Archive for the ‘Local government’ Category
It’s a bit of mystery when a cash-strapped council refuses money.
As my colleague Louise Vennells reported this week, two Devon councils – South Hams and West Devon – are poised to reject £250,000 between them.
It was money to pay for a council tax freeze from April, the equivalent of a 2.5 per cent council tax hike. Some £129,100 for South Hams, £100,200 for West Devon. Both are Conservative run.
Why? After all, it is a central plank of the Government promise to do all they can to protect households from the chill winds of austerity.
“Council tax frozen for two years running,” Chancellor George Osborne beamed at the Tory autumn conference. Just this week Local Government Secretary Eric Pickles heaped praise on 150 authorities who have agreed the freeze.
At the heart of the problem is that the offer is only on the table for one year. By contrast, councils got money for a tax freeze for five years if they opted not to put the levy up in 2011/12.
By accepting the one year-only hand-out they effectively store up problems for the following year. From somewhere the council has to find cash if it wants to fund the same level of service, or the “baseline”. A tax hike? A frontline cut or two?
Add to that the normal inflationary pressures and in 2013/14 councils face a nasty headache.
Officials at Cornwall Council, which will get £6 million for holding down the tax, put the quandry like this: “If the grant is accepted by the authority and council tax frozen, the council will have sufficient funding in 2012/13, but in 2013/14 there will be a funding shortfall of circa £6 million and therefore the council will have to implement service cuts to an equivalent sum or to raise council tax by 5 per cent.”
This is the bullet the two district councils have attempted to avoid, which is perhaps a lot simpler to do if you are a small rural authority.
Next year is made all the more fascinating, for policy nerds at least, by local referendums. They can be triggered if authorities raise taxes by 3.5 per cent, a prospect most in their right mind would look to avoid.
The way out? Well, next autumn the Chancellor could announce another one-year freeze, bagging a further set of positive headlines and putting something in a Tory councillor’s back pocket at local elections. Cornwall goes to the polls in 2013, for example.
Although one Westcountry council source isn’t banking on that, noting Margaret Thatcher had little love for provinces.
Not quite Holmes versus Moriarty, but the game is afoot.