Ministers ‘overstepped capping powers’

8 Jun 09
The government has been accused of overstepping its legal powers and inventing an ‘artificial construct’ to cap the budget of Surrey Police Authority

By Tash Shifrin

05 June 2009

The government has been accused of overstepping its legal powers and inventing an ‘artificial construct’ to cap the budget of Surrey Police Authority.

The authority is seeking a judicial review of the government’s March 26 decision to impose a cap.

Local government minister John Healey announced that the SPA would be capped for the second year running because it had set a 2009/10 budget increase of 4.82% and a precept increase of 7.07%.

But in its application for judicial review, the authority will argue that its precept increased by only 4.89% over 2008/09 — below the 5% capping threshold. The SPA said the government’s 7.07% figure had been produced by comparing its 2009/10 precept with ‘the artificial construct of a notional precept figure’.

SPA treasurer Ian Perkin said former communities secretary Hazel Blears did not have legal powers to make a capping decision based on this ‘notional precept’, which he called ‘a limit entirely of her own making’.

Perkin told Public Finance that the government had powers under the 1992 Local Government Finance Act to put restrictions on local authorities’ and police authorities’ budget requirements.

‘But the Act doesn’t talk about restraining authorities according to their precept or council tax,’ he added.

This was because the proportion of their budget that authorities raise through council tax varies according to how much government grant they receive, Perkin said.

SPA had been capped in 2008/09 and was set a ‘notional’ budget limit by the Department for Communities and Local Government, against which future budget rises would be judged. This year, it used the 2008/09 notional budget figure in calculating its budget increase of 4.82%.

But the authority received a letter from the DCLG on January 28, which arrived three days before it had to publish its budget proposals. The letter stated that the 2009/10 figures would be compared not only with a notional 2008/09 budget requirement of £189.6m, but also a ‘notional Band D council tax for that year of £184.09’.

This was the first the authority had heard of a notional council tax figure since it had been capped in 2008/09, Perkin said. The SPA had responded to its capping that year by amending its budget, but not council tax levels.

It is the introduction of the ‘notional’ council tax level, and consequent notional precept, that the SPA aims to challenge in the courts.

Perkin told PF: ‘They’ve created this notional precept and said, against this it’s not a 4.89% rise, it’s 7.07%. We’re saying the concept of a notional precept, or control by precept, is not included in the Act.’

He added: ‘We’re querying their right to use that to put us as a capped authority, when other authorities’ precept increases are higher than ours and budget increases are higher.’

A DCLG spokeswoman said: ‘The authority knew where government expectations stood yet it still went on to set an excessive increase.’

She added: ‘It is up to Surrey Police Authority to decide how it wishes to proceed, but any judicial review would cost the taxpayer more and be vigorously opposed by the government, which views the claim as unlikely to succeed.’


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