28 November 2003
The government will not impose a single capping threshold on local authorities whose council tax increases are deemed to be excessive, Public Finance has learned, but councils will be expected to keep any rises at 'reasonable' levels.
Following the announcement of the proposed 4.7% increase to the revenue support grant, local government minister Nick Raynsford told PF that he did not support the idea of a 'crude' capping measure but he refused to be drawn on the detail of how any sanction would be applied.
Instead, Raynsford said he expected local authorities to 'budget prudently' and set council tax increases below 10% – 'in the low single figures'.
He added that this year's average council tax increase of 12.9% was unsustainable and had engendered public anger. 'I do not expect to see very large increases, which the public will not wear. There is growing public disquiet at council tax increases,' he said.
Raynsford is expected to clash with council leaders at the Local Government Association's finance conference on November 28, which will pick over the details of the settlement.
A week on from the announcement and local government leaders show no sign of modifying their threats of service cuts and council tax hikes.
LGA Liberal Democrat chair Chris Clarke predicted that the settlement would be a 'disaster'. 'In most authorities there is hardly any money at all for services like care for the elderly, protection of children or environmental projects.
'There can be only one result from such a tight and inflexible budget and that is another big rise in council tax, coupled with cuts to services and increasing service charges,' he said.
The Conservatives accused the government of playing party politics with local government funding, given that 11 of the 13 authorities that will have to passport their entire grant increase to schools are Tory-controlled.
LGA Tory education spokesman Ramon Wilkinson said: 'Avoiding a repeat of last year's funding crisis now looks to be a remote possibility for those authorities that have little or no spare cash to play with.'
But Raynsford countered by saying that modest council tax increases did not have to result in service cuts. 'The complete absence of cost-effectiveness and efficiency savings from the debate is surprising and disappointing,' he told PF.
He added that efficiency gains offered a 'huge scope for savings' as well as providing an opportunity for councils to learn from best practice. 'It is a practical solution for all councils.'
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