Conservative-run Canterbury City Council is considering rejecting the government’s council tax freeze funding and increasing the charge by 1.99% next year.
The Kent authority blamed larger than expected funding cuts and has recommended a council tax increase which is just 0.1% point short of the level which would trigger a referendum.
Canterbury’s complaints of further funding cuts were echoed by the leaders of Southampton, Portsmouth and Brighton & Hove City Councils who wrote to communities secretary Eric Pickles to point out that expected 8% funding cuts next year had grown to 12% according to the government’s consultation on business rate retention.
This meant councils “room for manoeuvre is severely limited and for such a significant further reduction to come so late in the day will only lead to more decisions that are not considered as fully as we would like”, the three leaders said in their letter.
Canterbury councillors are due to consider a draft budget on Monday which recommends that assumptions of a 2.5% increase in council tax in 2013-14 will have to be reduced to 1.99% after the government announced the referendum trigger would be 2%, not the 3.5% it was last year.
The report also warns of considerable uncertainy in 2013-14 because “this is a year of major change in how local authorities are funded”. It adds: “In addition, it seems likely that the overall funding available for local authorities will reduce more than previously anticipated, due to the pressure on public finances.
“In terms of the overall funding, councils are expecting reductions of between 7% and 15% in 2013-14, with further reductions in 2014-15. The draft budget for 2013-14 assumes a fall in government funding of 10%, £806,000 worse than previously planned.”
Councils will not find out their actual funding position for 2013-14 until after the Autumn Statement on 5 December.
Canterbury leader John Gilbey (Con) told the local paper that some councils would struggle to operate in the new system.
“Local government is being squeezed. We are having to adapt and adjust and reduce expenditure as quickly as possible. So far we have managed to maintain the standard of our services but that can’t go on.
“Massive adjustments are needed. I find it totally unacceptable as the government changes the roles of councils. Some councils won’t be able to operate under these rules.”
Canterbury joins Labour-run City of York Council and Thanet DC (no overall control), which have also announced they are considering an increase in council tax of or close to 2%. Other councils have made early announcements that they intend to freeze council tax including Lambeth LBC, Haringey LBC, Hertfordshire CC and most recently Barnet LBC.
Letter of complaint
The government’s handling of the council tax freeze was one of a number of complaints contained in the letter to Mr Pickles from Portsmouth leader Gerald Vernon-Jackson (Lib Dem), Southampton leader Richard Williams (Lab) and Brighton & Hove leader Jason Kitcat (Green).
“Offering grants for council tax freeze for one or two years at a time is a sticking plaster approach to dealing with our finances,” they wrote, which “encrouages short-termism”. They added: “We believe the role of your department is to support sensible financial planning and not undermine it.”
They were critical of the lowering of the referendum trigger rate - from 3.5% to 2% - for ruling out “a modest 2.5% increase, broadly in line with inflation”, but they also complained this was one of a number of funding decisions that had come late in the budget setting process and called on the government to improve the way it communicates with local government.
Cllr Vernon-Jackson, leader of the LGA’s Liberal Democrat group, said: “Yet again, a change at the last minute has meant that our careful planning has been undermined. Government needs to work with councils by providing far greater clarity far sooner. We call on Mr Pickles to overhaul the way council funding is communicated, laying out government funding policy for the remainder of this Parliament and ideally beyond.”