Sunday 22 January 2012

Is a council tax rise to protect services an option?

Local government is faced with real dilemmas regarding funding cuts imposed by the Coalition which they then have to pass on by cutting public services. Implementing cuts but 'protecting vital services' or 'protecting the most vulnerable' became the policy of many councils . When it was pointed out that the scale of the cuts made that impossible and they should refuse to make the cuts, they said that if they did that the cuts would then be made by people less sensitive to local needs. Early on Brent Council seemed to be arguing that they were making the cuts so cleverly that people would not notice the difference. However recently they have painted a much bleaker picture and admitted that the cuts threatened the very existence of viable local government.

No council, including the Green led Brighton and Hove City Council, have yet refused to make the cuts or set an 'illegal budget'. Clearly such a policy has to start somewhere and will only really be effective if it is a start of a movement by many councils. Someone has to take the lead and perhaps Brighton should have done. I have argued that Brent Labour should initiate such a campaign amongst London councils. Whilst not advocating refusing to set a budget  Cllr Ann John, leader of Brent Council,  recently conceded that if there was a groundswell of opinion there could be a joint approach to the Coalition government.  There is little time now for such a campaign ahead of the 2012-13 budget setting.

However, some councils, starting with Brighton and Hove, have taken a different step to protect services, albeit still implementing some cuts. The have decided to spurn the government's grant for freezing council tax, and gone ahead and tabled increases. The Budget Report that went before Brent Council, warned that a council tax freeze over several years would seriously erode the Council's revenue base. Cllr Muhammed Butt,  lead member for resources, said that the government grant was a 'trap' and would result eventually in a loss in revenue but Ann John said that Brent Labour had made a manifesto commitment to keep the council tax low. She noted however that some Tory councils were now in revolt and things might change.

According to Brent's figures the impact of raising the Council Tax by 2.5% would be significant (figures in bold in brackets below):

Budget Gap
2012-13 £m
2013-14 £m
2014-15 £m
2015-16  £m
4.4 (4.4)
6.4 (1.1)
22.5 (19.7)
16.1 (13.1)
4.4 (4.4)
10.8 (5.5)
33.3  (25.2)
49.4 (38.3)

Brighton and Hove has led the field with a council tax rise of 3.5% but have been followed by Darlington Borough Council. Leicester City Council. Middlesbrough Council. Nottingham City Council, Redcar and Cleveland Borough Council, Stockton-on Tees Borough Council and Stoke-on -Trent City Council who are all Labour authorities. They have been joined with lower increases by Tory authorities, Chelmsford (2.46%), Peterborough City (2.95%) and Surrey County Council (2.99%).  Whilst losing the government grant the rise enables them to have a net increase in revenue and this safeguard some services.

Eric Pickles, Communities and Local Government Secretary, has lost no time in denouncing these councils. He said that 'a vote against the council tax freeze is a vote for punishing tax rises.....councillors have a moral duty to sign up to keep down the cost of living'. Councils also have a moral duty to maintain services for their residents. A council tax rise can be seen as a different way of shifting the cost of the economic crisis on to ordinary people and it is not a particularly progressive tax, but at the same time it shares the cost of preserving services for the most vulnerable amongst all residents.

It is certainly a strategy that deserves debate and Greens in Brighton and Hove have had an extended consultation with local residents about its budget which was opposed by the 'Purple Opposition Coalition' of Labour and Conservatives.

Breaking ranks with Labour,the GMB in Brighton which represents many council workers, has given its approval to the Greens' council tax proposals.

Branch secretary Mark Turner said:
The GMB agrees that the plans to increase council tax by 3.5% this year are in the best long term interests of the city.

The Coalition government offer of a freeze in council tax is a bribe that would quickly leave the city much worse off, and less able to provide the services that residents expect and need.

It seems that Brighton Labour and Conservative parties have not grasped the financial realities of the long term damage taking the council tax freeze would create.

The city already faces extreme challenges because of the Coalition's huge reduction in the grant to the council - taking the freeze offer would make the situation even worse.

While the increase may seem unfair to residents, the truth is that we will all be much worse off without it, not just the council staff who will lose their jobs, but the whole city would suffer as services deteriorate needlessly.
Because Brent Council made a decision to freeze council tax before putting forward a budget we have not been able to have a debate about this in Brent. A decision to raise council tax can be seen as still making ordinary people pay for the economic crisis caused by the bankers and hitting them when incomes are frozen and inflation rising. It can also be seen as the only way to preserve vital council services and spreading the load across the population.

Next year I believe Brent Council should have a full and open debate about the options available as the Brighton Greens managed recently. Formulating a 'needs led' budget with local people, trades unionists and voluntary organisations would give a firm basis for going out and campaigning against Coalition cuts and would be a way of preserving local democracy.

An independent comment on the Brighton budget process can be seen HERE

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