Labour warns of a 'trap' over council tax freeze cash

Nottingham council chamber Labour-run Nottingham City Council has rejected the offer of a cash incentive from the government

The annual budget round that sets your council tax is going to be tougher to fix over the next few weeks.

The government wants increases frozen for another year and is even offering town halls a cash incentive.

You might expect hard-pressed councils to welcome that with open arms. But not a bit of it.

The Conservative-led coalition faces a familiar critic leading the charge. Labour-run Nottingham City Council has rejected the extra money.

And this is why...

Impact on services

"Oh, it's a trap," says Councillor Graham Chapman, Nottingham's deputy leader.

Start Quote

It's like taking out a pay-day loan and paying 40% interest”

End Quote Cllr Graham Chapman Deputy leader, Nottingham City

"If we take the money, it's going to cost us and the citizens of Nottingham a great deal more money further down the line.

"It's like taking out a pay-day loan and paying 40% interest a year. That's the trap."

Nottingham's council tax is set to rise by 3.4%.

Accepting a freeze, Labour says, would mean it getting lower government funding the following year.

Councillor Chapman says it doesn't take into account the huge bill for council tax benefit payments for low income households.

"Without increasing the council tax, we will lose between £800,000 and £1m a year. That's big money which has a direct impact on delivering crucial services," he told me.

Business style

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Nottinghamshire County Hall

It would be morally wrong to put the council tax up ”

End Quote Cllr Kay Cutts Conservative Leader, Nottinghamshire

It's just a short 10 minute drive across the city's Trent Bridge to Nottinghamshire's County Hall.

You won't hear talk of a political trap here. It's two and a half years since the Conservatives took control.

A year before deficit reduction dominated our lives, Nottinghamshire's Tory leader Kay Cutts controversially set the pace for cost cutting and a more business style approach to running local government.

It's now the third year running that her shire county has frozen council tax and it welcomes the cash support from the Chancellor George Osborne to deliver it.

"We've been offered £7.7m extra this year to put into our budget. That means we don't have to make as many savings we expected to make," she said.

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Sir Peter Soulsby

This freeze is a trap, there's no other word for it”

End Quote Sir Peter Soulsby Mayor of Leicester

"Also we won't have to ask the public to put their hands in their pockets.

"Quite honestly, I think it would be morally wrong to put the council tax up, especially when we've been offered money by the government to keep it down."

In Leicester, as in Labour Nottingham, the government's cash offer to freeze council tax has been turned down.

Its Labour Mayor Sir Peter Soulsby is planning a 3.5% increase.

"An increase of 1% in council tax produces £1m in Leicester," he told me.

"If we took the tax freeze grant, we would be getting £2.5m extra in our coffers but we would have to cut £3.5m the following year and over the years to come, a further £10m.

"This freeze is a trap, there's no other word for it," he added.

Political will?

On this issue, the local government minister Bob Neill is taking no prisoners.

"I think it's very disappointing that Leicester is taking that attitude," he said.

Bob Neill MP Minister Bob Neill thinks there is a lack of political will on Leicester's part

"Cities like Leicester get four times more money than comparable authorities for providing the same services. They are funded to reflect the local demands.

"But efficiencies can and are being made by local authorities.

"Many councils have been able to save money and freeze their council tax and in some cases to reduce council tax.

"So I think there's a lack of political will on Leicester's part.

"Remember council tax doubled under Labour and it remains a real issue of concern for many people."

In the past, ministers have used legal action to 'cap' council tax increases deemed as excessive.

Now, council tax increases over 3.5% will automatically trigger a local referendum.

Local voters will have the final say.

John Hess Article written by John Hess John Hess Political editor, East Midlands

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  • rate this

    Comment number 8.

    I am really sorry for thise that live in a Labour council, but did not vote for them. Sadly labour will never change its spots. Tax and spend is their motto and not wisely either. labout can never have enough money to waste buying their votes. Conservatives mean while get their votes by being sensible and not spending. opposites, never live in a Labour area you have any money and want to keep it.

  • rate this

    Comment number 7.

    The UK has the highest combined rate of direct and indirect taxation in all of Europe and possible much wider than Europe. When I lived in France the amount I paid for the equivalent of Council Tax was less than 200 quid per annum this was as recent as 2007. Too many of the UK's talentless climb aboard LA for an easy, comfortable ride. Cut even more LA jobs & sinecures

  • rate this

    Comment number 6.

    Nottingham city council does a great job - it struggles to raise enough council tax from the mainly poor housing areas. It has excellent public transport facilities and brought in the work place car tax to force a chage in attitude - roads can be gridlocked for 15 miles from the city centre to Bingham.

  • rate this

    Comment number 5.

    Nottingham City Council is addicted to tax rises - the Workplace Parking Tax has gone up twice before it even comes into force, and they jack the Council Tax up year after year as a matter of course, to waste and squander, without giving a damn about how their victims are going to find the money to pay it.

  • rate this

    Comment number 4.

    Nottingham City Council is appalling. It lost millions in investments in Icelandic banks,survived a huge council-house allocation scandal,is currently, via its work-place parking levy, driving out the shops and businesses its anti-car policy hasn't, and now wants council tax rises for the few who pay it, to subsidise yet more of " the poor" who are largely unmarried mothers/workshy scroungers.

  • rate this

    Comment number 3.

    Where Leicester city council squanders hard earned taxpayers money is not a mystery! They continually pour money in to support their failed 'pet projects' (they have for years), whilst the city's basic infrastructure is in terminal decline! The council typifies, and has all the failings of the previous Labour government but the electorate will never be astute enough to remedy the situation.

  • rate this

    Comment number 2.

    You have to wonder why neighbouring councils can't be creative and merge back-office functions like finance, HR, and IT to save on staff costs, centralise procurement to get the best deals on purchases, and move their staff on to defined contribution schemes so that 25% of my council tax doesn't go on someone else's pension.

  • rate this

    Comment number 1.

    People are sick of the council tax. Each year it goes up and the service gets worse. With all the non jobs going it should be going down. Why are these rises way above average pay rises each year. Seems like greed to me. Its time for SMALL local government and these taxes to be cut back to a realistic level. Roll on the revolution its sorely needed in the UK.



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