Latest Public Sector News

09.10.12

Council tax freeze to be extended for third year

The Government has announced £270m of funding available for a third year of council tax freezes across England, if local authorities accept the deal.

This year, they will receive the equivalent of a 1% increase from Whitehall in return – £225m funding in both 2013-14 and 2014-15.

While this could be good news for residents, the Chartered Institute for Public Finance and Accountancy (CIPFA) warns that the move goes against the Government’s localism agenda.

Steve Freer, CIPFA’s chief executive said: “Many councils are having to resort to cutting services in order to balance their books. In many ways it is helpful if they can avoid increasing local taxes at the same time, particularly when household incomes are under such pressure.

“But it is also very worrying that we seem to be drifting to a position in which the council tax is effectively determined by central rather than local government. That’s bad news for local democracy and sits awkwardly with the Government’s own localism policy.”

He also called for confirmation that the funding was new money, and not that already earmarked for councils’ spending.

Sir Merrick Cockell, chairman of the Local Government Association, agreed that the announcement would make localism more difficult to implement and said that the freeze was only a short-term solution.

“Reducing the current referendum trigger from 3.5% to 2% represents less flexibility for councils and even less localism with Whitehall decreeing what constitutes excessive. If local referendums are to be truly localist, they should be triggered by local people who can determine whether a council tax increase is excessive or not.

“Any help for councils is a good thing, but we have to be clear that this is a short-term offer. It doesn't address the huge long-term pressures councils are facing, including bigger cuts than any other part of the public sector and an immediate and growing crisis in funding care for the elderly. Councils could now have to budget for a further future shortfall.”

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