Judy Terry is a marketing professional and a former local councillor in Suffolk.
The fact that two of London’s richest boroughs, Wandsworth and Westminster, have Band D council tax rates of, respectively, £723 and £711, less than half that of the average across England which stands at £1,671, highlights how unfair this system has become.
Average property prices beyond the M25 are a fraction of their equivalents in London, whilst wages outside London average less than £30,000. However, local authority bosses’ incomes are certainly comparable with some of the highest paid in the capital, with enviably generous pension entitlements.
Nevertheless, two Suffolk councils (Forest Heath and St. Edmundsbury) which share many services, now propose increasing pay for top executives by up to 26 per cent, to aid future recruitment.. This means adding a reported £17,000 to the Chief Executive’s salary. There is no doubt that this is a very well run and ambitious authority, but such generosity lacks sensitivity when hard-working local people, living in areas of deprivation including Mildenhall – and even parts of Newmarket – are lucky to be paid as much as £17,000 a year.
Meanwhile, a growing number of second home owners dodge paying council tax by registering properties as holiday lets and claiming small business rate relief. In the prime coastal areas of Southwold, Aldeburgh and Walberswick in Suffolk, more than a third of residential properties are registered as second homes, pushing up prices to the detriment of local communities.
In Southwold, alone, 253 second home “businesses” benefit from this rate relief, which is equivalent to £551,744 a year. Just up the coast, also within the Waveney District, Lowestoft suffers pockets of deprivation and low aspiration; although the area now benefits from the expanding offshore wind industry, it deserves the added investment such a sum could contribute, creating more jobs and potentially helping to revive the fishing industry.
As one local Conservative councillor says:
“It is unfair that people who can afford two homes are being subsidised by those who can’t even buy one.”
Whilst tourism makes a valuable contribution to local economies, it shouldn’t be at the expense of residents. Cornwall, which suffers from similar “rate relief” problems with second homes, is seeking devolved powers to end the practice. Despite its apparent affluence, Suffolk should do the same, especially given the pressures on social care for its expanding elderly population, and the plans to cut school transport seriously impacting rural areas.
Taxpayers want to see local authorities delivering value for money: for example, separate charges for some bin collections could be avoided if all Suffolk’s councils signed up to a centrally controlled county-wide waste service, saving millions, instead of retaining separate operations. Millions could also be saved if Highways officials co-ordinated works with the various utilities (water, broadband, gas etc), fining them if roads and pavements are not restored to a high standard, and if projects overrun. Engagement would also prevent roads being repeatedly dug up just weeks after they have been resurfaced, causing huge inconvenience to local residents and businesses. Savings could repair urban potholes, which have proliferated to dangerous levels.
Local authorities beyond the capital do have extra responsibilities, which is all the more reason for sharing resources to reduce costs, and Waveney with Suffolk Coastal are exemplars. But it is not an excuse for borrowing vast sums to become ‘developers’ which is an increasing practice around the country in the hope of raising extra income.
For example, Labour-controlled Ipswich Borough Council recently announced an increase in its borrowing from £56 million to build a commercial property portfolio to £350 million, without having any credible strategy for allocating such a vast sum.
The council set up a company, led by an ‘expert’ from a national firm of surveyors, with Labour councillors who lack any specialist property experience, appointed to the ‘board’, to manage the business. The problem is that there is no accountability or formal oversight of its activities, yet there is evidence from underbidders that the council has already overpaid by several million pounds for sites. Conservative councillors report being refused permission by the council’s Operations Director, who doubles as the monitoring officer, to ask questions at Full Council because of ‘commercial sensitivity’. For the same reason, the Scrutiny Committee is toothless.
Commercial property is notoriously volatile, so the secretive nature of these deals is worrying when the local taxpayer (the Ipswich population is less than 140,000) will ultimately have to repay the debt, potentially penalising future generations. At the very least, the company should have an experienced independent chair (the recently retired former chair of the Local Enterprise Partnership would be an ideal candidate) and publish an Annual Report, setting out the financial position for each acquisition, including tenancy agreements and rental levels, as well as ongoing maintenance costs. When public companies are required to provide such information, it should also be mandatory for local authorities dabbling in unfamiliar territory.
The Government should urgently review its lending priorities; its own borrowings may be a few billion lower than in recent years, but it is funding a future financial crisis by allowing councils to build up enormous debts which are unlikely ever to be repaid.