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The big parties’ council tax claims: correct, deceptive and useless

The big parties’ council tax claims: correct, deceptive and useless

🕔23.Apr 2013

Did you catch David Cameron on Aston Villa’s Premier League survival chances last week? He was in Nuneaton launching the Conservatives’ local election campaign and, being a longstanding Villa fan (in the way so many of us developed our childhood allegiances, his uncle was the club’s Chairman), he was asked about their chances of avoiding relegation. His response: “I’m sure it’ll be alright in the end”.

Fantastic! A politician’s near-perfect answer. Short and upbeat. Inoffensive, in that it didn’t mention at whose expense Villa might survive. No definition of ‘the end’ – of the season, of the decade, of the millennium? – so no possibility of being proved wrong. And, as a consequence, utterly meaningless. The trouble was that several of his assertions in the actual campaign launch were also in politician-speak and similarly devoid of meaning – or at least of the meaning he hoped they’d be taken to have.

The Government’s Localism Act had empowered local government, he asserted, so local elections now mattered more than in the past … “We’ve given councils much, much more freedom …”

It was the double emphasis that took the biscuit. It must be really, really difficult for most councils, having seen their grant funding cut year by year, and having just implemented their fourth round of spending cuts to meet budget and tax ceilings effectively dictated by the Government, to identify quite where all this freedom and electoral meaningfulness are hiding.

However, it’s not the purpose of this blog to engage in partisan knockabout – no, really, it’s not. It’s about trying to introduce some factual clarification into a county council election campaign which, while it may not affect directly those of us in metropolitan boroughs like Birmingham that don’t have elections this year, will centre on issues that certainly do concern us – like council tax.

It’s hardly surprising that claims and counter-claims about tax levels are at the heart of campaign debate, but it is slightly ironic. First, because, as I say, councils’ tax rates and spending totals are nowadays effectively determined not by locally accountable councillors, but by central government – particularly under the Coalition, whose ministers argue that councils have a “clear moral imperative” to freeze their council taxes for the sake of “hard-working families and pensioners”, and for three years now have tried to bribe and bully them into doing so.

But secondly, even if councils had more freedom in setting their tax levels, very few of those holding elections this year, and none of the county councils, are so-called ‘billing authorities’. The local authorities that actually send out the bills and try to collect the taxes are not the county councils, responsible though they are for most of the big services and about 90% of spending, but the smaller district councils.

There is logic in the arrangement, because council tax is a property tax and the districts are the housing authorities. But it can make life difficult for voters.

In Worcestershire, for instance, should electors in Bromsgrove and Malvern Hills vote as if to punish their tax-collecting Conservative councils for rejecting Cameron’s “clear moral imperative” and having the temerity to refuse the Government’s freeze-cut grant and increase their council taxes by up to 2%?  That presumably would be a demonstration that local elections mattered.

Or should they reward Conservative Worcestershire for taking the Government’s grant (equivalent to a 1% rise in council tax) and freezing the much bigger portion of their tax bill? In Staffordshire, voters in the Conservative tax-raising districts of Lichfield and Tamworth face the same dilemma.

It’s a definite complication for the Conservatives, who would have liked to be able to contrast a near-unanimity of blue councils, which had obediently taken the grant and frozen their tax bills, with loads of red and orange/yellow ones that had ignored their “moral imperative” and increased theirs. There was no lack of ministerial arm-twisting (proverbial, I presume) to which Conservative council leaders were subjected, but in the end, as the Sunday Telegraph was one of the first to document, the figures just didn’t turn out right.

In a survey of all 353 English councils, the Telegraph found first that 124, or more than a third, were increasing their council tax bills as a way of raising revenue. Second, more than half these offending councils (64) were Conservative – that’s more than one in three of those the party currently controls.

Some, moreover, were seriously big and embarrassing names. The three tax-raising counties were almost bound to be Conservative, and indeed are – Cambridgeshire, Surrey, and a particularly interesting A N Other. The six London boroughs were more mixed. There were two of Labour’s 18 – Lewisham and Harrow; one of the Lib Dems’ two – Kingston-upon-Thames; and three of the Conservatives’ 11 – Bromley, Croydon, and, with the biggest increase of all at over 3%, Wandsworth.

As for A N Other, the Sunday Telegraph seemed almost salivatingly pleased to note that the Tory miscreants “included Oxfordshire County Council, which is David Cameron’s local authority, and Runnymede Council in the constituency of Philip Hammond, the Defence Secretary.”

None of this, of course, is going to stop the Conservatives exhorting voters to vote Conservative for lower council taxes. But listen carefully to what they actually say. This was Cameron on Friday: “On average, on a Band D bill, Conservative councils continue to charge lower levels of council taxes than Labour or Lib Dems.”  It’s perfectly true – as it generally is. It’s also, unless you stop and think about it for a few moments, seriously misleading.

As, in a similar way, is Labour’s counter-claim that we should vote for them, because, to quote Hilary Benn, the party’s local government spokesman: “households in Labour-controlled authorities pay on average less council tax per year than those in Tory and Lib Dem areas”.  Equally true, and just as potentially deceptive.

Note the small, but hugely significant, difference: Conservatives: average Band D; Labour: average per household/dwelling. If I were preparing students for an exam, I might suggest they use a mnemonic – say, Bullingdon and Downing Street for Band D – but I’d also get them to think it through, because it’s really not brain-hurting stuff.

The tax base for council tax is a ratio system based on 8 valuation bands, centred around Band D (properties valued, in 1991, at ₤68,000 to ₤88,000). Band A properties (under ₤40,000) pay 6/9 (2/3) of Band D; Band B 7/9, and so on up to Band H (over ₤320,000) paying 18/9 (2x) of Band D. Councils calculate their tax base by weighting the number of dwellings in each band to Band D, and report their budget headlines in terms of ‘Council tax for council services (Band D)’.

Band D has thus become a benchmark for comparative purposes, and it is perfectly reasonable for the Conservatives to use it – reasonable but disingenuous. Not so much because only a small minority of properties (15% in England) are actually in Band D, but because, exacerbated by the lack of any revaluation since 1991, the mix of property bands across authorities and regions nowadays varies starkly.

In Birmingham, over two-thirds (66%) of properties are Bands A and B, and just 8% in E to H combined. Solihull, however, has 29% in Bands A and B, and also 29% in E to H. In the North East there are 55% Band As, in the South East 9%, in London 3.6%.

It obviously follows that to raise any particular sum of money in an authority with mainly Band A to C properties requires a higher Band D tax than in one comprising many E to H properties. The average bills paid per household will vary similarly – being generally higher than the Band D figure in more affluent and Conservative-inclined areas, and lower in less affluent or Labour-inclined ones.

Hence Labour’s equally disingenuous preference for average tax bill figures. Two contrasting Inner London boroughs provide an illustration. Kensington and Chelsea (Conservative): Band D – £1,086; average tax per dwelling – £1,190; Tower Hamlets (Labour): Band D – £1,189; average tax per dwelling – £787.

The parties have been playing this game seemingly forever, and they continue to do so, despite the estimable House of Commons Library staff producing a table each year showing in statistical detail how partial, in every sense, the competing claims actually are  (p.9).

Their conclusion: “The average band D council tax is lower in Conservative-controlled authorities than in those controlled by Labour, the single exception being Police and Crime Commissioners, where the lower levels were set by Labour. But in all cases the average council tax per dwelling is lower in Labour-controlled authorities.”

In short, on their own, without a great deal more information, both parties’ boasts are worth precisely the same as David Cameron’s considered assessment of Villa’s salvation prospects – diddly squat. Which surely means that we need hear no more of them? In your dreams!

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