Crisis for councils unfolds before our eyes

LOCAL councils received a sliver of good news from Government just before the Christmas break when they were told they can raise council tax by up to three per cent without having to hold a referendum.

Up until now, any increase above two per cent could only be approved if the public got a vote on it.

Few councils have seemed keen on such a vote. This year, Rossendale Council forecast it would generate £5.1m from council tax.

A three per cent increase would give the council an extra £150k a year to £5.32m.

But as the council had already assumed its council tax revenue would rise to £5.27m next year, the actual increase would only be around £50,000.

I say ‘only’ because while an extra £50k is no doubt welcome, it’s a drop in the ocean of what the council needs.

Indeed, reports prepared in March showed the council would need to find an extra £546k of savings, and that could rise sharply to nearer £1.8m by 2022 – thanks in part to the fact the hoped-for windfall of £600k a year from rental income from a wind farm won’t materialise after the Government refused permission for it.

It’s a similar picture at Lancashire County Council, where £434m a year is collected in council tax. An extra one per cent would provide an extra £4.3m next year. It needs to save £60m next year.

County council leader Geoff Driver says the council faces ‘extremely serious financial challenges.’

It’s worse than that – at this rate, it’s hard to see how councils will even be able to exist by the start of the next decade.

It’s a crisis unfolding before our very eyes.