In the latest piece of repositioning, Sir Keir Starmer, the Labour leader, has spoken out against Council Tax increases. It came in a speech yesterday devoted to seeking to recapture a broader piece of territory from the Conservatives by claiming Labour to be the party of “the family”. Sir Keir declared:
“The Prime Minister and the Chancellor want to hike council tax – a £1.9bn bombshell that lands a bill of around £90 on every family…
“I’m calling on the Government today to put families first during this lockdown. By backing local councils to prevent council tax rises; stopping any cut to Universal Credit; extending the ban on evictions and repossessions and giving our key workers the pay rise they deserve.”
It followed an article for the Sunday Telegraph, where Sir Keir wrote:
“It is absurd that during the deepest recession in 300 years, at the very time millions are worried about the future of their jobs and how they will make ends meet, Boris Johnson and Rishi Sunak are forcing local government to hike up council tax. The Prime Minister said he would do “whatever is necessary” to support local authorities in providing vital services – he needs to make good on that promise. That’s why I’m saying to Boris Johnson: give councils the support you promised and then give families the security they need by dropping your tax increase.”
To some extent, the intervention is not especially brave. How could any of his local government colleagues object? He proposes that every penny of the funding they would forgo from the Council Tax increase would be replaced by extra central Government grant. So nothing to challenge Labour councillors or public sector workers. (Though some who believe in “localism” might fret that local authorities would become still more financially dependent on Whitehall.)
Similarly, what Council Taxpayer could possibly object? No increase in bills without any reduction in funding for local services.
Doubtless it has occurred to Sir Keir that a bumper batch of local elections will be taking place before too long. They might, or might not, be delayed from their scheduled date of May 6th. Some I have spoken to think a short delay until June would be likely. But whenever they do take place, they will be dubbed as “the first big test” for the new(ish) Labour leader.
If the political focus is directed to the interests of the Council Taxpayer that is something to be welcomed. Council Tax hits the poorest the hardest. It is also a tax that people are highly conscious of paying. Eric Pickles, the Communities and Local Government Secretary during the Coalition Government, was very effective in keeping bills down. Councils had the option of increases above inflation – but only if they could win the approval of their residents via a referendum. Of course, they didn’t dare. It was an era of spending restraint where – despite much scare-mongering – services were generally well-maintained. Since then, there has been greater indulgence, but the referendum limit has still prevented excessive increases. Routinely we would have Labour and Conservative councils setting Council Tax rises at the maximum they could to avoid a referendum. Sometimes there would be a misleading claim, to be doing this “on behalf of the Government”.
This has tended to take the political heat out of Council Tax over the last decade. Yet the bills continue to vary widely – by several hundred pounds from one local authority to another. That impact on household budgets could mean, for example, whether or not there is enough to pay for a family holiday. Council leaders sometimes try to justify what marvellous value their tax increases offer, only ” a few pence a week”. A spokesman for Sadiq Khan, the Mayor of London, notes that the proposes ten per cent increase in precept amounts to “£2.63 a month on average”. But annual rises above inflation represent a cumulative burden. So often during recessions we have references to “austerity” in terms of the public sector. Tax increases being presented as being anti-austerity. Neither Ed Miliband nor Jeremy Corbyn complained much about Council Tax increases. Sir Keir has shifted the focus.
Yet the rhetoric from the Labour leader lacks credibility as he does not disclose how this additional largesse to town halls would be paid for. Council Tax is due to raise £51.2 billion in the coming financial year; a five per cent rise. If Sir Keir would stump up the £2.5 billion to avoid that increase, would he borrow the money? Would he cut spending elsewhere? Would he increase other taxes? If he wants borrowing to go up even further, with the current pandemic as the justification, what would be his plan to bring it back down? Would we all have to pay really big Council Tax rises in future years to make up for it? Or would Council budgets be squeezed – with Sr Keir offering an echo of Tony Crosland’s message that the “party is over”.
Previous Labour leaders have sought to prove their responsibility with the message that there will be “no unfunded spending pledges.” Often researchers at CCHQ would be able to spot a lack of rigour when it came to the details. In the current mood of profligacy, Sir Keir may calculate that nobody much will challenge him about a footling couple of billion here or there. Yet this remains a vulnerability for the Labour Party. In the coming years, the public finances will be a key priority. Can Sir Keir persuade sceptical voters of his credibility? Will he show he has the capacity to take the “tough choices”? To show that his sums add up. His speech yesterday is scarcely encouraging in this respect.