For the last couple of years one of the main sources of pride for local councils was the ability not to raise council tax or even to reduce it. Government proudly presented charts showing how many councils managed to do that and publicly shamed the ones which did not. It seems that the councils also took it upon themselves to partake in the PR game. My own local authority has quite recenly sent me a leaflet boasting that the council tax has been frozen for 8 years.
I must say that I find that almost as impressive as shocking. Undeniably budgets of local authorities have been significantly affected since the conservative government came to power. David Cameron often emphasises that he wants councils to become more efficient and make ‘back office’ savings. However, there are only so many senior managers who can be made redundant, so many optimalisations one can make. At certain point local authirities will inevitably find themselves with their backs against the wall… and we may already be past that point! It became brutally aparent when Mr Cameron himself tried to intervene against some of the cuts in his consituency (more on that – here). Loss of over 40% of funding (as it was the case in Oxfordshire) will mean that not only those evil ‘back offices’ will be affected, but also some (lots of?) crucial frontline services – a children centre, womens’ refuge, day centre for people with dementia, anything which does not need to be legally provided by the council is under risk of being shut down.
The ability to protect the services, more – to deliver a high quality services to its inhabitants should be a source of pride to the council; that and nothing else. I very much welcomed the indication that Geoge Osborne may allow councils to raise their local tax by 2% to gather extra funds for social care. However, I think that everyone needs to accept that more may be needed and that we should be all prepared to contribute more to keep the services we and those who live around us need.
That said, we now come across another problem. Many families are already struggling financially. An increas of even few pounds will create additional strain on their budgets. Especially that for the last few years even individuals or families on welfare benefits need to contribute to their council tax. Therefore there is no way to increase the council tax in a way which only affects those who can actually afford that.
The way in which properties are allocated into diffent bands (which in turn tells you how much to pay) perfectly symbolises just how backward this tax it. Band allocations actually use property valuations from 1991! So if your property in 1991 was valued at under £40 000 you’d be in band A, between £40 000 and £52 000 B, and then it goes up to H which is over £320 000. I’m not quite sure how this is calculated for properties which were not around 24 years ago. Well, it is not like a lot is being built in London anyway, so at least that is not a problem.
Especially in London linking amount of tax you must pay with value of your property seems highly unfair. Prices of many properties sky rocketed in the last decade or so. Some of them surely are inhabited by low earners who would struggle if council tax was increased. There is also a lot of people who would be able to contribute more, but currently live in properties of a lower value.
A great start to differentiating prices of the council tax for high and low earners would be an introduction of voluntary top up. An addition to the council tax which one could subscribe to and which would go only and directly to front line services.
The spending review tomorrow will surely bring more cuts and thefore more hardship. Maybe, just maybe, through allowing councils to raise the tax it will also open up discussion about the need, cost and value of the local services and the ways to save them.