COUNCIL TAX

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The Local Government Association has warned that most homeowners face council tax rises of at least £100 in 2006. They predicted an average rise of 10%, meaning bills will have nearly doubled in only nine years. The expected rise is four times the rate of inflation. Before the last general election council taxes were kept down by a £1bn bailout for local government from the Treasury. But that's unlikely to be repeated because of a gaping hole in the public finances.

Town hall chiefs say they have been landed with the estimated £147m cost of looking after failed asylum seekers and their children. They also have to cover the expense of the new licensing system that allows pubs to open for 24 hours a day. Councils also cite the cost of new rules for rubbish disposal, the price of repairing heavily used roads and paying for bus subsidies demanded by the Government. (Source: This is Money)

Council tax bills for 2003/4 increased in April by an inflation-busting 9.3% taking the bill for a Band A property in Derby from £619.23 to £677.06 - an increase of £57.83 a year. As well as an 8% increase in Derby City Council's share of the bill, this figure includes the Derbyshire Police Authority precept, which will this year rise by 21.5% - from £61.31 to £74.51 for a Band A property.

Band A, for houses valued at up to £40,000 in 1991, is the most common in Derby, with 53,553 of the city's 100,370 properties in that band. Labour councillors, who have a majority of three, all voted in favour of the budget while the Tories unanimously opposed it and the Liberal Democrats abstained. Mr Williamson said the city's finances had been badly hit by the 2001 census, which saw 14,545 city records "disappear" from official records overnight.

Tory group leader Councillor Philip Hickson said, "Derby received a 6.4% increase in Government grant and taxpayers should have been entitled to a more modest increase in council tax. No matter how much squealing is done about the census, it's the council's responsibility to set its budget in accordance with how much money it has got. The census is a red herring. This is about mugging the middle class." Liberal Democrat leader Councillor Maurice Burgess agreed the generous Government settlement should have cushioned the census blow. "I don't believe there's any real excuse for this rise," he added.

The council partly blames inflation-busting pay awards, pension schemes and increased National Insurance contributions for a forecast 10.4% rise in its revenue budget without increasing services. But it also wants to spend an extra £7.8m on services over the next year, bringing its total budget to £652.3m. In order to achieve this, the council needs to raise £224m from council tax.

The rest of the budget is made up of a £231m grant from the Government and £197m from business rates. Education will receive £403m, environmental services £69m, libraries and heritage £11.7m, public protection £4m and social services £156m. Of the £7.8m designated for increasing services, local projects and organisations should benefit, as £50,000 will be available to provide match funding to help them claim grants from national and European sources.

A total of £200,000 is also due to be spent on providing more resources for libraries to enable them to meet national targets. Over the next few weeks, each of the council's cabinet members will draw up more detailed proposals. Councillor John Williams, the Labour authority's leader, said the budget had been fixed following the most extensive consultation exercise ever. He added, "These exercises showed clearly that education, the care of vulnerable people, crime and business crime, support for young people and regeneration are key concerns for many people."

Comment...

The increases in council tax were reported to be necessary because of the drop in population recorded in the recent census and the reduced Government funding which this had caused. The figures first mentioned were in the region of 10% to 12% but more recently 7% to 10%. This approach follows that of previous years, in that the council first floats a high increase, but subsequently settles on a lower figure, when everyone is supposed to heave a great sigh of relief at the lower amounts extorted from them.

A typical council tax bill for 1992/93 which, for a Band C property, was £294, amounted to £826 for 2002/03, an increase of 181% over a period of 10 years. This massive increase occurred over years when Government funding was not claimed to be a problem. As numbers have decreased in the city, surely a fall in expenditure by the council should be in order as services have to be provided to fewer people?

Council Leader Chris Williamson maintains the above comparison is flawed because the figure quoted for 1992/93 relates to the amount paid by an individual under the discredited poll tax which was replaced by council tax. But whatever 'method' is used the result is the same - we're paying a lot more now than we were then.

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