As is usual with the treacherous Tories they have completely broken their promises regarding meeting all the costs of dealing with the pandemic. Ongoing costs will largely be met by increases in Council tax where Councils can increase tax by up to 5% next year without calling referendum. This represents 85% of the money available to pay for local services. The extra Government contribution then is negligible.
The local government finance settlement announced yesterday settlement indicates that core spending on local services has the potential to increase by £2.2 billion in 2021/22, an increase of 4.5 per cent.
Extra money to meet COVID-19 costs, new funding for adult and children’s social care and for councils with responsibility for services such as homelessness, planning, recycling and refuse collection will help meet cost and demand pressures next year.
However, more than 85 per cent of the potential core funding increase next year is dependent on councils increasing council tax by up to 5 per cent next year. This leaves councils facing the tough choice about whether to increase bills to bring in desperately needed funding to protect services at a time when we are acutely aware of the significant burden that could place on some households.
I have no objection, in principle, to higher taxes. Providing that they are based on establishing a minimum of support required for the poorest and the services which they need, support the overall needs of the Country and weigh heaviest on those with the deepest pockets and broadest shoulders then I think that there are many ways in which we could increase our tax take. Not least by ending the scams which enable individuals and companies to earn money in this Country and then shelter it away in tax havens.
Unfortunately Council tax meets no possible concept of fairness. A millionaire living in a mansion flat in Kensington London pays as much council tax as someone living on a level just above the minimum wage in Kensington Liverpool. When we put Council tax up here it is mostly the poor paying more for the needs of the very poor.
If Liverpool levies a 5% tax increase when public sector workers will get no pay rise, pensioners 2.5% and benefit claimants a below inflation increase we will once again create a system of absolute unfairness. Add to that the many people who may well be getting less money in the private sector if they get a wage at all in the post-Covid economy and we end up with an absolutely desperate situation. There is no easy answer to this question for Liverpool City Council. We cannot be fair to everyone in this time of desperate need.
Here are some suggestions that the Local Government Association have made in response to the local government settlement. There is a wide consensus amongst councillors of all Parties about these pints. The difference being that here is no consensus on the long term changes required.
• Council tax rises – particularly the adult social care precept – have never been the solution to the long-term pressures faced by councils, particularly in social care which is desperately in need of reform. Increasing council tax raises different amounts of money in different parts of the country, unrelated to need.
• Councils also need clarity and certainty about how all local services will be funded over the next few years and beyond. Next year we need a multi-year settlement and meaningful progress towards a long-term, sustainable solution to the funding crisis our adult social care services continue to face.
There must be no further delays to the process of reform.
• It is vital that the Government guarantees the financial challenge facing councils as a result of COVID-19 will be met in full, including funding for cost pressures and full compensation for lost income and local tax losses.
• The Government must urgently publish next year’s public health grant settlement so councils can get on with the job of helping keep their communities healthy and resilient, in the face of the ongoing pandemic.
• The impact of the pandemic has not changed the way general Government grants are distributed between councils which remains complex, opaque and out of date. We are calling on the Government to resume the Fair Funding Review, but with a guarantee that the transitional mechanisms ensure that no councils experience a loss of income.
• The Government must use its review of business rates to determine the future of the tax – which accounts for around a quarter of all council spending power – and shift attention towards developing new sources of finance for councils and different ways of incentivising growth.
• We will continue to promote the role councils play in making a huge difference to the lives of our residents and communities. As we prepare our response to the 2021 Budget and look ahead to the Spending Review, we will be campaigning for local services to be provided with a long-term, sustainable future which gives councils clarity and certainty over their funding. This will allow local government to play our full part as we improve outcomes and value for money in public services, rebuild our economy, get people back to work, level up inequalities some face and create new hope in our communities.
Council Tax Referendum Principles
The following council tax referendum principles were announced:
- a core principle of up to 2 per cent applying to shire county councils, unitary authorities, London borough councils, the City of London, the Isles of Scilly, the GLA general precept and fire and rescue authorities.
- a continuation of the Adult Social Care precept, with an additional 3 per cent flexibility available for social care authorities on top of the core principle. This can be spread over two years.
- 2 per cent or £5, whichever is higher, for shire district councils.
- £15 for Police and Crime Commissioners
- no referendum principle for Mayoral Combined Authorities or town and parish councils.
Please feel free to contribute to the discussion about levels of taxation and types of taxation. You can contact me at email@example.com