out at the next election. I don’t see why Central Government should feel it appropriate to interfere in the relationship between councils and their voters in a way which inevitably weakens local democracy and reduces the true differences between the party groups as they are forced to work within tight financial restraints.

However if we have a cap, then if parties want to increase spending and feel they have the support of residents they should put their money where their mouth is and risk a referendum. I happen to think they would lose but in Southend I was always being told that residents oppose spending cuts so give them a simple choice.

If the Administration is not prepared to go to the voters then it should accept the subsidy and protect residents from increases in council tax at this difficult time. They will say that it only adds a small sum to bills and that the Government may remove the money in later years. As I have already said we kept the subsidy before and in hard economic times for our residents every little helps.

And in any event why 1.95% and not 2%. If you are rejecting Government money why not go as high as you can if you won’t face a referendum. The reality is that this decision gains about £0.5M in the budget for the coming year – a very small sum in the context of the Council’s overall budget, and could easily be found if the Administration abandoned some of its current vanity projects.