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This year’s council tax experience – how was it for you?

This year’s council tax experience – how was it for you?

🕔03.Apr 2018

With local elections exactly one month away and the new tax year arriving in three days, Chris Game takes a look at what’s happening to council tax around the country. 

If your interest in council tax happens to extend beyond your own tax demand to what others across the country are being required to pay, March can be a frustrating month.

My Birmingham tax bill, for example, dated 7th March, explains that, when the city council’s 2.99% general expenditure charge is rounded to one decimal place (3.0%) and is joined by a 1% Adult Social Care Precept, the Council’s share of my increased 2018/19 council tax is 3.99% or, rounded to one decimal place, 4% – to which in our case have to be added charges from the West Midlands Police & Crime Commissioner and the Fire & Rescue Authority, bringing the total increase from 2017/18 to 4.5%.

Were I still lecturing to undergraduate students and looking to illustrate a revision session on local government finance, I’d photocopy this small section of my tax bill.  And, where possible, I’d compare my 3.99% increase with those of their councils, using something like the Local Government Chronicle’s ‘Council Tax Tracker’ that plots the increases of all English councils as soon as they’re apparently made.

The Tracker would be great for my pedagogic purposes, but it’s is a fine journalistic device, not a document of record.

Which this year meant it wasn’t able to adjust, for instance, to Birmingham Council’s relatively late “You spoke, we listened” budget decision, only finally approved on 27th February, to reduce, “in response to the budget consultation”, its share of the Council Tax increase from the provisional 4.99% to 3.99%. Indeed, it still hasn’t.

So it’s only at the end of March that really authoritative comparisons become available to curious amateurs like me. The data was published last week in exhaustive detail by the Ministry of Housing, Communities & Local Government (see esp. Table 7), and represented the conclusion of a process that opened, as far as we mere taxpayers were concerned, with the provisional local government finance settlement shortly before Christmas.

With the Chancellor’s Autumn Budget having largely ignored local government’s repeated warnings of the need for new money to meet an imminent £5.8 billion funding gap threatening particularly adult social care and children’s services and indirectly all other council services, the then still Communities Secretary, Sajid Javid, proceeded to do essentially the same.

Instead of new money from him or his Government, he slightly redefined how councils could raise and spend their money. So, in both 2018/19 and 2019/20 he would generously allow all councils to increase the ‘core’ council tax they raise from their own taxpayers from 1.99% to 2.99% without having to spend their money on a justificatory referendum.

As for England’s 151 really hard-pressed social care authorities – upper-tier and unitary councils – he would allow them in addition to take from their taxpayers up to a further 3% to fund specifically those social care responsibilities, bringing the potential increase to 5.99%, still without a referendum.

The minister did emphasise, though, how he felt it a democratic shame that this referendum provision was confined exclusively to local government’s only tax. So much so that he’d recently submitted a Cabinet paper suggesting that increases in other taxes – tobacco, alcohol, betting and gaming duties, for example – might also be made subject to referendum approval.

Sorry – late April Fool!  Back to the settlement. Yes, of course the minister recognised that each per cent in, say, Hartlepool would raise, even controlling for population, only one-twelfth of what it would in Surrey – but stuff’s cheaper, including probably social care, in places like Hartlepool.

Besides, this would be really new money, just not his Government’s. Look, even the Local Government Association (LGA) accepted that if all eligible councils made use of their additional 1%, they’d raise a whole £250 million additional income, which is quite a start in closing that £5.8 billion gap – well, one-23rd of it, anyway.

Though he didn’t mention the LGA’s other calculation – that the whole of the “extra social care funding will be wiped out by paying for the Government’s National Living Wage”, while the “extra general council tax income will only replace a third of the £1.4 billion central government funding they will lose this year”.

Interestingly, one of the first detailed reactions to the December settlement came from Manchester City Council, whose Leader, Sir Richard Leese, ruled out almost within hours raising core council tax by the extra 1%.

He noted that “last year we carried out extensive public consultation on the three-year budget strategy for 2017-20, which outlined Council tax increases of 4.99% in 2017/18 and 2018/19, and 1.99% in 2019/20” … It would be a breach of faith with Manchester people to introduce a further increase on top of this simply because the government have moved the goalposts again”.

10 out if 10 for political class, I’d say, and, although a 96-member council with a 95-1 majority over the Lib Dems hardly needs it, useful come May when Manchester, like Birmingham, has all-out elections.

Manchester was the exception, though. Generally, media headlines over the whole Christmas to February period suggested that the great majority of councils would feel it necessary or financially judicious to charge the highest tax available to them – while hoping perhaps that residents could be reminded of the four successive years from 2012/13 when for many taxpayers, including in the West Midlands, their council tax stayed at the same rate.

The survey of 130+ councils covers much more than planned tax increases, but the latter are understandably what make the headlines, and the single specific finding in the report (p.7) was that 95% of responding councils “said they would be raising council tax in their area … three-quarters by more than 2.5%”

Outside the actual report, though, someone from the LGIU apparently decided to stoke this insufficiently alarming impression, rating it “very likely that three-quarters will adopt the maximum 5.99%”.

It was this that was seized on by the popular media, like ITV – and that must have shaped many people’s expectations, or apprehensions, before discovering that their actual bills would be at least slightly lower than anticipated.

By my reckoning, and extending the interpretation of £5.99 down to £5.90 (Kensington & Chelsea, since you clearly weren’t going to ask), not three-quarters but just 55 or 36% of the 152 social care authorities raised their council tax by the 5.99% maximum: 7 of the 33 London boroughs, 26 of the 56 unitaries, 10 of the 36 metropolitan boroughs, and 12 of the 27 counties.

Among these councils the average 2018/19 bill will be 5.1% higher than this year’s, or about £81 on a Band D property, which is undeniably substantial, but again some way below the £100+ that also featured in several of the scarier headlines.

As for the West Midlands, for reasons I’m not sure I can really explain, our 4.48% average increase turns out to be the lowest of the six metropolitan regions, with none of our seven councils exceeding 4.99%.

Part of the explanation, as ever with local government finance, is that all councils and their councillors are keen not be seen as too far out of line with immediate neighbours, a couple of illustrations in this instance being Merseyside, where all five boroughs have adopted 5.99% increases, and Tyne & Wear, with their five boroughs all deciding independently to go for increases between 4.95% and 4.99%.

My concluding bar chart, also adapted from the MHCLG’s data, confirms that, even if this year’s council tax increases aren’t as a whole quite as savage as may have been expected, they are still collectively the highest in 14 years, which will undoubtedly be seized on by interests like the TaxPayers’ Alliance.

Indeed, the TPA recently did precisely that, producing some ‘research’ showing how extortionately council tax in England has increased over the past so many years. The period they chose, though, wasn’t eight or even ten years, but 20.  Interesting!

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