Tuesday, 3 February 2015

Possible Council Tax rise emerges as an option on eve of Budget Consultation deadline

I understand that at last night's Labour group meeting the possibility of a Council Tax increase came back into play with a potential rise of 1.99% for 2015-2016 looked upon favourably by a majority of the group. A straw poll indicated 24 in favour of a Council Tax increase and 6 against.  This would be an annual increase of £30 for Band D residents.

Although Cllr Muhammed Butt opposed an increase at the Civic Centre Public Budget Consultation  that this would hit people already suffering from Coalition cuts the counter-argument is that in terms of social solidarity sharing the burden (with those in higher rated property paying more) would enable the most extreme of the proposed cuts to be avoided.  This would preserve some vital threatened services  to the benefit of poorer residents andwould be better for the Council's long-term stability.

Since 2011 the Council has avoided Council Tax increases, accepting the Government's grant for freezing the tax. Indeed Muhammed Butt has made virtue out of what he sees as necessity by boasting to residents that he has frozen the tax.

However there is an argument that long-term freezing of the Council Tax undermines the Council's revenue base.

This is what Clive Heaphy's Report stated in the First Reading Debate in November 2011 LINK
On 3 October 2011 the government announced a further one-off grant, for 2012-13 only, of £2.6m predicated on the basis that the council does not increase council tax for 2012-13. Each 1% in Council tax equates to approximately £1m of Council spending and members should note that the failure to increase Council tax over a number of years will erode the Council’s underlying revenue position in the longer term.
By January 2012 Ann John had ruled out a rise in the Council Tax as reported by the Brent and Kilburn Times LINK

As I stated at the time: LINK
The [Heaphy] report said that a rise of 2.5% in council tax would close the budget gap as follows:

2012-13 £4.4m
2013-14 £1.1m
2014-15 £19.7m
2015-16 £13.1m

In other words a rise of 2.5% in council tax this year would result in a net gain when the loss of the £2.5m grant is taken into consideration. Some councils are considering this option and some Labour councillors in Brent thought it worthy of debate. However that option appears to have been ruled out in advance of both consultation and decision making.
In November 2012 Assistant Director Finance presented a Budget Report that assumed a 3.5% Council Tax increase (above that triggered a referendum at the time). However the trigger was reduced to 2% (still current).

As I stated on my blog in January 2013 LINK
I understand that there has been discussion in the Brent Executive as to whether to raise Council Tax with the benefit marginal after grant losses and  a reduced collection rate are taken into account. A rise above 2% would have incurred the cost of a local referendum.  It would of course have been another additional cost for people already suffering from benefit cuts and low or frozen wages. An alternative view is that calling the Coalition's bluff and triggering a referendum could result in a proper political debate about the need to adequately fund  local services and the iniquities of the Coalition's grant reduction to local authorities. Only a very small percentage of local government revenue comes from council taxes and charges.

Brent Council leader Muhammed Butt has confirmed via a Facebook interchange with me that there will not be a 2% rise this year. Asked about a possible lower rise he said that the Council was looking at the settlement figures as part of the budgetary process and considering the offer of the freeze grant.
In January 2014 Muhammed Butt said that there were 'no plans' to change policy from freezing Council Tax in the 2014-15 Budget. LINK

I wrote on this blog:
Reflecting on Muhammed Butt's declaration yesterday that there were 'no plans to change course' on freezing council tax for the 2014-15 budget, I wonder what his plans are for 2015-16. In October the Council forecast a deficit for that year of  £34m (see below) a huge amount that on the council's own reckoning will put essential services at risk.

As political parties are deciding their manifestos for the May local elections surely they should be saying something about this crisis waiting for them in their first year of office.

In that respect a manifesto pledge to have a referendum on increasing council tax would make sense. Rank and file Labour party members and the wider public could than have a say and it could provide a launch pad for similar moves by other local authorities.  I do not think increases in council tax are the answer to the huge cuts in local authority funding, that of course requires the restoration of adequate funding, but a national debate post May 2014 leading up to the General Election in 2015 could feed into that demand. It will certainly put the future of local government on the General Election agenda.
Unfortunately despite some efforts at raising the issue and confronting the Coalition with the impact of the cuts, no real movement has emerged and no Referendum challenge..

Brent Council is left with the weakened revenue base that Clive Heaphy warned them about and deeply damaging unpalatable cuts.

It is noteworthy that in the above examples it has been Ann John and Muhammed Butt who appear to have made the decision about a Council Tax rise, although formally of course it is the Full council Meeting.

Where this leaves the Labour Group's support for a modest 1.99% rise, just below the Referendum threshold remains to be seen. Clearly the Cabinet should be taking note of the virews of its own councillors as well as the support shown for services by residents in consultations and in the campaigns that have sprung up to defend services.

If you wish to put your view there is still time to submit a  comment to Brent Council's budget consultation. The deadline is tomorrow, Wednesday February 4th :consultation@brent.gov.uk


 

36 comments:

  1. Is this thought to be a product of the 'disquiet' you blogged about recently? Was there any particular ringleader?

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    1. No ringleaders general feeling that the cuts were enough and no one wanted to cut further. Very amicable meeting.

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    2. "The cuts were enough"?? Jesus Christ, you're not even putting up a pretence of anti austerity. Have you heard of a party called Pasok?

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    3. It was a good debate but not quite as amicable as you make out Anon 12.04. It would be accurate to say there is a fairly deep division in the group.

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  2. So Butt has now lost the support of the majority of the Labour Group in wanting to freeze council tax. Interesting, very interesting.

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  3. On 22 January I wrote to my three Fryent Ward councillors to let them know my thoughts on this matter, as whatever is said during the various "consultations", it is our elected councillors who will each have a vote to decide what happens. I said:

    'There has been a lot of talk of the need to save £54 million from the Council's budget over the next two financial years, but I have heard very little about the possibility of increasing Council Tax. The £54 million appears to be the figure required if there is no increase in Council Tax, but that figure of "cuts" can be reduced if there is an increase (for the first time in many years).

    On the inside page of the "wrap-around" on today's Brent & Kilburn Times it does raise the question "Why don't you just increase council tax to protect frontline services?" The graphic beside this shows a tiny amount of reduction in the "Budget Gap", as if to suggest that it would hardly make any difference; but the graphic is misleading. It only shows the effect of a '1% council tax rise', whereas the text beside it says that the government will only allow a 2% increase (without the holding of a local referendum), and that each 1% increase in council tax would raise £850,000 each year.

    I believe that Brent Council should raise its council tax by 2% for 2015/16. For a semi-detached house like mine, this would only mean around an extra £33 a year in council tax payments, but would bring in £1.7 million in extra revenue for the borough each year. As the projected £54 million in cuts covers two years, even without a further council tax increase in 2016/17 (which would be a possibility, especially if economic conditions improve), a 2% increase in council tax this year would mean a reduction in the necessary cuts to just over £50 million. Whatever the priority areas shown by the Brent Council budget consultation exercise, the increase would allow more of the vital frontline services to be retained.'

    I have received replies from each of my three local councillors, who although not committing themselves, did thank me for my views and said that they would consider them. It is good to know that some Brent councillors are thinking about this point of view, even if their Leader is against it, as to rule out raising Council Tax would be an acceptance of George Osborne's ideology, which is not what Brent's electorate (or at least the 53% of the 33% who voted) put them in power to do.

    Philip Grant.

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    1. The reality is that the extra £1.7 million would only go in their cronies pockets all in the name of re-structure

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    2. Agree whole-heartedly. They can not be trusted to spend the money they do have wisely.

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    3. There is some evidence for Anon. at 22:57's statement that 'they cannot be trusted to spend the money they do have wisely'.

      At a Brent Connects Forum I attended in February 2014, Cllr. Butt and his then Budget Lead Member, Cllr. Ruth Moher, told the meeting that there would have to be cuts for 2014/15, and much deeper cuts for 2015/16 onwards. Despite this, in June 2014 Brent was recruiting to set up a new Business Intelligence Unit, as part of the Assistant Chief Executive's Department, with around a dozen staff and an annual salary bill of half a million pounds.

      Then, under the Davani/Gilbert restructuring plans in late 2014, many of those new jobs, as well as the Assistant Chief Executive post itself, were scrapped. Who profited from this mismanagement of Council funds? Only the recruitment firm hired to find staff for the new Unit, Bloomsbury Resourcing Ltd (run by one of Davani and Gilbert's former associates at Tower Hamlets), who were paid nearly £30,000 according to the "Monthly Spend" information on Brent's "Transparency" web pages.

      Philip Grant

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    4. Bernard Collier (councillor for Willesden Green) was a director of Bloomsbury Resourcing until c. March 2014

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  4. Interestingly the biggest threat to Mo Butt is going against the group. Although he will lose face a bit with his previous pronouncements on council tax, it is the group who elect him. He knows that and that is why he will heed the will of the group. At the moment it has not sunk the size of majority he lost by. When it does sink in his self preservation instincts will take over.

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    1. With what consequences?

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    2. Ask Ann John

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  5. Interestingly the biggest threat to Mo Butt is going against the group. Although he will lose face a bit with his previous pronouncements on council tax, it is the group who elect him. He knows that and that is why he will heed the will of the group. At the moment it has not sunk the size of majority he lost by. When it does sink in his self preservation instincts will take over.

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  6. Butt's days are numbered. He will try to save face by presenting this as him being open and listening to his councillors but he has been fatally weakened within the group. Councillors are annoyed that he has made public pronouncements about wanting a council tax freeze as it was seen as an attempt to bounce them into a decision.

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    1. I'm not sure if talking up Butt's demise is likely to get the result you want. He's a scrapper and very dangerous when his back is against the wall.

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    2. 'He's a scrapper' is an anagram of 'craps harpees'. No connection with any of the regular stars of this blog I'm sure.

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    3. True, just ask Zaffar

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    4. We have 4 more years of Butt! he is invincable! No Labour Councillor has the nouse to take him on!

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    5. I know someone who has the nerva.

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    6. Other councillors are also making their marque

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    7. Will they Agha-nise over it?

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    8. I'm not sure a certain councillor will pavey the way....

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    9. Lots of tittle-Tatler, not much substance

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    10. i'm not in the mahmood for this

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    11. Yes, please Stopp.

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    12. I Khan't be bothered either

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    13. Don't rox the boat just yet...

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    14. Carr'nt believe these puns are still continuing!

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    15. With 63 councillors I admire your staying power - if not your puns!

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    16. We all know who the real butt of these jokes is...

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  7. "Brent Council leader Muhammed Butt has confirmed via a Facebook interchange with me that there will not be a 2% rise this year."

    Cllr Butt may be left eating his own words...

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  8. That was the statement Cllr Butt made in 2013.

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