By Alex Klaushofer
Local authorities in England and Wales are on course for the lowest council tax rises since the tax was introduced in 1993, according to CIPFA research published this week.
As Public Finance went to press, CIPFA data indicated that council tax for an average Band D property in 2009/10 will rise by 3.1%, bringing the average tax bill to £1,395.39, up by £42 per household.
The figures suggest that recession-conscious local authorities – while faced with falling revenues – are mindful of the need not to place undue financial burdens on cash-strapped council tax payers.
Local authorities in the capital, with average tax rises of 1.2% according to a survey by London Councils, are setting the lowest rates.
Along with Westminster, Lambeth is keeping its tax at present levels. ‘The council has decided on the freeze, against the background of the economic downturn, in order to help residents through these difficult times,’ said a Lambeth spokeswoman.
She added that prudent economic management, which included reducing the council’s six departments to four over the past year, had made the decision possible.
Meanwhile, Hammersmith & Fulham is dropping its council tax by 3% for the third year running. Council leader Stephen Greenhalgh said the cut was partly due to efficiency savings and partly to the council reducing its levels of debt. ‘Staff numbers have fallen by 566 through efficiency measures and agency spend has tumbled from £22.7m in 2005/06 to a projected £19.7m in 2008/09,’ he said.
‘Before we spend a penny on services, we currently have to spend £10m of your money just servicing our historic debt. For every million we can trim off that bill, we are saving taxpayers £100,000 a year,’ he added.
London Councils chair Merrick Cockell attributed the low rises to ‘sound financial planning. Unlike previous recessions the brunt of this recession will be felt in the capital – we will do everything in our power to reduce its impact on our residents,’ he said.
But local authorities in Wales – where council tax is due to rise by an average 4.2% – have struggled to keep increases down, blaming falling revenues and a low settlement from the Welsh Assembly.
‘We’ve had the lowest settlement in Wales at 1.5%,’ said a spokeswoman for Conwy County Borough Council, which has set a 5% increase. But she stressed that the rise came on top of a tax that was unusually low. ‘Even with a 5% increase, that still brings in a Band D average of £783.’
Swansea City Council, which expects to approve a 4.45% rise, was facing a £14.5m shortfall following a Welsh Assembly settlement of 2.9%.
Cabinet member for finance Stuart Rich said that setting the tax any lower would have led to service cuts. ‘We felt 75p a week was a reasonable ask of the public even in tough times,’ he said. ‘We were preparing ourselves for the future as much as the current situation.’
Some precepting authorities are also levying higher-than-average rates. Greater Manchester Police has set a rise of 7.5% as part of a three-year agreement that began last year. The increase includes 2.5% ring-fenced for neighbourhood policing, which would pay for 104 community police officers, a spokeswoman said. ‘The 5% is what we need given the sheer size of Greater Manchester and the issues that it faces,’ she added.
Earlier this week, the Local Government Association revised its January estimate of a 3.5% increase for councils in England down to 3%. LGA chair Margaret Eaton said: ‘Town halls are taking decisive action to protect local people and businesses from the worst effects of the recession.’
Local government minister John Healey said the first-ever three-year settlement had given local authorities the stability to plan ahead. ‘So there is no excuse for excessive council tax rises or service cuts, and I have made clear that we will take capping action where necessary to protect council tax payers,’ he said.
