Wait until 2013

Eric Pickles (Conservative Cabinet Minister in charge of Local Government) in a recent speech said:

This year, it will be tough for many people - facing pay freezes at work, be it in the public or private sector, as well as a rising cost of living.

This is why it's essential in February and March, as town hall budgets are set, that councils sign up to the council tax freeze.

It's practical help every councillor can offer to their ward constituents. A vote against the council tax freeze is a vote for punishing tax-rises. Local taxpayers will remember that decision next time they cast their vote at the ballot box.

Councillors have a moral duty to sign up to keep down the cost of living - anything less is a kick in the teeth to hard-working, decent taxpayers.

With the Government offering money for a Council Tax freeze for next year (2012/13), I thought I would take a look at the authorities which make up our council tax bill and whether they are taking the cash. Councils, Police and Fire will have to hold a referendum on whether Council Tax should rise over certain amounts.

The smallest is St Neots Town Council which has put in a zero increase for this year. The Town Council receives no government grant and therefore will get no money to freeze their Council Tax.

The Cambs Fire Authority is looking to not take the grant and is having a public consultation until 25th January 2012 on this subject. The Fire Authority presents the decision not to accept council tax freeze money as thus:

As the Government grant is a one-off payment and will not feature as part of the ongoing base budget, it will mean that come 2013/14, the fire authority will have two options:

1. Increase the council tax by a significant amount, over and above inflationary pressures. This will be to cover 2012/13 and also an increase for 2013/14.

Or, if the Government caps a rise on council tax and only allows a certain percentage increase:

2. Add the deficit to the budget cuts that CFRS already face (£4.2 million to £6 million) which could contribute to the loss of more jobs and more resources, such as retained fire engines.

Capping has gone. Abolished by the Localism Act. What the Fire Authority is missing is it would have to hold a referendum to increase Council Tax substantially. The Fire Authority is not directly elected. Therefore I feel they should ask the people through a referendum on whether they should increase tax.

The Cambs Police are looking to either increase the Council Tax by 2.5% or take the freeze money and let the newly elected Police Commissioner sort this out once elected in November 2012. Though they are having a consultation this has so far come out for taking the freeze money.

Whilst having this Consultation the Police Authority hasn't geared up for taking the Council Tax freeze. As it says in this linked report:

1.2 
Two options are presented: 2012/13 council tax increase at 3.0% (Table A)and 2012/13 council tax increase at 2.5% (Table B). Both sets of figures have been produced on the assumption that the Authority will reject the Government's offered 2012/13 Council Tax Freeze Grant.

Huntingdonshire District Council is looking to add 2.5% to their portion of the Council Tax bill and is set not to accept the freeze money. No consultation on this at all.

As for the County Council, I have no idea on what their stance on this matter is. This is far the largest part of the Council Tax bill. The 2012/13 budget comes up for discussion on 31st January 2012.

So far two authorities are consulting - Police and Fire. The Town Council has decided to freeze. HDC is looking to increase. Whilst the County Council has yet to come forward with a draft budget. It looks as though the local authorities are looking to increase Council Tax and spurn the freeze money.

Yet there is another way! In 2013 the County Council is due up for election. If any authority wishes to increase Council Tax then they can do so via a referendum. The whole county will be having elections so all can combine to put any Council Tax increases to the voters and therefore gain the approval needed at a shared cost.

Let the people have their say on Council Tax increases.

Lets Tax and Spend

Now I'm a tax and spend person. I believe that Government at all levels should tax and spend. What I mean by tax and spend is Government should determine what services it needs and wants to provide and at what service level and then tax accordingly. If our politicians don't like the level of tax then they go back to what services they want to provide. I know Government finances are more complicated than this simple principle, yet if Government and Council follow this simple principle we get the price of services and can decide what we want to be taxed.

Council Tax is the local tax for local services. In Cambridgeshire most of the money goes to the County Council, with some going to District and some going to the Town and Parish Councils.

Use of reserves is one of the biggest problems that distorts the Council Tax rates. Because it gives the impression that services are being paid for out of Council Tax and by using reserves to keep Council Tax down this gives a false impression of services costing less than they actually do.

The problem is compounded because of inflation.

Below is a simple example of using reserves to keep the cost of council tax down. In this example a £1,000,000 of reserves are used with a 10% increase in the net cost of services and Council Tax is kept at zero increase.

In Year 6 reserves have run out and the options are to either raise Council Tax by 50% or cut £500,000 from the net cost of services.

In the next example the amount of increase is 2.5% in the net cost of services and 2.5% increase in the Council Tax. This example assumes no increase in Government Grant or charges the Council can make which makes up the £14,000,000 difference between the Net service cost and Tax.

So having spent £3,588,600 in reserves, in Year 6 there is a deficit of £1,839,715.  To make this up Council tax would have to rise by 30% in Year 6 to make up this deficit.

In the next example the Net Cost of Services rises by 5% and the Council Tax increases by 2.5%. As in the previous example Government grants and service charges have a zero increase.

The deficit in Year 6 is £4,737,182.  This added to the Council Tax would mean a 69.7% rise on top of the 2.5% annual rise. Either the Council Tax goes up by 69.7% or the Net service cost has to be cut £4,737,182.

Over just 4 years the amount of Reserves spent is £9,129,655.

I know there are many other factors in the actual calculations with Government grants which do go up but are currently reducing. I know charges haven't been included, but charging for services is a double edged sword as pushing up charges can mean a loss of revenue as people may not be willing to pay higher charges. But this isn't the point of these examples. What I'm trying to show is using reserves to keep Council Tax down by using reserves is false and is wrong. The cost of services are not reflected in the amount of Council Tax increases and there comes a time when either Council Tax has to rise or services are cut and the same amount of Council Tax has to be paid.

Both the Town Council and the District Council have kept Council Tax down by using reserves. Under the Liberal Democrats, the Town Council eventually ran out of reserves and had to cut projects to maintain a low Council Tax rise. The same goes for HDC which had the problem of using reserves to keep services going in its "socialist utopia". The deficit caused by low tax/high services is being slowly dealt with by cuts.  What HDC needed to decide is whether it wants to be a high tax/high services council or a low tax/low services council. I feel they have decided to be neither.

In the coming budget round it will be interesting to see what the Town and District Councils will do with the spending pressures they are accumulating. The capping regime has gone and authorities can put up their portions that make up the Council Tax by whatever they like so long as it is approved by a referendum. The Zero Council Tax bribe by George Osbourne is also going to cause problems as this too makes a problem for the future as I does exactly what using reserves does. It will give a false impression on what the Council Tax rate should be. Also it HDC get £200,000 in extra grant this year without this money next year it will mean a greater rise in Council Tax or more cuts.

What this Budget could mean for Councils.

The Budget has set out a policy of a Council tax freeze. If a council has an increase in excess of 2.5% they don't get any money. Looking at authorities covering St Neots it doesn't look too bad. Though cuts will have to happen.

CCC - already looking at a 2.5% increase for 2011/12. To achieve this they still need to cut £22 million
HDC - already looking at a 2.5% increase for 2011/12. To achieve this they still need to cut £1 million
Police - already looking at a 2.4% increase for 2011/12. To achieve this they still need to cut £1.9 million
Fire - already looking at a 1.9% increase for 2011/12.

SNTC doesn't figure into this because it does not receive any government money and raises all its tax from the local tax base. We should find out soon if they could achieve a budget freeze.

What could be the real problem behind all this is what will happen over the grants received from central government.

Hunts Post: Old MacKellar's Almanac - Some predictions

The Hunts Post has made some predictions on page 19. I thought I would examine a few of these predictions.

Prediction:
"One of our safer predictions is that both Jonathan Djanogly, MP for Huntingdon, and Shailesh Vara, who represents North West Cambridgeshire, will hold their seats comfortably whenever the election is held."

Rednek says: This is an easy prediction to make. Apart form murmurings and a few bad results in local by-elections and euros there hasn't been an effective organised reaction against either MP.

Prediction:
"May’s poll for one-third of the seats on Huntingdonshire District Council will not change control of the authority, which has been run by the Tories since it was created in 1974, but it could throw up one or two interesting results."

Rednek says: This is an easy prediction to make. The Conservatives have a 36 seats to the combined opposition of 15. It would take the loss of a further 11 seats to make the Conservatives lose overall control. 

Prediction:
"Expect Council Tax to rise by around 2.5 percent in April, though the precise change will vary from parish to parish as usual."

Rednek says: This is an easy prediction to make. Council Tax rises have already been talked about. With the County Council aiming for 3% the resultant rise will be over 2.5% in St. Neots.

Prediction:
"The cinema saga in St Neots will roll on, but films are unlikely to be rolling in the town in 2010. The town will have to look to the long term for its cinema."

Rednek says: This is an easy prediction to make. Unless the plans are fast tracked and the building is completed at an extraordinary rate any cinema will not happen in 2010.

Are the Liberal Democrats helping the Conservatives?

In this weeks Huntspost - St Neots addition (on page 10) is a piece on "New bus station in doubt". A little bit on the doubts raised over the proposed capital spending on project. The rest of the piece is about the rest of the 2nd December 2009 HDC Meeting. Liberal Democrat Group leader Cllr Downes attributed to the problems to a combination of (Rednek says):

• International recession - Will hit everyone. But most of the funding for this Council comes from Government grant and the very stable Council Tax. 
• Technical issues of tapering in central Government funding that penalise councils such as HDC - True and the action that was taken was to just fund this shortfall from reserves. This did not address the problem of less funding.
• The decision to use interest on the proceeds of the sale of council houses to subsidise Council Tax in the past - The problem was as the interest declined services should have been cut. Instead finite reserves we raided to prop up the deficit budget.
• Capping that meant the council could not implement a cross-party agreement on the level of Council Tax increases - The Conservatives boasted and celebrated the low Council Tax rates in Huntingdonshire. The problem was they weren't reacting to events. It was easier to add to the deficit financed by finite reserves that tackle the funding shortfall.

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What I don't understand is the Liberal Democrat position. The Conservatives got this Council into this mess and the Liberal Democrats want to help the Conservatives out. Mentioning the cross-party agreement seems to me to shift the blame from the Conservatives to the Labour Government. It is the Conservatives who are in charge of this mess. As the opposition the Liberal Democrats must point out where the Conservatives have gone wrong rather than helping them out!

Less Tax! NOT more new facilities.

In April 2011, the new development at Love's Farm will be annexed by St Neots Town Council. At the same time the Town Ward of Eynesbury Hardwicke (gray shaded area in the picture) will also be annexed. Other designated development land to the east of the railway bounded by the A428 will also be annexed. St Neots will lose some land west of the A1 to Hail Weston and parts of Skipper Way development will be annexed by Little Paxton.

Currently St Neots has a council tax base of 9178. On current figures Love's Farm will add at least 100 to the council tax base. Eynesbury Hardwicke will add roughly 700. The loss of Skipper Way will lose roughly 100. So when SNTC finally gets to add this to the Council Tax base this could mean a bonanza of at least an extra £61,000 a year to the Town Council coffers. As Love's Farm gets larger this may add another 800 to the council tax base. So a potential £70,000 pa extra. That is without including any housing developments to the south of Cambridge Road.

The question is what should the Town Council do with this annual bonanza? The temptation is to spend all this money on "something". I'm sure there is a list of things the Town Council will want to do with the money. The list will get longer as Town Councillors have more ideas. The Town Council has shown a lack of financial discipline over the ECC and moving Grounds Maintenance in-house.

In the Forward Plan it says:
c. Loves Farm Community Centre
The Council has been approached by the District Council to assume responsibility for the future Loves Farm Community Centre. Land will be made available and some £350,000 will be transferred to provide a suitable building. However, that sum will be insufficient to provide a suitable building.

This means SNTC is already planning to take out another loan to pay for facilities we don't necessarily need. But these residents are paying substantially below what the rest of St Neots are paying.

In St Neots we currently pay band D = £87.55.
In Love's Farm they pay band D = £16.95.
In Eynesbury Hardwicke they don't pay anything towards their Parish Council. So ALL bands = £0
(It will be a shock for these residents when their Council Tax bill will go up to SNTC levels in April 2011.)

I think it is wrong that St Neots residents will potentially have to pay towards new facilities for our new residents. Both Love's Farm and Eynesbury Hardwicke residents pay little or nothing currently to their Parish Councils. If these facilities are needed then a dowry should be paid with the residents. In Love's Farm there is land and £350,000 for a building and that should be it. Build the facility for £350,000 and no more! I feel this bonanza should be used solely for reducing the Council Tax for the whole of the new St Neots.