06 February 2004
John Prescott's department is this week trying to persuade the home secretary to flex his political muscle and join the battle to avoid another year of politically damaging council tax hikes, Public Finance has learned.
The Office of the Deputy Prime Minister wants David Blunkett to follow its lead and warn police authorities contemplating 'excessive' precept increases for 2004/05 that they will be capped.
But, according to an ODPM source, the Home Office is so far resisting the department's attempt to open a new front in its aggressive campaign to prevent a repeat of last year's council tax increases, which averaged 13% in England.
An ODPM spokeswoman would not comment on how much progress had been made but confirmed to PF that the two ministries were discussing the issue. 'We are still working on that with the Home Office,' she added.
The Audit Commission identified large increases in police authority precepts last year as a major contributing factor to the massive council tax rises that inflamed public opinion.
Its report on the reasons for the council tax hikes, published last December, cited the North Yorkshire police force's huge 76.1% precept increase.
The ODPM's attempt to enlist Blunkett's help came as local government minister Nick Raynsford warned another 25 councils that they face capping.
Fifty-six English councils, just over one in seven, have now received letters saying that if they increase council tax in 2004/05 by more than 5%, the government will scrutinise their budgets 'very closely' and will not shrink from using its capping powers 'if necessary'.
A spokeswoman confirmed that more letters would be going out to authorities, 'probably early next week'.
The department also intends to impose the 5% limit on fire authorities: none has yet been given a warning but PF understands that some will be issued shortly.
A snapshot survey of the provisional council tax increases being considered by the 31 authorities on the ODPM's original hit list, conducted by PF this week, illustrates the department's determination.
Twenty-four councils provided figures: of these, just six were likely to be above 7%, while at least nine of the 24 were planning increases of less than 6%. Three authorities had increases that were actually below the 5% limit – Northumberland County Council (4.94%), Suffolk County Council (3.9%), and South Hams District Council (4.9%).
The highest projected increases came from Breckland District Council in Norfolk and Leicester City Council, both 14%, and West Lindsey District Council in Lincolnshire, contemplating an increase of around 10%.
Kent County Council is planning to increase its council tax by 5.2%, which means it only just breaches the ODPM's limit.
Council leader Sandy Bruce-Lockhart, who is also vice-chair of the Local Government Association, told PF the government was being disingenuous in its campaign to keep bills down next year.
'The problem is not council tax. The problem is that the government has abused it by not matching spending commitments with grants to authorities, forcing councils to raise it,' he said.
'If the government was genuinely concerned about council tax, it wouldn't have forced it up.'
He added that he found it 'extraordinary' that the ODPM had sent out letters to councils on the basis of press reports.
Bruce-Lockhart also expressed scepticism that the Balance of Funding review, being chaired by Raynsford, will live up to expectations when it reports in the summer.
The belief of many in local government is that the review, which is considering whether the local government finance system needs to be overhauled, will make specific recommendations on reform.
But Bruce-Lockhart told PF that he regarded it more as a scoping exercise, which would merely identify areas for further exploration. 'It is unlikely to come up with any bold solutions to the problem before the general election. It is most likely to come up with a list of options that will allow the government to avoid taking any action until after the election has happened,' he said.
Additional reporting by Mark Conrad and Vivienne Russell
Tax snapshot of councils on Nick Raynsford's hit list
Cheshire CC – c5%
Dorset CC – 7%
Gloucestershire CC – 6.8%
Kent CC – 5.2%
Leicestershire CC – 6.4%
Lincolnshire CC – 5.9%
North Yorkshire CC – 5.75%
Northumberland CC – 4.94%
Nottinghamshire CC – 5–7%
Oxfordshire CC – 6.25%
Staffordshire CC – 6.4%
Suffolk CC – 3.9%
West Sussex CC – 6.4%
Worcestershire CC – 5.3%
Breckland DC – 14%
North Kesteven DC – 6.5%
North Norfolk DC – 7.9%
South Hams DC – 4.9%
Stratford on Avon DC – 5%
West Dorset DC – 8%
West Lindsey DC – c10%
Islington LBC – 5–7%
Swindon BC – 5–10%
Leicester City – 14%
PFfeb2004
