Council Tax 'Rebels'

Keep track of which councils have rejected the government’s financial incentive to freeze Council Tax next year

First Published by: Local Government Chronicle

Brighton & Hove City Council, the country’s first council to be run by the Green party, were the first to announce they would reject the governments’ funding for a Council Tax freeze and instead ask residents for 3.5% more next year.

Ever since the chancellor announced last Autumn that there would be funding for a second Council Tax freeze there have been mutterings about the financial pitfalls of the deal.

Instead of the four years of funding offered in 2011, and which was snapped up by every council in the land, this year’s offer is for one year only, leaving councils quickly facing a financial cliff edge which will have to be smoothed by spending cuts/savings or an even larger Council Tax increase in 2013-14.

Sensing this disquiet, LGC surveyed councils and found that as many as one in five were seriously considering turning down the financial incentive. Soon after our survey, it emerged that Teeside leaders had been discussing the issue and in a united front, bar Hartlepool BC, four of them announced they would increase Council Tax by 3.5%

Nottingham and Leicester City Councils weren’t far behind, and since then we’ve also heard from Gedling BC and Stoke-on-Trent City Council.  So far, all likely suspects as councils run by national opposition parties, but would any Conservative and Liberal Democrat councils take a stand and turn down their government’s not very enticing one-year offer?

Interestingly all the Tory councils declared so far have kept their increase below 3% while the Labour and Green councils have opted for as large an increase as they can get without triggering a referendum.

More councils - of all colours - are expected to announce increases in the weeks before budgets must be set, so it will be interesting to see whether any Tory council breaches the 3% mark. 

READWHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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Osborne's council tax freeze is an old announcement

The Chancellor promised to freeze council tax.

First Published by: New Statesman 

You could be forgiven for thinking that George Osborne has pulled a rabbit out of a hat with his pledge to freeze Council Tax for a second year running. Indeed, most of the papers lead on the story this morning and treat it as a new announcement. 

"Tories find £805m for Council Tax bill freeze," says the Times, adding that Osborne, who will address the Conservative conference today, has offered "comfort" amid the "austerity drive".

But the truth is that this is merely a restatement of existing policy. Osborne first promised a two-year Council Tax freeze in his speech to the 2008 Conservative conference. "I can tell you today that the next Conservative Government will freeze your Council Tax for at least two years," he said.

The policy went on to feature in the Tories' 2010 election manifesto and the coalition agreement included a pledge to "freeze Council Tax in England for at least one year", and to "seek to freeze it for a further year."

With his growth strategy under attack from Tory backbenchers, it's no surprise that Osborne is talking up this measure. But it is indicative of the weakness of his plan that, with growth stagnant (the economy has grown by just 0.2 per cent in the last nine months), the best he can offer is a re-announced £805m Council Tax freeze. 

Families paying an extra £450 a year in VAT (owing to Osborne's decision to raise the tax to a record high of 20 per cent) will gain just £72 from the measure.

Were Osborne truly determined to stimulate growth, he would have announced an emergency tax cut such as a temporary reduction in VAT (as advocated by Ed Balls). A VAT cut would boost consumer spending, lower inflation, protect retail jobs and increase real wages. 

When Alistair Darling reduced VAT to 15 per cent during the financial crisis, consumers spent £9bn more than they would otherwise have done. A VAT cut today would be a similarly effective fiscal stimulus. 

As Boris Johnson wisely observed in his Telegraph column in July, "if we were to cut taxes now, it might be best to start with VAT to get people shopping again." Osborne's decision to raise VAT (a measure he described as "permanent") by 2.5 per cent to an all-time high of 20 per cent automatically knocked 0.3 per cent off annual growth (OBR figures).

A Council Tax freeze will do little to stimulate growth and little to relieve families facing the biggest fall in living standards since the 1920s. We'll get a better idea of Osborne's plan when he addresses the Tories. so far, all the signs are that he will offer little to combat the growth crisis facing Britain.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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BUDGET 2012: COUNCIL TAX BOOST FOR FORCES

No Council Tax for troops at war

First Published by: Express

BRITAIN’S Armed Forces and their families emerged as Budget winners.

Thousands of soldiers will no longer have to pay Council Tax while deployed overseas. Their rate of tax relief is doubled to 100 per cent.

The families’ welfare grant has also been doubled and the Chancellor released what he described as an extra £100million to improve Forces accommodation.

Mr Osborne said he was able to fund the boosts thanks to the cost of operations in Afghanistan being £2.4billion lower than expected over the remainder of the parliament. David Cameron has pledged that British Forces will end combat roles in Afghanistan by the end of 2014, with the vast majority of troops expected to come home before then.

Critics argue that this means the numbers eligible for Council Tax relief while serving abroad is therefore likely to come down dramatically from the current level of 9,500 personnel serving six-month tours. They also pointed out that Mr Osborne last year froze £140million earmarked for improving Forces accommodation due to the huge Government deficit.

The squalid state of many military quarters has been a scandal for years. A spokeswoman for the Army Families Federation said: “On the surface all of this is very good news. “The Council Tax announcement is very welcome though the devil will be in the detail.

“The money for the accommodation is a reinstatement of spending frozen – and it is not the full original £140million.” Major Charles Heyman, editor of guidebook Armed Forces of the UK, said: “By and large it is good news. But it will not be the end of the morale problem due to the defence cuts.”

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYSABOUTOVER-CHARGED COUNCIL TAX.

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The government must sort out council tax

First Published by: The Guardian 

George Osborne's conference promise to freeze Council Tax for two years was clever and eye-catching pre-election politics: this most visible of taxes is the bill that many electors most resent.

Council tax is not an invention of this Labour administration, yet Labour will increasingly be blamed for its continued flaws unless it grasps the nettle and offers a better solution than the new Tory plan. 

The Osborne proposal is designed to win votes - but its flaw is that it does nothing to address the underlying problems of local council finance which must be addressed soon.

Having been wrong footed by the shadow chancellor last year over inheritance tax, Labour should this time ensure that its response is effective both as short-term politics, and as a sustainable policy strategy.

There is a superficial attractiveness to Osborne's suggested "deal" between a Conservative Treasury and those councils who are willing to participate; if efficiency savings are made locally to a certain threshold then the government will "match" these and enable a £200 lower Council Tax bill than might otherwise have been the case.

Everyone is in favour of efficiency savings – though we have heard this many times before. Vague plans to slash "advertising and consultancy budgets" are too unspecific. The risk for the Conservatives is the appearance of promising a tax cut, when in truth it will only happen in a hypothetical scenario if several hurdles are overcome.

Here, then, is a political liability that Labour could exploit - if the Tory plan turns out to have been a political gimmick, it may look calculating and stealthy to an unforgiving public mood.

Moreover, Osborne cannot guarantee the levels of council tax he seeks unless he also guarantees to keep the local government grant settlement at a high level. Otherwise, any Council Tax freeze may only occur at the expense of vital public services.

Placing a sticking plaster over the Council Tax problem just will not do. There are deeper inequities in local government finance that need to be solved. Yet the shadow of the poll tax means that governments are always tempted to leave it in the "too difficult to think about" category.

However proper council tax reform is possible to achieve - and in a politically popular way. A shift away from grant dependency and towards a broader basis for local revenues is the underlying reform most needed in order to modernise council finance.

Council Tax is based on ridiculously outdated 1991 property values. There should be an automatic biannual rolling revaluation independent of government which would help ensure that some residents do not overpay beyond the point justified by the true capital value of their property.

Council tax should also be made fairer as it applies across society: the narrow range of bands is still too regressive and a "fairness" reform would do more for those in less expensive properties.

Yet even the ditching of the hated poll tax for Council Tax in the 1990s showed that trying to shift to an objectively fairer system on a revenue neutral basis could still leave losers as well as winners.

What stalls a rational and fair reform is the fear that losers will feel the pain – with political consequences – while winners barely notice the gains that they quietly pocket.

But there is a way out of this conundrum.

Labour's reforms should therefore ensure there are no losers at all – and that everyone gains from the changes. How is this possible? New money needs to be identified for "transitional relief".

We would suggest that £3.5bn could be raised by asking those super-wealthy individuals lucky enough to be earning over £250,000 incomes to pay 10% more on every pound earned above the quarter-million level.

This would allow a very real £200 reduction in Council Tax bills for the average householder as a "reform discount". Any efficiency "bonuses" could drive this reduction even further.

This could trump the flimsier efforts offered at the Tory conference. Immediate pressures on household budgets would be alleviated – and without threatening local services. The key difference would be in also seizing the opportunity to manage the transition to a fair and sustainable council tax reform.

Labour needs to sort this problem out soon. If the government misses this opportunity, it risks facing a Conservative offer which, on the surface, may look very appealing to the electorate – even if its proposal leaves the headache of true reform to another generation.

READ WHAT:ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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COUNCILS PICK WIDOWS' POCKETS

First Published by: Express UK

WIDOWS and divorcees are being targeted for a huge rise in their council tax bills.

Labour-run councils want the eight million people living alone to pay the same rate as couples or households with several working adults.

SUNDAY EXPRESS

Their plan to scrap the 25 per cent single person discount would push up bills by nearly £360 a year on the average Band D home. Communities Secretary Eric Pickles last night condemned the move. 

He said the unfair “widows tax” would affect millions of pensioners living alone after the death of their spouse. Single parents would also be hit.

“There is clearly a well-orchestrated campaign being run by the Labour Party to target the elderly, single mothers and the most vulnerable,” Mr Pickles said.

“They want to punish people who have worked hard all their lives and paid their taxes simply because they live on their own. There is a gross sense of injustice at raising taxes that could force people out of their homes. This is a widows tax and shows how out of touch Labour is.”

The demand by Labour-run town halls to scrap the discount, which has been in place since council tax was introduced in 1993, emerged from a Government consultation on how to save 10 per cent of the cost of Council Tax benefit.

In scores of submissions from Labour councils, town hall chiefs argued that working single people or pensioners not on benefits could afford to pay the full council tax bill to cushion a £500million cutback on benefit claimants.

The London borough of Southwark said: “The unconditional award of a single person discount regardless of income seems inappropriate when asking local authorities to manage a 10 per cent reduction in funding while protecting vulnerable claimants.”

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Oldham’s treasurer Steven Mair said the “universal discount irrespective of income” should go, while Bradford’s strategy delivery manager Mark Widdowson said its exclusion from debate was a “major missed opportunity”.

Among those backing the call were Luton, Doncaster, Bedford, Colchester, Burnley, South Tyneside, Exeter, Sheffield and Oxford councils as well as the London boroughs of Islington, Hounslow, Brent, Harrow and Newham.

Matthew Elliott, chief executive of the TaxPayers’ Alliance, said: “It beggars belief that some town halls are suggesting abolishing one of the few reliefs on Council Tax at a time when so many are struggling with that incredibly burdensome bill.

“Getting rid of single occupancy discount would be a tax rise for millions of people in order to sustain generous council tax benefits for a select few. Council Tax has almost doubled in the last decade. Some local authorities need to stop treating taxpayers as an endless source of revenue and focus on finding savings instead.”

Of the 23 million households in England, eight million claim the discount. Of that total an estimated 560,000 are working single parents. A further 2.9 million homes are occupied by a single person over 65.

The average Band D bill is £1,439.

In its submission, South Tyneside council said it would be “easier to collect an increase in Council Tax as a result of a discount being withdrawn from someone who can afford it than someone on benefit who can’t”.

Kirklees council in Yorkshire said: “Not all those in receipt of single person discount can be said to need the 25 per cent reduction in liability.”

Stockton-on-Tees council calculated “removal of the automatic entitlement of 25 per cent single person discount would generate 2.5 times the 10 per cent savings target”.

The Chartered Institute of Public Finance and Accountancy said: “Given the costs of the single person discount scheme it has to be asked whether this continues to be a fair way to use limited resources when others on much lower levels of income are facing reductions in help and therefore increase in the amounts they will have to pay in respect of Council Tax.”

The political row over council tax discounts emerged as Work and Pensions Secretary Iain Duncan Smith vowed to overturn defeats inflicted on the Welfare Reform Bill in the House of Lords.

Bishops led the revolt against plans for a £26,000 benefit cap and watered down proposals on child maintenance and Employment Support Allowance. The Bill returns to the Commons on Wednesday.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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No love lost on council tax

First Published by: Local Government Chronicle

There has been much talk of communities secretary Eric Pickles’ new-found respect for councils in the wake of their response to last August’s riots. But ministers’ conduct over authorities’ decision on whether or not to put up council tax next year has been pretty shabby.

The government will seek to punish any local authority that defies it by increasing council tax next year

Last week Grant Shapps stood up in Parliament to state more bluntly what Mr Pickles had put in garbled terms a couple of weeks ago - that the government will seek to punish any local authority that defies it by increasing Council Tax next year.

Whatever the relevant merits are of giving taxpayers a freeze this year that could lead to higher tax rises or deeper spending cuts in future years - the opposite of the government’s deficit reduction rationale - by threatening councils, ministers are quite simply breaking their word.

The announcement of the one-year £675m funding offer that ministers were making available to English councils that keep Council Tax levels frozen contained a simple statement: “The scheme will be voluntary.”

Except apparently it won’t. Quite how ministers intend to punish local authorities that choose to put up Council Tax is unclear.

Mr Shapps made hints about retrospectively adjusting baselines once the new retained business rates system is implemented. To do so according to whether or not a council took advantage of a voluntary offer would surely attract the interest of the legal profession.

Come Wednesday, Bob Neill was writing to local newspapers around the country telling their readers that any council putting up Council Tax was doing so at the behest of “municipal officers” intent on “filling the town hall coffers” and urging them to lobby against such a move.

That a minister was using the Central Office for Information -part of the civil service - to attack officers’ professionalism left more than one person I spoke to genuinely appalled. The department remains unrepentant.

And just in case councils are dealing too easily with the political pressure, the department has sown confusion by devising a method that leaves different types of council with different levels at which referendums kick in.

As Lord Beecham, the former LGA chairman, said in the Lords this week: “Making a council budget is a difficult and protracted process at the best of times”.

These are most certainly not the best of times. And if ministers are intent on using their platform to have a bit of sport at the expense of councils, the department could at least give some clarity on what the rules of the game are.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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Council Tax Set To Rise By 3.5% As Preston Tightens Its Belt

First Published by: blogpreston

A Council Tax rise for Preston households is on the table as the city decides how to spend its money up until 2016.

The three-year financial plan for Preston City Council, due to be discussed at cabinet on Wednesday, sets out how the Labour administration plan to spend millions of pounds on improving the city, while struggling to balance the books.

Preston Town Hall will see its grant from the government reduced by £5.5m in this financial year, triggering a number of redundancies and savings.

Leader of the council, Peter Rankin, has also decided a Council Tax freeze will be scrapped – with rates going up 3.5%, equating to £9 a year extra for Band D properties.

Some council services including leisure, cemetery and car parking charges will also see steady increases over the coming years.

In plans set out by cabinet member for resources, Martyn Rawlinson, 18 council jobs will disappear.

Six are roles which are currently vacant and Coun Rawlinson says many can be cut through voluntary redundancy and retirement. Plus other posts will become redundant at the end of the Guild year.

Cllr Rawlinson, writing in a guest post on Blog Preston, said the city should be proud of a budget which aimed to promote the city in a time of “great opportunity.”

He said: “The speed and depth of the grant reductions, coupled with other budget pressures linked to the recession means that some cuts and sharing of services with other councils are unavoidable. Labour in Preston though, is fighting back. We are resisting privatisation and limiting cuts through smarter working and reducing overheads.”

The budget also ring-fences £2m in funding for the Preston Guild and commits the administration to redeveloping the city centre despite the turmoil surrounding the Tithebarn scheme.

However, a regular saving of £100,000-a-year which is normally put away for future Guild years has been suspended in favour of investing in infrastructure and trying to capitalise on tourism off the back of the event.

Cllr Rawlinson said the council were pursuing city centre development options that will improve the city centre offer and be protecting historic buildings like the covered markets, the old post office and the Harris Museum.

Leader of the Liberal Democrat group, Bill Shannon, blasted the Council Tax increase.

He said: “All over England, local authorities are tightening their belts and deciding it would be totally unacceptable in the present economic climate to increase Council Tax.

“Not here in Preston, though, where Labour are slamming on an unbelievable 3.5% increase, despite the fact that most public sector employees face another year without salary increases.

“But then it’s so much easier to increase taxes than tackle the real issues.”

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Council Tax frozen, budget cut by 6%

First Published by: Virtual Lancaster

Lancaster City Council agreed to reduce its overall spending by 6% when it set its 2012/13 budget yesterday.

At the same time, its share of Council Tax will be frozen as the council sets its budget at £20.190M – a £1.291M reduction on the 2011/12 budget.

"This is the first budget I have presented in 25 years on the City Council," said Council leader Eileen Blamire in her speech on the budget. "I have to confess that I expected it to be a very difficult task and I approached it with some trepidation.

"However I have been amazed at how relatively easily it came together.

The Council has had to reduce its overall spending by 6% and at the same time we have accepted “Uncle Eric’s” kind offer and chosen to freeze CouncilTax.  This leaves £20.190 million – a reduction of  £1.291 million on last year. "

The reduction in spending has been managed through careful budgeting and efficiency savings. At the same time the Council say vital services for the public and facilities have been protected and additional investment has also been found for areas such as community safety and regeneration.

“Finances are tight and all councils have to look where they can save money, but unlike some local authorities we have been able to do so without making any major cuts to our services," said Coun Blamire.

“I’m pleased to say that we’ve also been able to freeze Council Tax to reduce the burden faced by hardworking families in these difficult times, while also identifying some room for additional investment such as funding for Police Community Support Officers.

“Overall the budget strikes a good balance between helping people and communities in the short term, as well as promoting improvements to assist with economic growth in the future.

“However, we’ve been able to make many of the savings through being more efficient and these are the sorts of savings which can only be made once.”

As part of the budget councillors will be asked to consider including the following growth and other items in its 2012/13 spending plans:

- £99k to fund up to nine PCSOs in the district.
- £5k to fund new brown tourism signs at junction 35 in Carnforth.
- £45k for a new apprenticeship scheme to get young people back into work.
- £300k for the Lancaster Square Routes project, further revitalising the city centre.
- £200K to improve New Town Square and Euston Road in Morecambe as part of the Morecambe Area Action Plan
- Reinstatement of £40K to help develop proposals for a Morecambe Business Improvement District (BID).
- £40k to develop funding bids for major regeneration projects in Lancaster and Heysham.
- Inflationary rises to Arts and Voluntary, Community and Faith Sector (VCFS) bodies, totalling £11K per year.

The council’s priorities are currently in the process of being finalised. The draft priorities on which the council will be focusing its resources are:

- Economic Growth
- Health and Wellbeing
- Clean, Green and Safe Places
- Community Leadership

Common themes which will underpin these priorities are working together in partnership, managing the council’s resources and environmental sustainability.

"We are not freezing the grants to the Arts Organisations and Voluntary Bodies, but we are giving them a much needed inflationary rise and we are hoping that the County’s Second Homes Funding may give further support," Coun Blamire also noted in her speech.

"One of our priorities was to fund more allotments, and we have included  £40,000 to bring in more outside grants.

"I thank all the officers who have guided us through this process and all the Cabinet members who have made it possible to present a Budget that we can be proud of in difficult times."

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When a council tax freeze is not a freeze

First Published by: The Adam Smith Institute

Councillor Colin Barrow, leader of Westminster Council, had a post on Conservative Home yesterday boasting about Westminster's Council Tax freeze:

Today Westminster’s Cabinet will confirm our intention to freeze our Council Tax for a record fifth year in a row, whilst at the same time responding to the concerns of our residents by putting an additional £2 million back in to street cleansing for the coming year.

Sounds good. Except that, in exchange for freezing council tax, Eric Pickles is offering councils a payment equivalent to a 2.5% rise in their council tax in exchange for freezing their rates. 

In other words, Westminster's council tax "freeze" has come at a cost to the rest of us that do not live in Westminster and might be facing rises in our own council tax. 

Eric Pickles's money is taxpayers' money, so this "freeze" is in fact a tax hike for everyone else so that Westminster council can look prudent. 

There's a bigger point here than just the deceptive use of taxpayer money. That the central government can do this sort of trickery to allow councils to look prudent (and to avoid bad headlines for the government) points to a much deeper rot in the system. Councils only get about a quarter of their funds through Council Tax — the rest is from national taxes and centrally-collected and -allocated business rates. 

The idea is to use government to redistribute between rich and poor parts of the country. This bears the same zero-sum thinking of all redistributive taxation.

A much better approach would be to devolve fiscal, tax and regulatory powers to councils, so that the poor parts of the country can grow their way into prosperity. If the Barking and Dagenham Council could slash business regulation, it could stimulate business and attract investment to enrich its residents. 

If the plain people of Islington don't want laissez-faire, fine, but they shouldn't stop poorer places from enriching themselves by cutting back the state.

Alas, it's unlikely to happen. As long as councils are dependent on the central government for most of their funding, their "constituents" will not be council taxpayers but government pen-pushers. No wonder they're happy to boast about tax "freezes" that cost taxpayers even more money.

Are you paying too much for your Council Tax