Budget pressures hit district harder

LGC’s exclusive survey reveals wide variations in the increases planned at district level, with 13 of 67 district council respondents intending to freeze their rates, while three said they expected their share to rise by 5%.

A 2% rise would be substantially lower than this year’s – according to the Chartered Institute of Public Finance & Accountancy, the average district council tax increase in 2009-10 was 3.2%.

While the whole of local government has been hit by the recession, district councils have arguably suffered more than other tiers because of their strong reliance on revenue from interest on reserves and fees and charges.

Corby is one of the fastest- growing towns in the country and the grant system does not recognise that

Adrian Sibley, head of financial services, Corby BC

Angela Brown, president of the Society of District Council Treasurers, said she was not surprised that some districts would be pushing for increases near 5% because of financial pressures.

She added that there was “a political imperative to keep council tax low, in order to help people through the recession”.

Corby BC said that while it had not formally been agreed by members, it was budgeting for a 5% increase.

The council’s head of financial services, Adrian Sibley, told LGC the council’s hand had been forced by loss of income as a result of the recession and because government grant was not keeping pace with its population growth.

“Corby is one of the fastest- growing towns in the country and the grant system does not recognise that,” said Mr Sibley, “but the politicians understand the situation and have been very supportive.”

Looking forward to 2011-12, one district council chief executive said freezes this year might lead to steeper rises the following year.

“If you make a modest increase one year, the chances are that you have to recoup the difference the next year,” the chief executive said.

Alison Scott, CIPFA’s assistant director, local government, agreed that district councils were likely to struggle more than other councils.

She said councils had to balance the needs of council tax payers against demands for services and cost pressures when setting their budgets, especially during a recession.

She added: “District councils are likely to find that equation harder to balance as they are faced with lost income from areas such as planning fees and parking receipts, compared to a smaller base budget.”

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