Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.
A recent press release from the Chartered Institute of Public Finance and Accountancy (CIPFA) made grim reading for taxpayers. Based on their survey of 331 local authorities in England and Wales, households will see their Council Tax bills increase on average by 3.5 per cent this year. It’s all too familiar news for us at the TaxPayers’ Alliance after commenting on years of endless council tax increases.
So it was refreshing to see Harlow council bucking the trend. Through its “efficiency dividend” residents in all bands will receive a Council Tax reduction of up to £50, without any cuts to frontline services. Those in bands A to D will also enjoy a further £150 rebate courtesy of the chancellor. Leaving the rebate aside, how has Harlow managed the seemingly impossible? I sat down with Cllr Russell Perrin, the Council’s leader, to find out.
I began by asking Perrin why Harlow has succeeded in cutting Council Tax when many other authorities have failed?
“We’re a district council so we don’t have to worry about social care pressures but over the past six years I noticed the council was unnecessarily padding its reserves.”
Adding that “previous administrations had a weak grip on the finances.”
The mention of reserves piques my interest. I’ve long questioned why councils have built up billions of pounds in recent years only not to use them when the rainy day that was Covid came along. Perrin makes clear his opposition to excessive earmarked reserves. He argues they are unnecessary as “the chances of everything going wrong at once are slim. There’s no need to have massive reserves which have swelled because of overcharging. We found savings and efficiencies of £1.8 million without any impact on services”
And what was behind calling the tax cut an “efficiency dividend”? He explains that there was a “natural inbuilt resistance” from council executives to hand money back to the taxpayer. There was a feeling of, “if you’re giving money back, it asks the question why did you take it in the first place?” He and his colleagues had to do a great deal of research themselves. Questions about the correct wording for returning money to residents led them to the Localism Act 2011 where they discovered that Kensington and Chelsea had previously used the dividend.
This means that Harlow’s Band D charge will technically be the same as last year. The difference this year is that the dividend is, to all intents and purposes, a rebate that will be discounted from bills. Consequently, there won’t be a “long-term cumulative impact” on the base budget. For example, a three per cent rise on £600 will be greater than the same rise on £550 as and when the council increases tax again.
I question Perrin on the possibility of cutting bills next year. He plans to freeze Council Tax for the next two years and will reduce it again if they can find the savings. His attitude towards taxpayers’ cash is a welcome breath of fresh air:
“If we take a single pound from somebody, we’re morally obliged to justify the reason for taking it because we haven’t had to go out and earn it. Every time we look at taking money from a resident, we ask ourselves is this entirely necessary?”
I’d be confident in saying that residents will very much welcome a freeze in 2023-24. News of this year’s budget is (unsurprisingly) going down well with local residents. A social media video by Perrin laying out the council’s budget has already garnered 31,000 views (over one-third of the town’s population). He’s even getting an “overwhelmingly positive response” from the public as he goes about the weekly shop. He stresses that it’s not all down to him. None of this could have been achieved without the tireless efforts of his fellow team and council members, particularly James Leppard and Dan Swords.
Given Harlow is not unique in being a district council with no responsibility for social care, I put it to Perrin that surely other councils in a similar situation should be able to follow suit? He says that every scenario is “bespoke” and what’s been done in Harlow can’t necessarily be copied and pasted, but more can be done.
In this spirit, he’s already looking at creating economies of scale by sharing core services between authorities:
“Why do we need two HR departments? It’s the same with election offices. Same software, same systems, do we need two teams?”
His comments on council remuneration are equally sound:
“If we put Council Tax up, we have no right to put councillors or executive pay up, that’s a given!”
Harlow should serve as a timely reminder to other local authorities that Council Tax doesn’t always have to go up. It may not be possible at every local authority, but tired arguments about no more fat left to trim hold little water. Next week government data will detail the exact Council Tax charges across England. It’ll be interesting to see how many have managed to cut tax. For the sake of the nation’s hard-pressed households, I certainly hope it’s more than just Harlow.