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On council tax, where there’s goodwill there’s a way

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A guest LGC briefing by Jonathan Werran, interim chief executive of Localis, on how the use of council tax referendums to win consenst for increased local charges should yield to popular consent

Council tax has been accused of many things and many sins. An ossified patch and repair job on the doomed poll tax from the early months of John Major, it is routinely dismissed as “outdated and unfair”. Public finance experts deride it as “dramatically regressive”.

However, despite the brickbats, council tax could, and perhaps should, be the platform for civic renewal and community empowerment.

So recommends Localis’s new report Monetising goodwill which found the majority of people would in any case – and regardless of where they live or how they voted – be willing to pay more in council tax or voluntary one-off levies to better fund local services.

For example, people living in the East Midlands – the region most keen to pay extra tax, show a marked preference to pay for better roads and pothole repairs. Support for homeless people and faster Wi-Fi speeds would get the Yorkshire pound. South east residents are keener to funnel extra money to the police than elsewhere and people living in the north east regard dog fouling as a bigger menace than others.

The sheer diversity of perspectives unearthed from our extensive YouGov polling strongly urges the case that local wants and needs should be reflected in local tax systems.

Following this local pattern of preference, local authorities should use their existing council tax platform to give citizens the opportunity to direct new and existing funding in line with their priorities. This could mean enabling residents to direct up to 20% of total revenue raised to specific services and for achieving certain outcomes.

And following Westminster City Council’s lead, authorities could include the voluntary option to pay higher funding directed to specific services and issues, on top of the core bill – albeit limiting the number of issues to pay for.

Speaking at Localis’s launch event yesterday, Westminster’s leader Nickie Aiken (Con) said the target figure of raising an extra £1m from Band H property owners in the flagship borough was the equivalent of an across the board 2% increase in council tax charges.

The experiment has shown that some – although a small cohort and as yet far from a tipping point weighty enough to upset the scales – wealthier people want to pay more.

This wouldn’t offset the limitations and losses. Westminster City Council’s tax take of, say, an exclusive penthouse in the Candy brothers’ One Hyde Park at Band H would remain around £832 – a figure far less than that paid by households in other less prosperous parts of the country. But an absolute paltry pittance compared to the hundreds of thousands of dollars chargeable to a similar property by municipal authorities in Manhattan.

This agenda isn’t about raising ever higher taxes and increasing the power of the local state. It does not pretend to be a remedy for the sustainability of local government finances. It is, rather, a creative opportunity to renew and re-cement civic bonds.

To this end, Localis proposes any extra funds raised by voluntary levies should be allocated to community groups for the purpose of delivering local services. Community-led organisations can be entrepreneurial and creative with a vested interest in a way that a council cannot. They are also more likely to attract a higher level of public support for higher contributions raised through hypothecated local taxation.

This could be an opportunity to convert local patriotism, pride and sense of place into something tangible and real that affects individual lives in a way the Big Society and latterly the Shared Society have failed to accomplish.

For those of a more philosophic persuasion, it is a chance to put Edmund Burke’s fabled ‘little platoons’ into the field of civic battle in the colours of localism.

For neo-localists the Monetising Goodwill agenda represents a huge opportunity for councils to take back control in the right way. And while Whitehall remains blindsided by Brexit, to make full use of the general power of competence to be radical for place and people and usher in a deeper localism.

There is though a rather obvious barrier to be lifted – the referendum cap for triggering council tax votes. During the early years of the coalition, while money from the Treasury could fund a council tax freeze, the imposition of 2% referendum triggers made perfect policy sense. It displayed as good a sensitivity to the cost of living agenda as one could wish to see.

But now the freeze money has melted away into the slush of stop-gap social care funding fixes, this forlorn legacy lovechild of Osborne and Pickles must be sent packing. It’s time for centrally imposed caps on council tax charges to end and to abolish the referendum triggers enshrined in the Localism Act.

Failing abolition, James Brokenshire as housing and communities secretary, should at least set council tax referendum thresholds at a rate that enables places to set hypothecated taxes and levies more freely.

Like the social care precept, the secretary of state should stipulate that greater freedoms are used specifically for hypothecated taxes and levied and for services and issues that reflect public will. And to that end local people must be given the right to choose and vote on local spending priorities.

Jonathan Werran is interim chief executive, Localis

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