17 September 2004
Nick Raynsford has warned councils that the government is expecting even lower council tax rises next year – and will not hesitate to cap those that refuse to comply.
The local government minister said that, although this year's 5.9% average increase was better than the previous year's 12.9%, councils had not done enough to rein in spending.
'It was still 5.9%, which is rather above the low single figures objective, so we would expect councils to budget for lower than that,' Raynsford said.
'We expect all authorities to set prudent and reasonable council tax increases in 2005/06 and the years ahead, and if they do not we will have no hesitation in using our [capping] powers again.'
Raynsford, speaking at a Local Government Association conference on September 15, rejected suggestions that councils had already cut back spending as far as possible.
He cited the Gershon review, which has set a £6.45bn savings target for local government, as ballast for his argument. 'I think there is very considerable scope for economies to be made.'
The minister also denied that the government had deliberately delayed a decision about reforming the local government finance regime, following the Balance of Funding review, until after the next general election.
He told delegates that Sir Michael Lyons, who will announce later this month how he intends to conduct his independent inquiry, would produce firm recommendations when he reports in late 2005.
'Far from procrastinating on taking difficult decisions, the government is being entirely prudent in inviting as eminent a person as Michael Lyons to look at all the detailed technical issues,' Raynsford said. 'It is not sensible to rush into a reform process without thinking about the consequences.'
The Lyons inquiry would also consider issues such as what to do about the estimated 1.4 million people entitled to council tax benefit who do not claim it.
Raynsford said the revaluation of properties and council tax bands in England, due to start in 2005 and come into effect in 2007, would not lead to hikes in council tax.
Fears were raised when a similar exercise in Wales earlier this year led to many households jumping two property bands. But the government has pledged that there will be no overall increase in the council tax yield in England. 'What happened in Wales is not a precedent or an indication of what will happen in England,' Raynsford said.