The following is UNISON's argument put to North Somerset Council at their meeting tonight:
During this meeting you will be considering an update to the Draft Revenue Budget for the next 3 years. You will be asked to vote to accept the one year council tax freeze grant for 2012/13. We are asking you to consider our submission, which outlines the case for refusing the freeze grant this year (copies have been put on your desks), and to defer this decision until you formally approve the budget on 21st February. Our reasons are simple – you do not as yet have the full equalities impact assessments for your budget proposals. If you confirm your intention to accept the freeze grant tonight, then you will leave yourselves little room for manoeuvre in finding money to mitigate any high equalities impacts in your budget, other than use your reserves and contingency. As a result you won’t be able to meet your equalities duties, and in doing so avoid costly legal action. Initial equalities impact assessments note high impacts for services, including Adult Social Services & Housing, Children & Young People’s Services, Safer & Stronger Communities and Libraries.
Let me explain why we think you should refuse the freeze grant.
When the council froze council tax for 2011/12 you could be confident that it would not create a budget hole for the following year – this is because the government provided a grant equivalent to a 2½ % increase in council tax in each of the financial years up to 2015. BUT the freeze grant for this year is NOT a similar deal – in this case it is a one off 2½ % grant, which will create a £2.3 million hole in the budget for 2013/14. This means either you’ll have to make even more cuts or increase council tax by a much higher rate, potentially above the 3 ½% cap which will trigger a referendum (and all the costs associated with that). Your own Medium Term Financial Plan makes it clear that “given the projected deficit facing the council it is likely that council tax will need to be increased in 2013/14 and subsequent years”. In addition the 2½% freeze grant is well under inflation, which is currently running at between 4 and 5% . Accepting the freeze grant will therefore mean your base budget will keep falling in real terms.
To partially counteract the creation of a hole in your budget the November Medium Term Financial Plan suggests smoothing the effect of the grant over the next few years by only using one third of it this year, and putting the rest of it - about £1.5 million - into your reserves to use in following years. But we think that if you take this course of action you will send a clear signal to the government that despite being a low funded authority, you don’t actually need this grant, because you’re only going to be using a small amount of it this year.
You also need to take account of the fact that the government are currently proposing to calculate your future baseline funding by including the 2011/12 freeze grant, but excluding the 2012/13 freeze grant. If this year is the last time the government offers a council tax freeze grant, then refusing it, and increasing council tax by 3½% will send a message to Westminster that North Somerset Council, as a low-funded authority, cannot provide essential services on the current and future levels of government funding. As a result you will encourage Eric Pickles to increase your funding for future years.
We think that there is a good case for you to refuse the freeze grant, as some other local authorities are considering or even have done - Peterborough and Brighton we know about so far. This means that you could then increase council tax this year by 3½% without triggering the requirement to hold a referendum. This will demonstrate to both your electorate and the government that increasing council tax, and as a result your base budget, is the only way to protect vital services. It will also avoid much larger increases in future years, which otherwise would be necessary in order to recover lost income (and may also include the costs of a referendum). The alternative is even deeper cuts.
Increasing council tax would result in a significant improvement to your budget position. A 3½% increase in council tax for this year would bring in £3.2 million at an extra cost of £3.35 a month for the average council tax payer. Your base budget would then be £3.2 million greater for 2013/14. Another similar increase next year would increase your base budget by £6.4 million for 2014/15. As a result increasing council tax would wipe out your predicted shortfalls of £6.1 million. It is also our view that you could increase council tax this year by 3½% and still remain within your stated financial planning principle of being in the 20% lowest council tax authorities in southwest.
Finally, we think that councillors need to ask themselves whether they want North Somerset Council to go down in history as the second lowest council taxing authority in the southwest, or whether they want to be known as the council that did everything it could to protect vital public services?