Amidst the debilitating list of impositions in the Autumn Statement came the confirmation that local authorities will have the “freedom” to increase Council Tax bills by up to five per cent next year. They will not be obliged to do so. But given the spendthrift municipal culture, the expectation is that most will do so. Jeremy Hunt spoke about “more Council Tax flexibilities”. Yet councils already have the power to increase Council Tax by as much as they like – provided they secure the consent of their residents via a referendum. By increasing the threshold to five per cent this democratic safeguard is being eroded.
The poorest will be hit the hardest. It has been calculated that the poorest ten per cent pay 7.1 per cent of their income in Council Tax whilst the richest ten per cent pay 1.5 per cent of their income in that way. When the Coalition Government brought in the requirement for Council Tax referendum veto ten years ago it offered protection to those who needed it the most. Eric Pickles, then the Communities and Local Government Secretary, declared:
“Councils have a moral obligation to help hard-working families and pensioners with the cost of living. If they want to hike taxes on their local residents above 3.5 per cent they’ll now need to get a direct democratic mandate to do it.”
Rather than eroding that protection, it should be strengthened. When Pickles brought in his reform some areas already had excessive bills. There should be a mechanism not merely to limit increases but to achieve reductions. In Oxford, the Band D Council Tax is £2,225. In Nottingham, it’s £2,294. Liverpool’s is £2,195. If a certain number of residents sign a petition, then a referendum should be allowed in these places to cut it below £2,000 – should the majority decide that is quite high enough.
Council leaders sometimes brush aside objections by saying what wonderful value the Council Tax rise represents – “less than an extra pound a week” or some such message. But these increases are cumulative. £50 one year, another £50 the next year. For some households living in a high Council Tax area or another town where the bills are lower is the difference between being able to afford an annual family holiday or not.
It could have been worse. Most forecasters expect inflation to be falling next year. But it is likely that in April a five per cent Council tax increase will be below inflation.
Cllr Georgia Gould, the Labour Leader of Camden Council, tells The Times that borough finances will “remain in a critical condition” even with the Council Tax rise.
Ah yes, Camden. Where the chief executive is paid £218,474 a year and another 16 officials are on six figure salaries. Where there are 691 council homes that have sat empty for over six months. Plus 901 empty municipal garages. Where the Council finds a spare £3,000 a year for the membership of the Stonewall Diversity Champions programme. (Doubtless providing advice on the spending of £10,000 on inclusive trans road crossings.)
This is also a Council which puts children in institutional children’s homes (at a cost of over £150,000 a year each) even when they are in mainstream education – which indicates that an adoption placement or at least foster care would be viable. A Council where seven members of staff are employed to work as trade union officials. Where all these failings are explained away by 34 spin doctors.
Naturally, money is found to pay London councils an annual membership sub of £161,958. As the “chair”, Cllr Gould is paid an allowance of £22,446. (On top of the £52,715 in allowances she gets from Camden Council.) It also pays a hefty sub to the Local Government Association. These payments are crucial to pay for all the lobbying needed to show how councils need more funding.
If Camden Council really is in “critical condition” with its finances, then perhaps Cllr Gould might ask herself why.
The difficulty is that it is not only Labour council leaders pleading poverty. Too often Conservative leaders also make absurd claims about spending having already been “cut to the bone.” They face an important challenge when setting budgets in the coming weeks. Our credibility as a low tax Party has been destroyed in recent years by an addiction to big spending. If that credibility is to be restored then a start can be made locally. Conservative councils do not have to increase Council Tax even though they have been empowered to do so. The temptation should be resisted. If Conservatives join with Labour and the Lib Dems in a mission to raise the Council Tax to the maximum possible then what is the point of electing Conservative councillors?