By David Williams
18 February 2010
Local authorities across England look set to impose a second successive historically low council tax increase.
One senior local government source has told Public Finance that this year’s average increase could be lower than last year’s figure of 3%, itself the smallest rise since 1994/95.
PF also understands that more councils than last year are opting to freeze rates.
They have been given an above-inflation settlement of 4% from the Department for Communities and Local Government. But many are already hitting the brakes on their spending, anticipating a much tighter settlement in 2011/12.
Unison head of local government Heather Wakefield has attacked tax-cutting as ‘a macho race to the bottom’, arguing that councils ‘are creating holes in their budgets that didn’t need to be there’.
But her argument was refuted by Richard Kellaway, lead member for finance at the Royal Borough of Windsor & Maidenhead, which is considering a 4% decrease in council tax.
‘She doesn’t take much account of the taxpayer, but that’s not her responsibility,’ he said. ‘Why should you expect council tax to continue to rise? We just don’t believe that.’
Yorkshire’s East Riding District Council has agreed a 1.5% rise, despite officers recommending an increase of 3%. Council leader Stephen Parnaby said the budget was affordable this year by dipping into reserves, and that administrative savings could lead to similar low increases beyond 2010/11.
Mark Luntley, programme director in the Local Government Association finance department, outlined the factors that councils were trying to balance in drawing up their budgets.
He said the DCLG’s assumptions for local authority savings next year were a ‘very challenging’ 4%. Meanwhile, councils had simultaneously been hit by low interest rates, reduced income from charges and increasingly demanding ageing populations.
‘[But] councils are very aware of the pressure that individuals are under. While council tax is not a huge tax, it is a visible one, and one people are concerned about,’ said Luntley.
18 February 2010
Local authorities across England look set to impose a second successive historically low council tax increase.
One senior local government source has told Public Finance that this year’s average increase could be lower than last year’s figure of 3%, itself the smallest rise since 1994/95.
PF also understands that more councils than last year are opting to freeze rates.
They have been given an above-inflation settlement of 4% from the Department for Communities and Local Government. But many are already hitting the brakes on their spending, anticipating a much tighter settlement in 2011/12.
Unison head of local government Heather Wakefield has attacked tax-cutting as ‘a macho race to the bottom’, arguing that councils ‘are creating holes in their budgets that didn’t need to be there’.
But her argument was refuted by Richard Kellaway, lead member for finance at the Royal Borough of Windsor & Maidenhead, which is considering a 4% decrease in council tax.
‘She doesn’t take much account of the taxpayer, but that’s not her responsibility,’ he said. ‘Why should you expect council tax to continue to rise? We just don’t believe that.’
Yorkshire’s East Riding District Council has agreed a 1.5% rise, despite officers recommending an increase of 3%. Council leader Stephen Parnaby said the budget was affordable this year by dipping into reserves, and that administrative savings could lead to similar low increases beyond 2010/11.
Mark Luntley, programme director in the Local Government Association finance department, outlined the factors that councils were trying to balance in drawing up their budgets.
He said the DCLG’s assumptions for local authority savings next year were a ‘very challenging’ 4%. Meanwhile, councils had simultaneously been hit by low interest rates, reduced income from charges and increasingly demanding ageing populations.
‘[But] councils are very aware of the pressure that individuals are under. While council tax is not a huge tax, it is a visible one, and one people are concerned about,’ said Luntley.
