23 April 2004
Local authorities that defied government warnings to keep council tax increases to low single figures will be capped this year and an announcement confirming this is 'imminent', according to town hall leaders.
The Local Government Association has warned that the government is set to ignore authorities' reasons for breaching the 5% limit and impose caps on some budgets, 'just to make a point'.
The LGA has been conducting modelling exercises to try to identify how many councils will be in the firing line if, as expected, local government minister Nick Raynsford names the transgressors next week.
Sarah Wood, the association's director of economic and environmental policy, told Public Finance that there was now a widespread expectation that the government would invoke its powers.
She would not give an exact figure for how many councils the LGA thought were likely to face intervention. However, Wood did give some indication of the expected scale of government action. 'One would expect the figure to go through to double figures,' she said.
This would appear to corroborate suggestions that the Office of the Deputy Prime Minister is planning to cap around ten councils, including fire and police authorities.
Three district authorities, which came off worst in the 2004/05 finance settlement, are thought to be possible candidates: Shepway in Kent, Daventry in Northamptonshire and Fenland in Cambridgeshire.
Two unitaries – Herefordshire and Torbay – are also believed to be in the frame. In addition, Northamptonshire and Mercia police authorities, and Hereford & Worcester, Bedfordshire and Essex fire authorities are also considered to be at risk of capping.
Wood said the LGA remained firmly opposed to capping and pledged its strong support for any authority that wanted to contest a capping order. Councils will have 21 days in which to lodge an appeal.
'The LGA respects the decisions of individual authorities in setting their council tax levels, and will help authorities who wish to make appeals. We will make sure they appeal on the best possible grounds,' Wood said.
The association expects Raynsford to cap some authorities in the current financial year and to warn others that they face a similar fate if they do not tighten the purse strings in 2005/06.
The minister wrote to 65 authorities earlier this year telling them that their council tax increases were unacceptable, and it is possible that he could put as many as 20 on notice for next year.
But the LGA believes the government is struggling to find any 'common-sense criteria' to justify capping particular councils.
Sir Jeremy Beecham, its chair, said authorities faced 'overwhelming financial pressure' and council tax increases reflected this.
'A thorough and fair examination of the figures this year should lead even the advocates of capping to decide against it.'
PFapr2004
