15 July 2005
The government's decision to cap the budgets of eight English councils has prompted warnings of service cuts and complaints about the cost of rebilling.
The authorities, all district councils and Conservative-controlled, have been punished for exceeding the 5% council tax increase threshold set by the government.
The councils slated for in-year capping are: Aylesbury Vale; Daventry; Hambleton; Huntingdonshire; Mid Bedfordshire; North Dorset; Runnymede; and South Cambridgeshire. All, with the exception of the latter, are having their budgets capped at the level proposed by ministers in March.
A ninth authority – Sedgemoor District Council – has been spared capping this year but ministers propose to set a notional budget against which all future council tax increases will be measured for capping purposes.
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The affected councils have reacted angrily to the decision, branding the government crass, irresponsible and illogical. South Cambridgeshire has already secured a higher cap from ministers but still faces the biggest budget cut. It has notified the Office of the Deputy Prime Minister that it will be applying for a judicial review.
Council leader Sebastian Kindersley said: 'The government's cuts of £2.6m will be catastrophic for South Cambridgeshire residents. Services will have to be cut. Local people and communities will suffer. The decision is manifestly absurd and arbitrary.'
Peter Watson, head of finance at Aylesbury Vale in Buckinghamshire, told Public Finance that, had the council been made aware of the government's criteria, it could have escaped capping.
Even with a £138,000 reduction in its budget, the council tax increase was 7.1%, he said. Although the council will not be required to make service cuts this year, Watson said there were serious long-term budget implications. 'The growth agenda imposed by the government is due to double the number of houses in the district in the years up to 2035,' he said.
There was also much disgruntlement about the cost of rebilling. Hambleton District Council in North Yorkshire has to shave £196,000 off its budget. Leader Arthur Barker said: 'We are now in a position where we have to send out new bills to every householder this autumn – a process that will give them a reduction of just over £5 a year, but will cost us £50,000.'
Chris Millar, leader of Daventry District Council, said the cost of rebilling residents – 'in excess of £100,000' – was 'a total waste of their money'.
But local government minister Phil Woolas said, given generous increases in local government funding over the past few years, there was no excuse for massive council tax hikes.
'We will not hesitate to use our capping powers in future years to deal with excessive increases if this proves necessary,' he warned.
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