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Officials to check tax levels as proportion of ‘rebels’ reaches 10%

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The government has confirmed it will double check council tax levels to make sure no council inadvertently triggers a referendum – as the proportion of authorities planning a tax rise inches towards 10%.

As the total number of councils that have published plans to reject the government’s offer of funding for a tax freeze breached 30 this week, the Department for Communities & Local Government told LGC that councils would be given 10 days to submit returns following the deadlines for setting their council tax levels. This will allow the department to check that no council declining the government’s offer of a council tax freeze grant sets an ‘excessive’ increase.

Since reporting in November that one council in five was considering turning down the government’s offer of funding equivalent to a 2.5% tax rise in return for a freeze, LGC has been charting keeping track of those councils to confirm they will do so. As of this week, 31 authorities – 9% of English councils – had publicly stated they planned to increase council tax next year.

Precepting authorities have until 1 March to set their council tax levels and billing authorities until 11 March. Bills are usually sent in late March or April.

Any council planning to set an excessive tax rise is required to set one budget incorporating the planned rise and one incorporating ‘substitute calculations’ based on a non-excessive tax rise. They will then hold a referendum on which to adopt.

Communities secretary Eric Pickles had said that a rise in ‘relevant basic amount’ of tax greater than 3.5% is excessive.

However, issues such as changes to a council’s tax base and the levies paid to certain bodies mean that each council will have its own point at which a tax rise is deemed excessive.

Many metropolitan authorities could trigger referendums with an effective tax rise of less than 3%.

Frances Foster, chief policy officer for the Special Interest Group of Municipal Authorities, warned that some councils could trigger a referendum without intending to.

“It’s difficult. We’ve spoken to some places where they’ve included elements in their calculations that weren’t actually levies. When we’ve asked DCLG for a definition of a levy, they’ve not been able to give us one,” she said.

Asked by LGC what procedures were in place for a council that inadvertently triggers a referendum, a spokesman said: “If an authority sets an excessive increase and does not hold a referendum, it must adopt its substitute calculations, which means it has to set a council tax increase that is not excessive.”

The spokesman also said a referendum could be triggered by a member of the public flagging up an excessive council tax level.

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