95% of councils to freeze council tax, but want no further 'deals' from Eric Pickles

Published on Wednesday, 22 February 2012 12:44
Written by Scott Buckler

Senior local authority managers have demanded greater control over council tax beyond the Government-funded ‘freeze’ for 2012/13, according to exclusive research by the Local Government Information Unit (LGiU) and The Municipal Journal

While 95% of senior town hall staff who responded to the survey revealed their council would sign-up to the Government’s offer of a grant equivalent to a 2.5% council tax increase for 2012/13, more than 80% want more control over local tax rates from 2013/14.
This throws into doubt any embryonic plans the Coalition might have to sustain the popular council tax freeze throughout the parliamentary term and into the 2015 general election.

Local democracy think-tank, LGiU, and The MJ, the market-leading local government magazine, surveyed senior managerial staff (chief executives, chief finance officers etc.) across England's local authorities. In total, 81 councils responded to the study - almost a quarter of all local authorities in England.

The key findings are:
•    Almost 95% of respondents said they are planning to take Eric Pickles’ 2.5% grant and freeze council tax
•    However, more than 80% said they want the freedom to increase in 2013/2014 as they wish
•    86% of councils will not be able to meet the 10% council tax benefit reduction through back office savings – meaning benefit cuts to many claimants, or a withdrawal of CTB from some groups altogether.
•    Just over half (53%) of councils feel they will benefit from the Local Finance Bill

There is more detail explanation to these figures below.

Responding to the independent survey, local government minister Bob Neill, who recently urged councils to restrain tax rises ‘as an act of public service’, said: ‘This welcome survey shows that local authorities recognise that freezing council tax is a concrete way councils can support residents. Freezing bills is a public service act that will keep the cost of living down for local families and residents - something they will greatly appreciate in the months ahead.
‘The very fact Labour have described the council tax freeze as a gimmick shows how out of touch they are with the public.’

Asked whether their authority planned to freeze council tax or increase it above the 2.5% ‘deal’ offered by the Government in 2012/13, almost 95% (94.9%) of managers said they planned to take Whitehall’s tax freeze grant. Just 5.1% said they planned to increase council tax beyond the 2.5% grant ceiling – meaning their tax rise must be paid for entirely by the local authority.

Andy Sawford, Chief Executive, LGiU said: ‘There is some good news for government here, with most freezing council tax, and a small majority expecting changes to business rates to benefit their council. However, there may be trouble ahead as councils predict significant inflationary pressures and want the flexibility to increase council tax in future years.
‘The major concern both in the medium and long term is the effect of demographic change on demand for older peoples services.  This confirms the importance of the government bringing forward proposals for changes to social care funding in the forthcoming White Paper.’

The LGiU/MJ survey exposes a wide range of councils’ concerns over future cost pressures, and provides early indications of how local authorities intend to cover their costs during a period of continued public sector austerity.In a finding likely to heighten concern over the Government’s controversial council tax benefit (CTB) localisation plan, 86% of respondents said their authority would not be able to meet the 10% benefit reduction through back office savings – meaning authorities could be forced to cut the benefit to many claimants, or withdraw CTB from some groups altogether.

The research also indicates that council practitioners are doubtful the Local Government Finance Bill - currently making its way through Parliament - will hand England's authorities the significant freedoms and powers promised by the Department for Communities and Local Government.
Just 61.3% of those surveyed felt the Bill is ‘somewhat decentralising’ and a mere 1.3% believe the range of measures - hailed by ministers as a radical shift in financial freedom for councils - are ‘very decentralising’.  Almost one in five (18.8%) expect the Bill to have the opposite effect and instead return more power to central government.

Council chiefs are also divided over whether authorities stand to gain or lose from moves to localise control of business rates revenues under ministers' plan to kick-start economic growth. The survey suggests that just over half (53%) would benefit, with 47% fearing they would fail to reap rewards from greater retention of locally-raised business rates. Just 16% of senior managers said they were looking to pool their business rates with neighbouring authorities – as encouraged by ministers - and a majority (55%) also thought proposed arrangements would create a ‘two-tier’ system of top-up and tariff councils.

Critics have warned the creation of a two-tier local government growth arena could intensify the existing north-south economic divide.
Commenting on the findings from the survey, MJ Editor Heather Jameson, said: 'This study highlights the bitter-sweet nature of the relationship between central and local government.

'While councils appear happy to continue with the centrally-funded tax freeze for now, they have stated a clear ambition to return to far greater control of local tax rates in the future because they are fearful that further Whitehall grant cuts, the soaring cost of social care and rising inflation will impact heavily on council budgets next year. That could lead some authorities to seek inflation-busting council tax rises in 2013/14."


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