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Council tax: Will Sir Albert trigger a referendum?

Council tax: Will Sir Albert trigger a referendum?

🕔12.Oct 2012

Like the Lord High Executioner in Gilbert and Sullivan’s Mikado, local government ministers love making little lists. Not lists of things to do – civil servants do that. No, lists of councils to ‘get’ – councils that simply won’t do what they’re told and, in ministerial eyes, never would be missed.

There are those that publish ‘propagandising’ town hall newspapers, or advertise ‘non-jobs’, like cheerleading development officers – they’ll be on the list. And those who refuse to revert to weekly bin collections, or won’t relax their planning rules on home extensions – put them on the list.

Many of these lists are pretty predictable, but there was an exception earlier this year: a ministerial list full of names like Surrey, Cambridgeshire, Huntingdonshire, Tunbridge Wells, Tonbridge & Malling, Epsom & Ewell, East Cambridgeshire (Ely/Newmarket), and South Hams (Totnes).

It read like a Cook’s tour of Conservative heartlands, or even a list of ministers’ favourite councils. In fact, far from being Pickles’ pets, they were on what the Daily Telegraph took to calling the ‘Roll of Shame’ – the 35 councils that decided, in the face of frequently fierce ministerial pressure, not to freeze their 2012/13 council tax rates.

They did the math, and calculated that the offer of a one-off grant equivalent to a 2.5% tax increase, but creating a potential budget gap from 2013/14, was not in their residents’ longer-term interests. So they chose to set their own budgets – insofar as these things are possible nowadays – and raise their tax rates by between 2.5 and 3.5%, the latter being the point at which they would have been required to call, and fund, a referendum to approve the proposed higher increase.

The previous year, the Government’s financial incentive ran for the four-year funding term, and all councils took the money and froze their tax rates. This time, one in ten (35) rebelled – and the biggest single party group were, yes, 16 Conservative councils, for several of whom featuring on a naughty list must have been an interestingly novel experience.

There were, hardly surprisingly, nearly as many Labour councils – though again not those that might have been at the top of most people’s guess lists: no Hackney, Tower Hamlets, Newham, Liverpool, Sandwell, or any of the other ‘usual suspects’; indeed, there were no London boroughs at all and only one metropolitan. This was no more a co-ordinated, politically driven anti-Government protest than that of the Conservative rebels.

The three West Midlands councils among the 35 provide a good illustration, each deciding to reject the Government’s cash and cajolery in its distinctive way. In Lichfield it was the leader of the overwhelmingly Conservative council who wrote to the Conservative minister, explaining how the one-off grant would stop after 2012/13 without having increased the council tax base from which future annual increases would be made.

The council’s proposed 3.4% increase – criticised, incidentally, by the Labour opposition – would be preferable to the 6.8% compensatory increase that would otherwise be required in 2013/14, and would still leave Lichfield as one of the lowest charging district councils in Staffordshire.

In Labour-run Stoke-on-Trent the council’s case was essentially the same, but this time it was put by Labour, whose 3.49% tax increase, provocatively pitched right up against the referendum tripwire, no doubt irritated ministers even further, but still necessitated a £20 million cut in local services.

But Telford & Wrekin, also Labour, was perhaps the most interesting. The council undertook an exceptionally comprehensive consultation exercise, including an online survey, a postal survey of residents on its Community Panel, ‘engagement events’ at various locations across the borough, and a ‘Your Views Matter’ leaflet distributed to all households.

The detailed survey results are fascinating, especially as we approach an era of local tax referendums, and are available on the council’s website. Suffice it here to report that almost two in three respondents to the consultation exercise said the council should increase council tax – 37% favouring a 2.5% increase and 26% a 3.5% increase – while 37% wanted it to accept the Government ‘s offer of a one-year grant plus tax freeze. A 2.5% increase was the outcome.

One of the things that will make the coming few months interesting, at least for detached observers, is that the terms of the Government’s 2013/14 tax freeze offer, announced this week, have changed once again, and can be headlined in one of those ‘Good news, bad news’ games.

This year freezers will receive a grant equivalent to just a 1% tax rise, instead of 2.5% (bad news); but they will also get an extra year’s baseline funding, “to ensure that there is no cliff-edge in funding in 2014/15” – apart, that is, from any already incurred this year (good news); but the referendum threshold comes down from a 3.5% rise to one of just 2% (bad news) – or is it?

Two observations occur to me. The first is to recall all those statements when the Conservatives were in opposition about how damaging capping was, because it took the power of decision about local spending and taxation out of the hands of local voters and handed it to remote central bureaucracies. As we enter the third year of tax freezing by ministerial arm-twisting, it’s really hard to see it as anything other than local budget setting by remote central bureaucracy.

Second, there must be a likelihood of at least a few councils seriously considering the referendum option, making the case for restricting the speed and severity of service cuts in the general community interest, and hoping for the kind of result that Telford & Wrekin residents delivered. The question is: will one of them be Birmingham?

Judging from the then opposition leader’s speech in February’s budget-fixing debate, as reported by Paul Dale, it would be hard to draw any other conclusion. Sir Albert Bore didn’t present an alternative Labour budget, but instead attacked the Conservative-Lib Dem administration’s policy of keeping council tax bills “artificially low”. If, since 2005, they had set the average council tax increase for metropolitan authorities, there would be an additional £70 million to spend on protecting service.

If ever there were a hostage to fortune, this was it, as Paul himself suggested at the time. However, even a 2% tax increase is hardly going to plug the hole that Sir Albert described, so presumably we must prepare ourselves for another referendum – even though there seem to be so many rather substantial details still to be determined about how these referendums would actually work: the form of ballot; wording of the question(s); timing; all- or part-postal, or maybe included with annual tax demand notices; restriction to council tax payers – to name but a few.

A further non-detail, in addition of course to the cost of the whole thing, is the very principle of having a one-off referendum on a single year’s proposed tax increase, which must have the effect of making long-term planning even more difficult than it is already.

There was a question in the DCLG’s council tax referendum consultation back in 2010 that asked specifically about whether, with the abolition of capping, there was any reason why authorities should be required to calculate a budget requirement each year. The possibility of being able to frame a referendum around a medium-term financial plan, including staged council tax increases over more than one year, might be a more attractive proposition to some councils – particularly to one returning to office after eight years of opposition – and it’s a topic that ministers might usefully revisit.

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