07 May 2004
Local authorities whose council tax increases have been capped are planning their appeal with LGA help
The guillotine has finally fallen on the supposedly high-spending authorities that Nick Raynsford has had in his sights in recent months.
The local government minister told Parliament on April 29 that he had decided to 'designate' six local authorities for in-year capping of their council tax increases.
Four of the transgressors are unitary authorities: Herefordshire, Nottingham, Telford & Wrekin, and Torbay. The other two, Fenland in Cambridgeshire and Shepway in Kent, are districts.
Hereford and Worcester fire authority has the dubious distinction of being the only precepting body to be designated for in-year capping.
Raynsford also 'nominated' seven precepting authorities for action in 2005/06: Cumbria, Northamptonshire and West Mercia police forces; and Bedfordshire, Durham, Essex and Nottinghamshire fire authorities.
Under government criteria, unitaries were capped if their budgets rose by more than 6.5% on 2003/04 and their council tax by more than 8.5%.
Districts were capped if their budgets were more than 2% higher than last year's and council tax rose by more than 8.5%.
Authorities have 21 days to make appeals to the government and Raynsford has pledged to 'listen carefully' to these.
Even so, those councils that have been publicly punished say they are surprised and baffled. Some appear to have been caught unawares at their inclusion.
Labour-controlled Telford & Wrekin Borough Council, which was ranked as excellent by the Audit Commission in its Comprehensive Performance Assessment last December, is one. Its council tax rose by 8.6%.
Steve Wellings, its corporate director of resources, told Public Finance that the authority would vigorously contest the order and that an appeal was 'virtually written'. He says the council will be pointing out its record of prudence and its status as the authority with the lowest council tax in the West Midlands.
'We're very disappointed we've been included in the frame and perplexed when the amount by which our budget is over is so small,' he says.
Telford is hoping Raynsford will do the maths and accept that the budget saving he has demanded will be much smaller than the costs of implementing an in-year capping order.
'We're £31,020 over on a budget of £169m, the equivalent of 64p a year on a Band D property. It will cost us £200,000 to rebill,' says Wellings.
Nottingham City Council, another Labour authority, whose tax went up by 9.6%, tells a similar story. It has been told to slice £180,000 from its £331.2m budget for 2004/05: precisely what the council says it will cost to rebill.
Surprisingly, ministers did not take account of the cost to authorities of having to send out new council tax bills before deciding which authorities to cap.
Raynsford, speaking immediately after his statement to Parliament, confirmed this. 'We do take this into account but it's at this next stage, the 21 days, that we do it.'
This questionable approach gives credence to the Local Government Association's claim that ministers have gone in for capping 'just to prove a point'.
There is a widespread feeling that the government's repeated threats to cap in recent months painted it into a corner, and ministers felt obliged to act.
Sarah Wood, the LGA's director of economic and environmental policy, is deeply concerned at the effect on smaller councils.
She cites Tory-controlled Fenland and Liberal Democrat-run Shepway, which have been ordered to slash budgets after setting tax rises of 14.5% and 28.4% respectively. 'In small authorities with a large amount of money to find, it is going to threaten services,' she says.
On May 5 Wood hosted a meeting for the 14 authorities named by Raynsford. Its purpose was to 'share intelligence, identify the help needed for individual authorities, the support needed by each through the appeal process, and to weep on each other's shoulders', she explains.
The emphasis now has to be on damage limitation. The aim is to get as many authorities as possible off the capping list altogether and the rest moved from the designated to the nominated category. The LGA and the capped authorities have until May 20 to make their case.
PFmay2004
