Councils begin annual tax battle

2 Feb 06
Local authorities in England and Scotland have opened the annual trial of strength with the government over council tax with the traditional pleas for more funding and warnings of service cuts.

03 February 2006

Local authorities in England and Scotland have opened the annual trial of strength with the government over council tax with the traditional pleas for more funding and warnings of service cuts.

Most English councils are struggling to keep increases in the tax to below 3%, the Local Government Association said as it published the results of a survey of 50 authorities.

The 'snapshot' found that 28% say they might cut frontline services to keep their council tax rises down below the 5% capping level.

The survey also revealed that 78% of councils are proposing increases between 3% and the 5% capping level; 15% were proposing council tax rises of below 3%; and 7% had not yet proposed a level.

LGA chair Sir Sandy Bruce-Lockhart said: 'The settlement included no funding for demographic change, such as the increasing number of vulnerable elderly people and more people with mental and physical disabilities requiring care.

'Although local government is delivering more efficiency savings than any other part of the public sector, this has left very little room for many authorities to manoeuvre between higher council tax and service cuts.'

Details of the two-year settlement were confirmed this week. Local government will receive a 4.5% increase in formula grant in 2006/07 and a 5% increase in 2007/08.

But the threat of capping persists. Local government minister Phil Woolas said: 'Given this substantial investment… we expect all authorities to budget prudently and not place excessive demands on their council taxpayers.

'No authority should consider that it might be exempt from capping – if its increase is excessive, capping action will be taken.'

Meanwhile, the majority of councils in Scotland are preparing to set above-inflation council tax increases, a similar survey by the Convention of Scottish Local Authorities suggested.

The survey of 27 of the 32 councils shows that only three will be able to limit increases to the 2.5% target set by First Minister Jack McConnell. Six are planning increases of 5% or more. Councils in Scotland are due to announce details of their budgets and council tax figures on February 9.

A Scottish Executive spokesman said councils had sufficient resources to limit rises to 2.5%. He added: 'If they set it above 2.5% that's completely and utterly a decision for councils to justify to their local electorate.'

PFfeb2006

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