It’s that time of year again when councils present their budgets, and thoughts turn to whether council tax will rise, fall or be frozen.
According to a survey by the Local Government Information Unit, 95 per cent of councils intend to raise taxes, while just one of the responding authorities intends to implement a tax cut. Unsurprisingly, after Sajid Javid gave the green light by allowing councils to pursue tax rises of six per cent without a referendum, many are planning tax hikes that push close to and even right up to that limit.
That decision to raise the threshold at which a referendum is required to approve a tax rise passed with remarkably little comment a few months ago. And yet it was a peculiar one, with an unclear rationale.
I’m sure that some councils will have told the Department (now rebadged as a Ministry) that they need to tax more, but that’s been the normal state of affairs since the referendum rule was introduced. For some, asking for ever more cash is not just seen as their job, it is a state of mind.
The whole point of the cap-and-referendum rule is that if councils believe there is a compelling case for tax rises well above inflation then they should be willing to present their reasoning to their local voters and taxpayers in order to secure their explicit approval. That drew the sting from the often baseless claims of public sector lobbyists that there was strong public support for higher taxes; ‘if you reckon that’s the case, councillor, please be my guest and demonstrate it at the ballot box’.
Notably, it’s still the case that not a single council has ever dared to even bring such a proposal to a local referendum. Even Northamptonshire County Council, stricken by a (self-inflicted) financial crisis, doesn’t appear to be planning to seek a referendum on a tax hike to fill its financial gap.
That suggests that the rhetorical appeals that we often hear claiming that “people are happy to pay more” are still out of touch with reality in many parts of the country. Concern about continued austerity might, as many Conservative MPs now believe, be rising, but if so that doesn’t yet appear to have translated into an acceptance of even higher taxes.
This is where the danger of Javid’s decision lies. Councils themselves don’t appear to think that their local residents would be content to vote for tax rises pushing six per cent, or they’d have had the confidence to ask them to vote on it. They are presumably in a fairly good position to judge what their chances of success at such a referendum would be. But the Secretary of State has changed the rules so that residents won’t get the chance to block tax rises, and they will now be inflicted on people regardless of their wishes.
That is going to annoy quite a few taxpayers around the country. And it risks combining with other frustrations, too. If you believe that people are fed up of austerity, try putting six per cent tax rises in place in addition to the continued financial constraints on local government. To cap it all, these bills, with all their potential to annoy voters, will be confirmed shortly before the local elections.