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Tories turn up the heat

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The Tories have put Labour on the council tax spot at their party conference in Birmingham.

The conference will be remembered for George Osborne’s council tax initiative - the shadow chancellor announced he would freeze council tax bills for two years.

He would achieve this objective by providing extra grant to every council that kept its council tax rise to 2.5% so that the year-on-year rise would drop to zero. The additional central funding would be paid for by cutting Whitehall’s use of ‘expensive private sector consultants’.

Short of offering to burn City bankers at the stake, it is hard to think of a more well-directed populist initiative.

Council tax is unloved. Worse, it hits the ‘not-quite poor’ hardest. By offering local authorities a chance to peg the tax for at least two years, Mr Osborne has put ministers on the spot. Should they attack the Tories or copy them?

David Cameron has signalled he is pushing his party towards a lower tax/lower spend manifesto. Councils will face pressures to cut back spending. However, the Tories’ new proposal is not a mandatory cap for local authorities.

It will be possible for councils to decide to push their local tax up by more than 2.5% per annum, but if they do so they will not receive the extra grant that would peg council tax.

For those with long memories, there are vague echoes in all of this of the Thatcher government’s ‘targets and penalties’ regime during the early 1980s. However, the Osborne proposal is more ‘carrot’ than ‘stick’ and does not involve penalties for high-spenders.

Instead, the Conservatives have talked of requiring authorities to hold a referendum if they wish to increase council tax by more than a stated percentage.

Taken together, these two policies are a minor, position-holding, improvement on the present government’s policy of universal capping.

Labour has been put on the spot. After the government’s eleven and a half years of failure to reform local authority finance, ministers will now find themselves faced with the problem of what to offer in response to the Tories’ new proposal.

They will have to do something because of the popularity of the Osborne freeze. The Daily Express and The Daily Mail certainly liked it.

Gordon Brown now has a once-in-a-lifetime chance to show he is decisive in the face of events. He could announce proposals for a full reform of council funding as part of a long-term package of reforms to the government.

There is a strong sense that many things will have to change once world financial markets are brought under control. If global financial arrangements are to be reformed, why not this country’s constitution?

The present government must now seek to out-flank the Conservatives by being brave and showing it is in control. Otherwise, Mr Cameron and Mr Osborne will successfully convince the electorate that they are the ones with all the new ideas.

See also the LGC blogs from the Tory conference:

Sunday with the Tories

Frozen smiles on tax

Mr Pickles is the Prince

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