Council Tax

This article unveils the impact of a lethal combination of unrelated but cumulative actions, dating back at least to 2010, when Central Government seemed to ratchet up its view that Local Government would some how rub along irrespective of what was turned off in relation to funding. In many areas the Whitehall machine is now increasingly bloated as it gears up for the long slog of Brexit, leaving an increasing vacuum around local service provision, which reflects the fact that the centre still accretes more and more to itself. The article tells us:

Unprecedented increases in council tax starting in April will not offset cuts to services including children’s centres and libraries, local authorities have warned.

The Local Government Association (LGA) said councils in England would raise an estimated £1.1bn through higher council taxes in 2017-18, but this would not cover the £1.4bn lost through cuts to central government funding plus the higher wage bill of £1bn.

Nearly half of English councils with responsibility for providing social care for adults and children will increase council tax by the maximum 5.99% allowed – 2.99% for general council tax plus a further levy of up to 3% to pay for the care of older and disabled adults – but this will not prevent further cuts to services, according to the LGA.

Councils will continue to reduce or close services such as children’s centres, libraries, leisure centres, parks, museums and road repairs to plug growing gaps in adult and children’s social care and homelessness services, it says.

The widespread emergence of what some councillors have dubbed “pay more, get less” budget settlements comes as town halls struggle to balance the books after years of cuts in core government funding.

Northamptonshire county council effectively declared itself bankrupt earlier this month after admitting that rising costs and shrinking income made it unable to set a legal budget.

The council must set out revised plans for cuts at a meeting this week after an auditors report warned that its existing proposed budget plans were “not credibly achievable”.

Northamptonshire’s predicament highlights how councils are increasingly reliant on one-off measures such as dipping into reserves, or selling buildings and land, to meet the spiralling cost of social care. Those pressures are being compounded in some cases by the failure to deliver savings with existing cuts.

The LGA said 147 of the 152 English authorities that provide social care services would levy a 3% council tax precept from April to raise extra cash for the care of older and disabled adults. Although this will raise an extra £548m, it will be wiped out by the cost of meeting the national minimum wage.

These councils face additional costs estimated to be at least £400m over the next 12 months as result of a legal judgement that requires care employers to pay the minimum wage to carers working sleep-in shifts, backdated for six years.

Out of the 152 “social care” authorities, 108 also plan to increase general council tax by between 2.95% and the maximum 2.99% allowed. This will raise an estimated £548m. Five councils have said they will freeze council tax for 2018-19.

Too little too late……???

Local authorities are to be allowed to raise council tax by up to 5.99% next year, after a further relaxation of the government-imposed cap to address shortfalls in funding for social care.

Families across the UK could see their bills rise by up to £100 a year as a result of the announcement, which will also see councils increasing the charge without holding local referendums.

The move, which has been widely criticised and called “woefully inadequate” by leaders in the social care sector, could see the average band D council tax bill rising to £1,653.30.

Sajid Javid, the communities secretary, said all councils would be able to raise council tax by up to 2.99% next year to fund local services, which is 1% more than this year. On top of this, 152 councils, which includes all London boroughs, unitary and metropolitan authorities and county councils, will be able to increase it by an additional “precept” 3% to fund social care services.

The minister also announced that 10 councils – Berkshire, Derbyshire, Devon, Gloucestershire, Kent & Medway, Leeds, Lincolnshire, Solent, Suffolk and Surrey – would be involved in a pilot scheme allowing them to retain 100% of business rates raised locally, along with new powers for police and crime commissioners to raise council tax.

Shoddy headline – fortunately Clive Betts does set out the broader context in  this article which tells us:

Local Government secretary Eric Pickles has said town halls had a moral duty to freeze council tax for people struggling with rising household budgets. He set aside £450m over two years as part of the autumn statement package to help support the freeze.

But figures published today show that only 61 per cent of local authorities – 257 out of 421 – have are accepting cash from Whitehall to fund a council tax freeze.

The remainder have decided not to use the grant money, and instead of increased the tax for millions of home owners from the beginning of next month.

Official figures from the Department for Communities and Local Government show thatin England the average Band D council tax is going up by 0.8 per cent in 2013/14.

The increase, from £1,444 to £1,456 is the biggest increase for three years since 2010/11. Last year the tax increased by 0.3 per cent and zero per cent in 2011/12.

Clive Betts, the chairman of the Commons’ Communities and Local Government committee, said councils were turning their backs on the money because of concerns it would not be available in future years.

One of two stories about cities in this week’s rural Hinterland. Interesting because it shows the feelings and challenges on the other side of the rural/urban divide in terms of local Government funding. I think Newcastle is a fab place and it has a major service centre role stretching economically into Durham and Northumberland. The problems it is facing are therefore a worry for all of us who understand that rural and urban places are inextricably linked.

“A North East council is set to cut at least 1,300 jobs as it looks to reduce its budget by £90 million. Newcastle City Council has outlined proposals, which will also see ten libraries close, equal to a cut of £760 for each household in the city. Described by the council as one of its “darkest days”, the authority has blamed a “grossly unfair” cut to their Government grant. Leader of Newcastle City Council, Councillor Nick Forbes, said: “This is one of the darkest days for public service in Newcastle. Cutting services is not what I went into politics to do. “The cut in Government grant is grossly unfair, at a time when more and more families are turning to us for help. Financially, this has put us in an impossible position from which there is no escape.”

Not much balm in terms of these problems from CLG: “A Communities and Local Government Spokesman said: “Council funding is distributed in a fair and sustainable way across all parts of the country – rural and urban, metropolitan and shire and higher in those parts of the country with the highest level of need.”

This article shows how the persistent lobbying of the RSN is bearing clear recognition “fruit” at the local campaigning level. It tells us:

The funding gap between what neighbouring local councils receive from Whitehall has been revealed in a new report. Politicians in the East Riding have long complained about being under-funded in comparison with other local authorities.

​New figures presented to East Riding scrutiny councillors have confirmed their beliefs. They show government funding received by the East Riding equates to £374 per head of population. That is lower than the average for councils classed as predominantly rural authorities, in which more than half of the population live in rural areas. The East Riding falls into the same category, with 71 per cent of its population classed as rural.

The £374-per-head figure also compares unfavourably with Hull, which receives just over £700 per head from the Government. The city council’s higher direct funding is primarily attributable to Hull having higher levels of deprivation.

But the figures show the East Riding is also lagging behind its other Humber neighbours, with both North Lincolnshire and North East Lincolnshire also receiving more funding per head. Local MPs have recently backed campaigns led by the Sparsity Partnership for Authorities Delivering Rural Services and the so-called F4 Group of the 40 lowest-funded education authorities.

Councillor Brian Skow, chairman of the East Riding’s corporate and communities scrutiny committee, said: “We get far less than Hull but cover a much bigger geographical area.”

Councillor Paul Hogan said: “This report does highlight a huge issue for councils like ours.”

Council chief accountant Jim Wright said the higher cost of delivering services such as education, social care and household waste collections across a large rural area like the East Riding was not factored into the formula used by the government to decide on local council funding.”

The Chair of our All Party Parliamentary Committee on Rural Services Graham Stuart has his constituency in East Riding and he is becoming an increasingly powerful advocate in terms of this issue – watch this space!!!

I have to admit to knowing nothing of this element of changes to the benefit regime. I fear it will have a particularly negative impact on rural authorities which as a whole rely more heavily on the council tax component of their funding than other councils. The article tells us:

Local authorities have conceded that up to half of people on low incomes will refuse to pay council tax after being caught in the net by benefit changes next year, and that there is little they can do about it.

Under coalition plans to reduce council tax benefits 2 million low-income workers will face an average bill of £247 a year from April – a charge from which they are currently exempt.

But the sums are so small – on average less than £5 a week – that councils are warning it “would in many cases be uneconomic to recover, with the costs of collection, including legal recovery costs, being higher than the bill”. The result is that councils are budgeting for large losses and potentially leaving the door open to widespread non-payment.

A series of freedom of information requests by False Economy, a campaigning group part-funded by trade unions, found that the two dozen councils that responded were resigned to seeing swaths of residents refusing to pay the tax.

Due to the iniquitous way the funding formula works rural local authorities have to raise more of their income through Council tax. This article explains why another manifestation
of the recession is bad for them.

The Consumer Credit Counselling Service (CCCS) saw a 27% increase in the number of people contacting it for help with council tax arrears, from 13,353 in 2010 to 16,958 in 2011. The average amount owed in council tax arrears also increased, from £675 in 2010 to £717 in 2011.

The CCCS says much of the increase has been fuelled by the worsening financial position of tenants, with more people who rent than homeowners contacting the charity about council tax arrears for the first time. A total of 8,841 renters sought advice on council tax debts in 2011, up from 6,084 in 2010.