Friday, 11 January 2013

Why local authorities should increase council tax above the cap and put their budgets out to a referendum

Councils across the country are in the process of setting their budgets and deciding whether or not to increase council tax or accept the government's third year council tax freeze grant. The Tory council I work for, and whose area I live in, have accepted the council tax freeze grant in 2 previous years. Each year my trade union, UNISON, have asked them to refuse the freeze grant, because although it currently seems an attractive offer, it has dire consequences for the future. The freeze grant is effectively a bribe whereby councils are given the equivalent in funding of a council tax increase (this year it's a paltry 1%) as long as they don't increase council tax. But the problem with this is that unlike an actual council tax increase the freeze grant only stays in their budget for 2 years, whereas an increase in council tax stays in their budget for ever.

So for councils across the country who have accepted freeze grants, when these all disappear from 2015 they will have massive holes in their budgets. In the case of my council that hole amounts to close to £4 million currently, but if they accept this year's freeze grant the hole will increase to close to £5 million. This will mean even greater council tax increases or even more massive cuts from 2015 onwards. Given that George Osborne has decreed that austerity will last until 2018 and from 2015 my council are being forced to make approximately £10 million of cuts each year (and this is only top of the £50 million they will have made in the previous 4 years), this £5 million hole caused by them accepting the freeze grants amounts to half of these cuts. So these are the reasons UNISON has been arguing for councils to reject the freeze grant and increase council tax up to the maximum 2% cap.

The Tory led government have made it incredibly difficult for councils, not only by cutting central government funding by 30% over 4 years, but also by capping council tax increases - this year the cap has been lowered from 3.5% to 2%. If councils want to increase council tax above the cap they now have to create two budgets - one with a below the cap increase, another with an above the cap increase, and put both these budgets out to a referendum in their area so that the people can decide. This obviously comes at a cost to councils, and to my knowledge none so far have done this.

This year things have been made even more difficult for councils setting their budgets by the lateness of the announcement of their final funding settlement from government. This means that in many cases councillors won't have chance to debate proposals to cut their budgets, and opposition councillors won't have chance to put alternative budgets to the full council meeting. So much for local democracy!

The reason I think all local authorities, particularly Tory councils, should increase council tax above the cap, and ask their citizens to vote on their budget is to send a message to the Tory led government that it is simply not possible for councils to provide vital public services with 30% cuts to central government funding, and even further cuts from 2015. As long as councils continue to accept the council tax freeze grant, and as long as they keep council tax either frozen, or low, this reinforces the message that all is OK within local government and they can continue to provide quality services, with little money - this is simply not possible.

I realise that throughout the country low paid workers are seeing their incomes falling, and those who aren't working are seeing their benefits cut. The last thing they want is to see their council tax bills increasing, along with food, fuel and heating bills. BUT it is now time for councils to stand up to this government. Now is the time for councils to send a very strong signal that all is not well in local government. Now is the time for councils to stand up and defend their citizens. The way they can do this is to reject the freeze grant, propose a council tax increase above the cap, and put their budgets out to a referendum - that way all their citizens can decide.

North Somerset Council's budget report for their 15th January meeting can be downloaded here: and Appendices here:

The December 2012 update can  be downloaded here:

The Medium Term Financial Plan up to 2017/18 can be downloaded here:

Equality Impact Asssessments can be found here:

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