Wednesday, October 5, 2011

Is the Council tax freeze really good news?

For the short term it will be good news to Council Taxpayers. In the medium to long term this is plainly wrong. As can be seen in the picture below the current Council Tax Special Grant runs out in 2014/15.
This will mean a cut of £200,000 for the year 2015/16 and beyond. The one off council tax freeze announced by the Chancellor is just that - a one off. Say HDC gets £200,000 for holding the council tax down. All this will do is hold down the Council Tax rise for 1 year. In 2012/13 the money for this Council Tax  freeze will end. So HDC will have a choice. Either cut a further £200,000 from its budget or increase the Council Tax by 5%.

Keeping down Council Tax by this means is a fallacy. It is the same as using reserves to keep down Council Tax. Local lessons with some of the the Town Council rises that were instituted under the Liberal Democrats and the massive hangover by the binge that HDC undertook by using reserves should be learnt. The underlying budgets go up which means Council Tax has to rise or services have to be cut. As the Government is putting £800 million to keep Council Tax rises down to 2.5% next year it will take double that (£1,600 million) the year if this continues.

The only way to cut Council Tax is to cut the cost of the Council. Cut services, cut jobs and drive down costs. Balance the budget each year (which means no use of reserves) and this will keep Council Tax rises down. All George Osbourne has done is put off rises for later years. This one will come to bite the Chancellor on his bum just before the next election.

It should be noted the Town Council receives no Government grant or funding.

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