Thursday, 24 November 2011

Is Cornwall Council showing contempt for hard-working families?

Local Government Minister Bob Neill has accused those local authorities which are refusing to freeze council tax of showing "contempt for hard-working families". At the moment, the Tory-led administration on Cornwall Council is refusing to say whether or not they will implement a freeze.

Back at the Conservative Party Conference, Chancellor George Osborne announced that the Government would be giving a grant equivalent to a 2.5% rise in council tax to any local authority which froze their element of the council tax. It is regrettable that this is a one year only offer and the money won't be embedded in council budgets - something that all parties on Cornwall Council are lobbying for. That said, the choice for the coming year is between the normal rise in council tax being paid by residents or being paid by the government.

Liberal Democrats are clear that, with that choice, it should be the Government and not residents who pay. There won't be any effect on services or jobs as a result of the decision. It seems that local Conservatives are flirting with a decision which their own minister is comdemning.


Stephen Richardson said...

The problem with this is that if you take the freeze this year, what happens when the subsidy stops. The whole idea is a Tory ideological trick to get two years spending cuts but only appear to blame for one.

If you take the subsidy this year then next year there will either be a double hike in tax or more cuts to finance the subsidy that has stopped.

Of course Lib Dems in opposition on local councils can't lose as they won't be responsible either way - they can afford to take the populist view to take the subsidy knowing that it will put the Tories in difficulty further down the line whatever happens.

Is this best for the people of Cornwall though?

Alex Folkes said...

Suppose you currently pay £1000 council tax. With no Government grant, in 2012/13 you would pay £1025 and in 2013/14 you would pay £1050.63 assuming a 2.5% increase each year (which is not something that should be taken as absolute).

If Cornwall Council accepts the Government grant than in 2012/13 you would pay £1000 and in 2013/4 you would pay £1050.63.

So the only difference in what people would pay would be the £25 in 2012/13. We're saying that Cornwall should accept the government to pay this.

Of course the rise in the second year would be sharper, but the amount being paid would be exactly the same under both circumstances.

There is, of course, the possibility that people might want to raise council tax by more than 2.5% this year. I would suggest that this is a tough argument to make when everyone is feeling the pinch and further cuts can be avoided without more tax rises.

People have raised the issue of capping and whether the government would allow a 5% rise. But remember that the Localism Act has abolished the capping regime.

Rob's blog said...

I'm not going to make too much of this because I agree with your points. Especially considering services are reducing people should be paying less. However if i am reading you're example properly you're saying people will save 25 pounds this year and the next year lose 50? Albeit over two years is there an actual saving for hard working families? Or is not just passing the rise to the year after next?

Stephen Richardson said...

I completely accept your example and I stick to what I said.

A £50 increase in yr 2 will seem a lot worse even though it would be the same in actual terms. That's the point I was making. It's all about perception.

It is easy to argue to accept the subsidy as this will result in an immediate saving. However, it will be difficult to make a political justificatuon for a leap of £50 in the next year and this will possibly result in further real cuts - a big win for Tory ideology, without having to subsidise it!

Just as I said Lib Dems are laughing either way - but is it good for Cornish people?

Alex Folkes said...

In the second year I would argue for CC to charge as little as it can whilst avoiding any further cuts. If this means it has to argue the case for a 5% rise then so be it.

However we are a long way from knowing what the financial situation will be by then. Who knows, the Govt may offer another grant?

I'm curious to know why MK feels the public should be charged when they don't have to be - if indeed that is party policy?

Stephen Richardson said...

I didn't say that it would be best not to accept - in fact I believe that the subsidy should be accepted.

However, the long term consequences should be made clear to the people who will pay for them.

I just feel that, once again, Westminster parties are playing party politics with ordinary people - not trusting them with all the facts and consequences and then dumbing things down to try to score a party political point.

Alex Folkes said...

Glad to hear MK is open to taking the grant.

Of course the public should be told of all consequences.

Equally, councils shouldn't be hamstrung by central govt diktat in the form of capping. Trust you will be giving credit to the Lib Dems in govt for securing the abolition of capping?