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'Loophole' councils warn of judicial review

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A metropolitan council considering a council tax increase of up to 3.85% without holding a referendum has suggested ministers’ threats of retaliation next year could result in a legal battle.

Bolton MBC’s cabinet is due to meet this afternoon to decide between a range of options from an increase of 0.7% to 3.85% and they will be advised that the secretary of state’s plan to set individual trigger points next year would leave the government open to judicial review.

The Greater Manchester authority is one of a number of councils able to increase council tax above 2% without a referendum because the Department for Communities & Local Government uses ‘relevant basic amount’ of council tax to calculate the referendum trigger point.

Because this measure excludes levy payments, those councils which do pay levies have variable trigger points, a state of affairs which has led communities secretary Eric Pickles to warn that he could introduce lower trigger points next year for councils using the “loophole”.

However, advice to Bolton’s cabinet members states: “Our view is that it could be difficult for the government to implement legislation that would only discriminate against the actions of the Greater Manchester Authorities and if they did, because we have met the government’s own guidelines (rules) we may have the potential to pursue a judicial review of any decision they made.”

Although the authority could increase council tax by up to 3.85%, councillors have been warned Bolton “is likely to come under a lot of pressure from central government if it puts up total council tax more than the 2% quoted referendum limit”.

Authorities in Greater Manchester have been affected by the quirk of the calculation arrangements because their waste authority levies have increased as part of a PFI investment plan.

Manchester City Council is considering a 3.7% increase while Rochdale and Oldham MBCs are considering a 3.5% increase.

Bury MBC’s cabinet member Tony Isherwood (Lab) has said the authority could rise council tax as high as 4.5% without a referendum, although no proposal has been put forward yet.

Salford City Council, Trafford & Wigan MBCs are all considering a freeze.

Mr Pickles has also announced plans to change the referendum calculation so that it uses ‘basic amount of council tax’, which includes levies, instead of the ‘relevant basic amount’. The decision signifies something of a u-turn after DCLG refused a similar request from metropolitan authorities last year.

Cabinet papers published this week by Stockport MBC, which plans a 2.5% increase, said the u-turn was “not surprising; indeed the potential for unintended consequences arising from the treatment of levies was pointed out to ministers and civil servants by several authorities, including ourselves, as far back as last summer.”

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