First Published by: Local Government Chronicle
George Osborne’s fresh Council Tax freeze:
Is being offered on far less generous terms than last year’s and
could result in future shortfalls of millions of pounds, LGC understands.
The chancellor announced plans to
extend the Council Tax freeze for another year, costing the Treasury some £800m
in his speech to the Conservative party conference. However, in a crucial difference
to last year’s offer, the Treasury will not compensate councils for the loss of
future revenues that comes from keeping their rates static in 2012-13.
The offer (see box below)
appeared to be on similar terms to last year with councils eligible for a grant
equivalent to a 2.5% increase in their Council Tax if they freeze their rates.
The 2010 spending review clearly
stated that “local authorities who freeze their Council Tax next year will have
the resultant loss to their tax base funded at a rate of 2.5% in each year of
the spending review period”. The review allocated £0.7bn to
compensate councils for the permanent loss to the Council Tax base up until
2014-15.
But the 2012-13 offer appears
only to compensate councils for the loss in revenue in that financial year –
meaning councils will face a funding shortfall in 2013-14.
A senior local government source
said: “The offer is a one-year deal funding costs for 2012-13. Councils will
have to think about the impact that this could have in future years when
considering whether or not to take the grant.”
A Treasury spokeswoman declined
to comment on whether councils would be compensated for losses in future years
as a result of agreeing to the latest deal.
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I support Council Tax Rebates in assisting home owners and tenants in getting a rebate on their over-paid Council Tax.