The minority Green Party administration running Brighton and Hove Council are proposing to spurn the Government's incentive to freeze the Council Tax and instead bring in a 3.5% increase.
Cllr Jason Kitcat, the Cabinet Member for Finance and Central Services blogs:
Why is it bad for the council? Because it would over 2 years cost us £4m, and more over the longer term. Let’s explore that in detail with an imaginary council called Picklesville with a £100 of income this year from council tax.
For the next year the councillors in Picklesville can either take the government’s grant worth a 2.5% increase or go with the Green option of a 3.5% increase.
If they take the government route they will receive £100 + £2.50 = £102.50 (£2.50 being the 2.5% grant from government).
If they go the Green route they will receive £100 + £3.50 = £103.50 (£3.50 being the 3.5% increase on council tax).
The next year the Picklesville councillors again need to decide on council tax. If they went for the government grant, that is now gone. So to catch up in the face of continued reductions in their formula grant (the other main source of income for councils other than charges) they decide to put council tax up by the maximum allowed, which is 3.5%. However because of last year’s freeze the starting point hasn’t moved. So they will receive £100 + £3.50 = £103.50 (£3.50 being the 3.5% increase on council tax over the previous year).
If they had gone the Green route then, still facing huge cuts in formula grant, they also decide to increase council tax by 3.5% so they receive £103.50 + £3.62 = £107.12 (£3.62 being the 3.5% increase on council tax over the previous year), quite a bit more than the other option.
These are of course hugely simplified numbers, but if you think in millions of pounds you can see that just freezing for one year (which every council already did for this financial year) leaves councils way behind each year, even if they keep increasing council tax. For Brighton & Hove accepting the one year freeze grant would mean £4m less income over 2 years. As we need to find savings of about £20m and £17m for the next two financial years, that £4m is money we can ill afford to give up.
So the mindset is the higher the Council Tax the better.
Jonathan Isaby, Political Director of the TaxPayers' Alliance, has a different view.
“Sadly, Jason Kitcat seems to revel in being part of the only council administration anywhere in the land currently planning to increase council tax next year, when most others are seeking to implement a freeze or a cut. Council tax payers in Brighton and Hove have every right to feel dismayed that their civic leaders have so little regard for their hard-earned cash that they want to snatch even more of it.
“Council tax virtually doubled over the last decade – without an equivalent increase in quality or quantity of services – so Cllr Kitcat and his colleagues should be looking at how to make savings from what they are already taking. Earlier in the year we found the council’s mileage rate to be 65p, rather than the HMRC-recommended level of 45p, whilst it was still employing three “European Officers” and three political advisers. Has anything been done to rectify that waste of taxpayers’ money? Other councils are cutting their coats according to their cloth: Brighton and Hove should follow suit.”
I will be interested to see how this develops. Will the budget go through? If the 13 Labour councillors along with the 18 Conservative councillors for a freeze they would be able to defeat the 23 Green Party councillors.
Another puzzle is that Cllr Kitcat suggests residents want Council Tax increases and complains that councils are "not allowed" to increase Council Tax beyond 3.5%. But they are allowed to. They simply need to win approval for a higher increase in a referendum. If Cllr Kitcat is confident this higher increase would be popular then there is no difficulty.
Why not crack on with some really exciting spending schemes and offer residents the chance to vote for a bumper Council Tax increase and accept their verdict.
Do you feel lucky, Cllr Kitcat?