Council tax referendum trigger to remain at 2%

5 Feb 14
Local government minister Brandon Lewis has confirmed that the referendum trigger for council tax increases will remain at 2% as part of the final local government finance settlement for 2014/15.

By Richard Johnstone | 5 February 2014

Local government minister Brandon Lewis has confirmed that the referendum trigger for council tax increases will remain at 2% as part of the final local government finance settlement for 2014/15.

Lewis announced today that, following a consultation after the provisional settlement was published last December, the government had decided to implement the proposals unchanged. This means town halls face an average 2.9% cut in spending power.

‘Every bit of local government needs to do its bit to help pay off the deficit, given it accounts for a quarter of all public spending,’ Lewis said. ‘The settlement offers increased protection from the safety net so that no council will face a loss of more than 6.9% in their spending power in 2014 to 2015. This is a higher level of protection than we offered both last year and the year before.’

As part of the settlement confirmation, the level of council tax rise at which authorities will be required to hold a local vote to approve the plan will be unchanged from 2013/14, at 2%.

Speaking to the BBC, Local Government Secretary Eric Pickles said that he would have liked the cap to be set lower. It has been reported that plans to lower the cap to 1.5% were blocked by other Cabinet members, including Deputy Prime Minister Nick Clegg.

However, the method used to calculate each authority's increase has been altered, to include bodies such as local waste disposal authorities, integrated transport authorities and local government pension authorities. Previously, their levies had been excluded from the calculation of the referendum trigger.

Lewis said this change ‘strikes an appropriate balance between direct democracy and representative democracy’, and called on authorities to accept the offer of a Whitehall grant to freeze council tax for a fourth year from April.

‘We would expect that most councils will wish to freeze council tax, but any which set an increase of 2% or more will need to arrange for a binding referendum to be held.

‘We are allowing council tax referendums to take place on the same day as the European elections on May 22, so a council tax referendum can be held at minimal cost.’
Also from April, grants for the previous freezes in 2011/12 and 2013/14 will be included in the funding settlement total for future years. Funding for the next two years ­– covering 2014/15 and 2015/16 – will also form part of the future funding baseline, Lewis said.

‘We hope this will give maximum possible certainty for councils that the extra funding for freezing council tax will remain available, and there will not be a cliff edge effect from the freeze grant disappearing in due course.

‘We have played our part – we now expect councils to play theirs.’

Responding to the announcement, the chair of the Local Government Association’s finance panel Sharon Taylor said it should be down to councils and their residents to decide how local services are paid for, not Whitehall.

‘Local authorities are striving to keep council tax down but at the same time are grappling with the difficult task of protecting vital services like caring for the elderly, fixing the roads and waste collection following a 40% reduction in government funding over this Parliament.

‘The ballot box on local election day allows for people to pass judgement on their councils. No other tax increase is subject to the extra cost of a referendum, as all other taxes are rightly seen to be within the mandate of the elected government. The same should apply for council tax.’

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