The news today that 4 out of 10 councils are turning down a government hand out in favour of putting up council tax is good news for local democracy.
Communities secretary Eric Pickles has been Osborne’s austerity champion delivering £5bn cuts to councils in England to date with further technical changes in the Autumn Statement meaning further substantial cuts through to 2016-17.
For example, Birmingham will see its grant reduce by a further £332m by 2016-17 at a time when budget pressures – not least adult social care – are estimated to rise by £273m. Finding £600m of savings after year-on-year ‘efficiency measures’ has been described by city leader Sir Albert Bore as “the end of local government as we know it”.
And it is the bigger cities and Northern towns that have been hit hardest. This is primarily because they were most dependent on deprivation-based grants which were quickly brought to an end. But through a series of deceptive wheezes – altering accounting periods, devising crude concepts of ‘spending power’ – Pickles has attempted to obfuscate further the already muddy waters of local government finance and create huge disparities along party political lines.
Yet the cuts in themselves only tell half the story. The primary reason why councils have suffered so greatly is their terrible dependency on central government finance in the first place. IPPR North analysis of the amounts of subnational revenue raised through subnational taxation shows the UK at the bottom of the league table alongside the likes of Romania and Bulgaria.
Source: CCMR 2012
Council tax is one of very few subnational revenue streams over which councils have any discretion – and even then accounts for barely a fifth of income in any council. This year’s £450m grant offered to councils that freeze their council tax is central government interference in even that small slice of the pie. Indeed, it is little short of a bribe and a further device for government ministers to pour scorn on those councils who refuse to take it.
But thankfully now more councils, including some which are Conservative-led, are taking a longer-term view and standing up to these tactics. Of course nobody wants to pay more council tax – nobody wants to pay more of any kind of tax – but it is surely better to be paying more for local services, over which we have closer control and scrutiny, than into a central pot increasingly steered towards penalising disadvantaged Northern cities.
Ultimately, council elections will cast judgement on whether modest council tax hikes in the name of local autonomy and better services are preferred over ever-diminishing central government hand outs, but the gloves are now off as local democracy fights back.
Ed Cox is Director of IPPR North and tweets at @edcox_ippr
Comments
Patrick Adams / February 28 2013 10:30pm
The difference between the grant offered by the Government and a council tax increase is like the difference between paid a bonus and receiving a pay rise. When the grant money is gone all those councils who received it will face a gaping whole in their budgets.