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Council budget: a challenging task made even harder

Council budget: a challenging task made even harder

🕔14.Jan 2017

So where had we got to with the City Council’s 2017/18 Budget before we were so inconveniently interrupted, asks Chris Game?  No, I don’t mean the Christmas/New Year interruption, which was certainly lengthy, but had, in management-speak, been factored in.

I mean the unnecessarily interruptive Provisional Local Government Finance Settlement on December 15th, which was substantially hijacked by the Government’s belated recognition – reportedly blocked personally by the PM from the Chancellor’s earlier Autumn Statement – that all was not entirely tickety-boo with adult social care funding.

True, children’s social care funding is also seriously untickety-boo, but of course they don’t have votes and block hospital beds in quite the same way.

Anyway, something – however late, short-term, inadequate and arguably misdirected – had to be seen to be done. Hence Community Secretary Sajid Javid’s announcement that councils with adult social care responsibilities would be able to change the profile of the Social Care Precept they’d been permitted last year – from an additional, ring-fenced 2% a year on council tax over three years to 3% a year over the next two years, and 0% in 2019/20.

There was some other stuff too – a social care grant funded from New Homes Bonus money already promised to councils – which added to the scepticism about Javid’s repeated insistence that he was offering £900 million of genuinely ‘new’ and ‘additional’ money, let alone about it being remotely adequate to address the scale of even the short- and medium-term problem.

Even if all councils took up this last-minute, hastily wrapped Christmas offering, it wouldn’t cover this year’s additional National Living Wage costs. To put it mildly, local government was unappeased. Birmingham City Council leader, Cllr John Clancy, labelled it less a social care levy than a Poor Tax Levy.

And not the least part of councils’ dissatisfaction was that many – including Birmingham, just a few days earlier – had already launched their budget consultations around a proposed council tax increase based on the use of part or all of a 2% social care precept, rather than potentially a 3% one.

Budget consultations aren’t participatory budgeting, which has a now lengthy and frequently inspirational history in numerous settings around the world. But, we’re a country with exceptionally large and remote ‘local’ authorities, and a political culture with a high disinclination to participate even in elections, which makes public consultations even on issues as crucial as budgets tricky and often discouraging exercises.

Birmingham, however, is a council that has consistently made the effort – with public meetings, downloadable and easy-readable budget summaries, and in this case a short online survey (open until Wednesday, 18th January), and it deserved better than to have its efforts thwarted in this needless fashion.

It’s easy to say that a budget consultation is about the proposed budget’s whole rationale, its key themes and the necessary prioritisation of competing options – quite as much as the ‘bottom line’ of any consequential council tax increase.

But even most councillors will admit that the percentage tax increase is the first thing they look for in any set of budget papers, and it’s unrealistic to expect us to be any different or more high-minded.

Hence the frustration. From the first page of the consultation document’s presentation of the Council’s current financial position (p.10), its “forecasts of future Council Tax include: an increase of 1.99% each year in Council Tax, and the continued ability to raise a Social Care Precept by increasing Council Tax by a further 2% each year until 2019/20 …”

And it is precisely these proposals and figures with which respondents are invited to agree, or disagree, in the final two questions of the ‘Have Your Say’ survey – figures which the Communities Secretary had now made potentially redundant.

He probably thinks he’s been terribly clever: shifted someone else’s money around, scored a few brownie points with his boss for his contribution to her resource-free approach to social care reform, and put council leaders on the horns of a classic ‘damned if we do, damned if we don’t’ dilemma.

If they stick to their original plans – those on which they may have consulted their taxpayers, and which should ensure they’re able to use the 2% Social Care Precept (SCP) for a third year – May and Javid will say it just proves that there never was funding crisis, and then condemn them anyway for drawing on their reserves.

If they make full use of the 3% precept over two years, they’ll have to face their residents, and possibly voters, with up to a 5% council tax rise that they hadn’t originally proposed and that follows what for most was one of around 4% last year.

However, the general assumption in the local government world is that there’s no real choice: in the end, most councils will opt for close to the full 3%. So far, though, only a minority have publicly revised or confirmed their earlier, pre-Finance Settlement, plans.

About the most systematic monitoring of council tax proposals is by the Local Government Chronicle’s Council Tax Tracker, from which the data on the left-hand side of the table are drawn.

 

 

 

 

 

The five listed West Midlands boroughs all confirmed to the LGC before the Finance Settlement their intention to make use of the SCP, as all metropolitan boroughs did last year and all unitaries (apart, I think, from Stoke-on-Trent).

But so far only Birmingham and Wolverhampton have said, following the Settlement, that they will go for the full 3% precept this year, and therefore a (technically) 4.99% council tax increase – the highest permitted by the Government without the council being required to call (and fund) a consultative referendum. The other three may well do likewise, but they hadn’t confirmed so to the LGC.

In Worcestershire the county council is the adult social care authority, and last year, like all the counties, it made virtually full use of the precept and as a consequence raised its share of residents’ council tax by nearly 4%.

The listed district councils, whose own spending accounts for roughly a quarter of their total budgets, raised their obviously very much smaller taxes by between 2 and 4%, except for Wyre Forest, which announced last February that it would freeze its element of council tax for not one but, as shown in the table, two years.

My own estimation, therefore, is that Birmingham’s average Band D tax for 2017/18, including social care and parish precepts, will be in the region of £1,273, which will put it probably around 4th in the list of the 36 metropolitan boroughs – 4th lowest, that is.

I know there are council tax payers in Birmingham who reckon they get a bad deal, but, as the DCLG stats show (Table 7), this year Dudley’s average Band D tax was second lowest among the metropolitan boroughs and Birmingham’s fourth lowest.

Moreover, as Cllr John Clancy is always, and rightly, ready to remind us, that Band D tax or more is paid in Birmingham by only a small minority of taxpayers. I tend to think of our council leader as one of those people who is never knowingly understated, but on this topic I venture to suggest he might be.

He made the point in his Leader’s blog, reproduced in the Files, that:

Birmingham has higher than average levels of poverty and deprivation, and a far larger number of cheaper houses than most other cities. In fact, half of all domestic properties in Birmingham are in the lowest council tax bands of A and B and are worth less than £120,000 – against the UK national average house price of £216,674. (my emphasis)

Which means, as he went on to emphasise, that most Birmingham householders paying the levy will be in the city’s poorest housing. Also, of course, that any Band D tax will bring in far less tax overall than in an area where higher proportions are in higher banded housing.

If anything, though, Cllr Clancy understates his case. According to the DCLG’s Council Taxbase, 2016, Birmingham has not half, but very nearly three-quarters (73%), of its ‘dwellings’ in tax bands A and B, and just 8% in Bands E to H – compared, for instance, to Solihull, with 28% in bands A and B and 30% in Bands E to H.

We’ve developed the practice over the years of always announcing council tax levels and rises in terms of Band D, and it’s worth remembering what huge differences in tax yields the same average Band D tax can produce in even neighbouring authorities.

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