Taxpayers in England and Wales are far from happy. Not only are their jobs on the line and their homes at risk of repossession, but they also face council tax increases equivalent to 30 times the rate of inflation.
Surveys published this week from both CIPFA and the Local Government Association suggest that increases will average between 3.0%, and 3.1%, representing an annual rise of £42 for a typical Band D resident in England.
This is in stark contrast to the approach taken in the rail industry, where companies have to abide by a funding formula that will force them to lower their fares later this year.
But the environment in which councils are operating needs to be borne in mind. As our cover feature demonstrates, the collapse of the economy means that demand for services is rising rapidly while fee income is falling.
Councils will have to put more resources into social services, schools, housing and benefit payments. This is on top of rising demand that is not necessarily linked to the recession, such as for older people’s services.
Moreover, 3% would be the lowest increase since the council tax was first introduced in 1993. It is also significantly below January’s estimate, suggesting that last-minute efforts have been made to contain increases.
Councils have to tread a delicate line. Clearly, this is not the time for high tax rises, but there is still a job to do. Local authorities will be in the forefront of attempts to mitigate the effects of the recession and it is imperative that they have sufficient funding to make this happen.
It may be that councils will need some additional help. Margaret Eaton, the embattled chair of the LGA, tells PF this week that Health Secretary Alan Johnson should redirect some of his funding to help local government. This is a reasonable request, given the seriousness of the economic situation.
But local government also needs to do a better job of maintaining a united front – and telling its side of the story. A focused LGA – free of internal battles – is the least that the public should expect.
