Our city is not alone in struggle to balance the books
EXPERT EXPLAINS HOW ‘UNFAIR’ GOVERNMENT POLICY HAS CONTRIBUTED TO RISING COUNCIL TAX
AN expert has explained why council tax continues to rise despite repeated cuts to services.
In April, council tax in Nottingham is set to rise by the maximum amount allowed by the Government, 1.99%, while an additional 3% will be added as part of the “social care precept” which goes towards care services for the elderly and vulnerable.
This increase comes as Nottingham City Council looks to save £15.6 million as part of its overall budget cuts.
Nottingham city has around 80% of band A and B properties (which raise the least income for the council) due to its tight boundaries and lack of coverage of the urban conurbation where the larger homes are located.
While the council says its average council tax as a result of this, with all precepts, was the 41st lowest in the country (at £1,145.50 compared to the £1,385.10 nationally), its individual rates are indeed “some of the highest” experts say.
For example, for a band A property in the city the tax is set to rise by £70.49, from £1,412.66 to £1,483.15.
For band A homeowners in neighbouring Derby, council tax will rise by £22.49 to £922.05.
In Leicester band A properties are charged £1,276.95 and in Leeds the annual charge is £1,140.47.
Going by the Government’s own average calculations, which uses band D properties, Nottingham has the third-highest council tax in the country.
Professor Peter Murphy, director of the Public Policy and Management Research Group at the Nottingham Business School, says the way local authorities must raise funds is inherently unfair due to Government policy.
He said: “Locally-raised revenue from central Government grants has been falling in real terms for a number of years.
“It is a deliberate policy of the Government [for councils] to raise a bigger proportion of their income from council tax.
“Nottingham will have a great deal of difficulty balancing its books this year so it will go to the Government to say can we borrow more money and the Government, when it gets those requests, will need the city council to raise money through its own means so that it will minimise what it takes from the treasury.
“The council must raise as much as it can from their own means before getting a Government grant even in normal times.”
Professor Murphy said by this time of the year councils have usually closed their accounts, with only a handful not doing so, however this year (due to the pandemic) he says 176 local authorities still have their accounts open.
“It looks as though a huge number of councils are finding it difficult to do the budgeting,” he added. “What is more the Government keeps promising to restructure all of this and make it fairer. The last two years they have started preparing but this has been put on the back-burner, the first time because of Brexit and second because of Covid.” Professor Murphy says Nottingham has typically been poorly treated by the Government, and this combined with its own financial troubles as a result of mishaps such as Robin Hood Energy, means services must be cut as a short-term response to reduce debts. Cuts are already being reported. He also added the council tax banding, which is judged by how much a property is worth, dates back to 1991, which he says is “pretty indefensible” considering how much values have increased since.
Speaking of the situation, the city council’s portfolio for finance, councillor Sam Webster, said: “Like the vast majority of councils across the country we will be having to pass on the Government’s social care precept of 3%.
“The basic council tax will rise by 1.99%. We really don’t want to put up council tax because we know many of our residents are struggling already and we don’t think it’s the right way to fund local services such as care for older people – but we’ve unfortunately been left with little alternative.
“However, the vast majority of people in Nottingham are paying among the lower bills in the country. Government figures show that our average council tax income is much lower than the national average.
“That’s because 80% of our households are in the lowest Bands A and B, meaning the Band D comparison is fairly meaningless as only a tiny minority of people in Nottingham pay it.
“Over the last 11 years people will have heard about austerity, and in relation to councils what this has meant is funds that used to be provided for local services by the Government have been drastically reduced, in favour of raising money locally to pay for services.
“In our case, that has meant we have had to make over £270 million of savings – a huge sum of money to remove from any organisation.
“This has forced councils to look at raising more through council tax – but the poorest areas in the country can raise the least through council tax, so it’s undoubtedly the wrong way to fund local services and unfairly impacts areas like Nottingham whose residents rely on those services the most.
“Our own financial situation and debts play only a relatively small part in this. What is needed is a proper solution to council funding from Government, especially in relation to looking after vulnerable adults which we agree with the Local Government Association, shouldn’t rely on the Government’s recommended 3% increase on council tax bills each year.”
The Tax Payers’ Alliance says Nottingham’s council tax rise is “an above inflation rise, higher than any neighbouring areas”.
Harry Fone, grassroots campaign manager at the Taxpayers’ Alliance, added: “Council tax hikes will hit struggling taxpayers hard, not least during this Covid crisis.
“Wasteful spending and the disastrous dally with the Robin Hood Energy company are seeing ratepayers robbed of their hardearned cash, to pay for the council’s mistakes and mismanagement.
“Though it has now taken some steps to control budgets, the council cannot hope to get back in black by relying on constant rate rises for years to come.”
Locally-raised revenue from central Government grants has been falling in real terms for a number of years.
Prof Peter Murphy