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Councils 'fall guys of failure' as government passes buck on council tax

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Commentary on the LGC Council Tax Tracker

There’s nothing in the budget setting process that gets residents hotter under the collar – and raises anxiety more among councillors that they may be burned at the ballot box – than the size of council tax bills.

With ongoing political and economic instability, coupled with the glaring absence of a solution to local government funding, most decision makers will approach the task with some trepidation.

This apprehension will be underscored by no small frustration that the scale of current financial pressures means some of the costs of government inaction will have to be passed on to households to prop up services.

Councils are all too aware of the growing financial challenges facing increasing numbers of residents.

Many will strive to maintain council tax support to those who are struggling the most, but the level of this provision has inevitably dwindled as the squeeze on budgets grows ever tighter.

Initial findings from LGC’s council tax tracker, published today, suggest a higher proportion of councils than last year will look to push council tax bills up to the maximum permitted without a referendum.

Of the 36 councils identified as having published their proposals, three quarters are looking to opt for a maximum increase, with 20 of the 25 top-tier councils included following this option.

With such a small pool of councils identified as having published proposals so far, it is too early to make firm judgements.

But last year’s initial findings identified an early significant trend of most councils imposing the maximum 3% adult social care precept, which was borne out by the completed findings that two thirds of councils went for this option. 

However, not all combined this with the maximum 1.99% increase in regular council tax. Overall, just under half of top-tier councils imposed the maximum 4.99% increase above which they would have to win residents’ support in a referendum. 

While the social care precept offered councils some welcome flexibility without addressing the scale of funding pressures, there were many in local government who expressed disquiet at asking households to take a hit.

It is easy to see why the government opted for the precept. It allowed the government to claim it was making additional funds available for social care, while leaving councils to face the fallout from communities facing council tax rises, deflecting any potential political damage to the government for its failure to ensure the vulnerable are supported and protected.

Comments made by leader of the Local Government Association’s Conservative Group David Simmonds at a meeting of the LGA executive yesterday suggested this approach has fans at the centre.

The Hillingdon LBC deputy leader said the government was setting up councils as the “fall guys of failure” by considering further increases in the council tax cap as an answer to financial pressures.

Given the many recent high-profile dire warnings that some councils are close to financial failure, outside observers may find it surprising there is so far no sign of any potential referenda on raising council tax beyond 4.99% next year.

However, as Surrey CC demonstrated last year, those in the sector know this would be a brave, costly and potentially politically perilous move with a slim chance of a positive result. In any case it is not much of an option for councils with a low tax base that would have to propose huge percentage increases to cover the costs of holding a referendum. 

But the Surrey case did at least provide an opportunity for a high-profile debate locally on the state of local government finances and the impact on services that went some way to focusing attention on where responsibility really lies.

A wave of referenda could compound this effect and prove very uncomfortable for the government, particularly if Conservative councils were involved, and generate a wider debate on what services can be provided and how they are placed on a sustainable footing.

Speaking at the LGA executive meeting Nick Forbes, leader of the LGA Labour group and Newcastle City Council, described the annual process of managing “ever-diminishing” budgets as debilitating.

During the same meeting, Sevenoaks leader Peter Fleming (Con) said the dynamic between local and national government had created a “broken system”.

A government approach which focuses on raising council tax may be an attractive way to pass the buck to local government, but reflects an ongoing inability, or unwillingness, to address the bigger picture.

Jon Bunn, senior reporter

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