Possible Council Tax rise emerges as an option on eve of Budget Consultation deadline

I understand that at last night's Labour group meeting the possibility of a Council Tax increase came back into play with a potential rise of 1.99% for 2015-2016 looked upon favourably by a majority of the group. A straw poll indicated 24 in favour of a Council Tax increase and 6 against.  This would be an annual increase of £30 for Band D residents.

Although Cllr Muhammed Butt opposed an increase at the Civic Centre Public Budget Consultation  that this would hit people already suffering from Coalition cuts the counter-argument is that in terms of social solidarity sharing the burden (with those in higher rated property paying more) would enable the most extreme of the proposed cuts to be avoided.  This would preserve some vital threatened services  to the benefit of poorer residents andwould be better for the Council's long-term stability.

Since 2011 the Council has avoided Council Tax increases, accepting the Government's grant for freezing the tax. Indeed Muhammed Butt has made virtue out of what he sees as necessity by boasting to residents that he has frozen the tax.

However there is an argument that long-term freezing of the Council Tax undermines the Council's revenue base.

This is what Clive Heaphy's Report stated in the First Reading Debate in November 2011 LINK

On 3 October 2011 the government announced a further one-off grant, for 2012-13 only, of £2.6m predicated on the basis that the council does not increase council tax for 2012-13. Each 1% in Council tax equates to approximately £1m of Council spending and members should note that the failure to increase Council tax over a number of years will erode the Council’s underlying revenue position in the longer term.

By January 2012 Ann John had ruled out a rise in the Council Tax as reported by the Brent and Kilburn Times LINK

As I stated at the time: LINK

The [Heaphy] report said that a rise of 2.5% in council tax would close the budget gap as follows:

2012-13 £4.4m
2013-14 £1.1m
2014-15 £19.7m
2015-16 £13.1m

In other words a rise of 2.5% in council tax this year would result in a net gain when the loss of the £2.5m grant is taken into consideration. Some councils are considering this option and some Labour councillors in Brent thought it worthy of debate. However that option appears to have been ruled out in advance of both consultation and decision making.

In November 2012 Assistant Director Finance presented a Budget Report that assumed a 3.5% Council Tax increase (above that triggered a referendum at the time). However the trigger was reduced to 2% (still current).

As I stated on my blog in January 2013 LINK

I understand that there has been discussion in the Brent Executive as to whether to raise Council Tax with the benefit marginal after grant losses and  a reduced collection rate are taken into account. A rise above 2% would have incurred the cost of a local referendum.  It would of course have been another additional cost for people already suffering from benefit cuts and low or frozen wages. An alternative view is that calling the Coalition's bluff and triggering a referendum could result in a proper political debate about the need to adequately fund  local services and the iniquities of the Coalition's grant reduction to local authorities. Only a very small percentage of local government revenue comes from council taxes and charges.

Brent Council leader Muhammed Butt has confirmed via a Facebook interchange with me that there will not be a 2% rise this year. Asked about a possible lower rise he said that the Council was looking at the settlement figures as part of the budgetary process and considering the offer of the freeze grant.

In January 2014 Muhammed Butt said that there were 'no plans' to change policy from freezing Council Tax in the 2014-15 Budget. LINK

I wrote on this blog:

Reflecting on Muhammed Butt's declaration yesterday that there were 'no plans to change course' on freezing council tax for the 2014-15 budget, I wonder what his plans are for 2015-16. In October the Council forecast a deficit for that year of  £34m (see below) a huge amount that on the council's own reckoning will put essential services at risk.

As political parties are deciding their manifestos for the May local elections surely they should be saying something about this crisis waiting for them in their first year of office.

In that respect a manifesto pledge to have a referendum on increasing council tax would make sense. Rank and file Labour party members and the wider public could than have a say and it could provide a launch pad for similar moves by other local authorities.  I do not think increases in council tax are the answer to the huge cuts in local authority funding, that of course requires the restoration of adequate funding, but a national debate post May 2014 leading up to the General Election in 2015 could feed into that demand. It will certainly put the future of local government on the General Election agenda.

Unfortunately despite some efforts at raising the issue and confronting the Coalition with the impact of the cuts, no real movement has emerged and no Referendum challenge..

Brent Council is left with the weakened revenue base that Clive Heaphy warned them about and deeply damaging unpalatable cuts.

It is noteworthy that in the above examples it has been Ann John and Muhammed Butt who appear to have made the decision about a Council Tax rise, although formally of course it is the Full council Meeting.

Where this leaves the Labour Group's support for a modest 1.99% rise, just below the Referendum threshold remains to be seen. Clearly the Cabinet should be taking note of the virews of its own councillors as well as the support shown for services by residents in consultations and in the campaigns that have sprung up to defend services.

If you wish to put your view there is still time to submit a  comment to Brent Council's budget consultation. The deadline is tomorrow, Wednesday February 4th :consultation@brent.gov.uk