How can the Government secure a Council Tax freeze across the country next year while also promoting localism? The circle is being squared by requiring those wishing to hike the Council Tax to secure authorisation from their own residents in a referendum.
The Council Tax freeze is not being imposed. But provided Councils budget for an increase of 2.5% or less than they will be able to deliver a freeze (or a cut) as they would get extra grant from the Government equivalent to 2.5% of Council Tax. (The cost to central Government next year will be £625 million once the lower cost of Council Tax benefit is taken into account.)
So there is a strong financial reward by a Council tax freeze is not being forced on Town Halls. What if a Council says to Eric Pickles: "Stuff you £1 million. (Or whatever the equivalent to 2.5% of the Council Tax is.) We want to spend more. We are going to increase our Council Tax by 5% which would give us an extra £1 million to spend."
The answer is fine but you must hold a referendum. The details of what the threshold should be to trigger a referendum has not yet been announced. Legislation will be needed. Yet the basic point is clear: The power of capping will switch from Eland House to Acacia Avenue.
"Let the people decide," says Eric Pickles.
"This is a radical extension of direct democracy, as part of a wider programme of decentralising power to local communities. Power should not just be given to councils but be devolved further down to neighbourhoods and citizens."