Latest Public Sector News

30.01.19

Northants given special dispensation by government to raise council tax by 5%

Northamptonshire County Council has been given permission to raise council tax by 2% more than permitted at any other council to help it balance its books amid financial turmoil.

Unveiling the final local government finance settlement, communities secretary James Brokenshire said the financially-troubled authority would be given special dispensation to raise its council taxes by 5% to help it overcome its “serious issues.”

The county council was proposing to raise taxes by 2.99%, the maximum increase councils are allowed to implement without triggering a local referendum, but Brokenshire has given Northamptonshire permission to implement the 5% increase.

In his written statement to parliament, Brokenshire said he had decided to provide the council with the tax flexibility “to assist with the improvements to council governance and services after their serious issues,” but added that use of the flexibility would ultimately be a matter for the authority’s cabinet and full council.

Several local authorities have called for the communities secretary to remove the referendum threshold beyond 2.99%, but Brokenshire rejected the request, stating that he believed that the limits allow councils to retain flexibility to raise resources whilst also protecting households from “excess increases.”

A 5% tax rise could raise £5.78m for the county council, up from the £3m it was looking to raise from a 2.99% over the course of the financial year.

Northamptonshire’s financial woes have been heavily publicised since the council became the first in 20 years to issue a section 114 spending ban amid reports of a £70m budget deficit.

Commissioners were sent into the council to help stabilise its finances, but today’s news follows Brokenshire’s decision in November to effectively bail out the county council by allowing it to divert £60m worth of funding raised from the sale of its HQ to wipe out some of its debt.

Northamptonshire County Council’s leader Matt Golby welcomed the announcement and said: “This now needs to be discussed, initially by the Conservative group and then by cabinet before a final decision is taken at February’s cabinet meeting.”

But Chris Stanbra, the council’s Liberal Democrats leader, said that “the whole fiasco could now mean a substantial tax increase for local taxpayers.”

The Northampton North Labour parliamentary candidate, Sally Keeble, accused the government of “pushing the price of local of Tory failure on to local people” by raising council tax.

Northamptonshire County Council will be scrapped in 2020 after local authorities voted for two new unitary authorities to be established in the region.

Image credit - Joe Giddens PA Wire

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