Davy Jones Consultancy

Council tax is the one tax everyone hates to pay! Why? Because, unlike income tax or VAT, it’s not deducted at source – you get a bill with the amount you need to pay on it.

And unlike our national taxes, you can see very directly in your local area how council tax money is spent. That’s good: local people should feel they have a say over the money they give to national or local government.

But it also means that council tax levels, and especially any proposed increases to them, can be very contentious. Most councils don’t even bother to ask residents what they think about council tax levels – let alone allowing them to decide them. There are very few examples of councils persuading the local electorate to vote for a higher council tax. Milton Keynes in 1999 persuaded the majority of its citizens to vote for a 9.8% council tax rise. And Wooton-under-Edge town council received more than 90% support in a parish referendum on whether to raise the precept by an average of £13pa to find £28,000 for repairs to the local swimming pool. But these examples are far outnumbered by other failed attempts to persuade people to pay more.

Taxes and services

It has always been a deliberate ploy of right-wing parties to emphasise taxes rather than services. The more the two are divorced, it tends to be a no-brainer: do you want to pay more taxes? Er, NO! But if you give people the chance to see how their taxes are used and what they are spent on, and to weigh up whether they are prepared to pay more for better services, the outcome can dramatically change. Then people often agree to pay more.

This is all very relevant now as councils across the land prepare to set their 2012/13 budgets – struggling to deal with the massive cuts in central government grant. Many would like to raise council tax to keep vital services going. But the Coalition has legislated for future council tax rises above 3.5% to trigger a local referendum. And for this year, Eric Pickles is offering a “one-off” subsidy to allow council tax to be frozen.

Pickles’ bribe

Pickles wants to take the credit for freezing council tax across the country, while blaming councils for making cuts (even though it is his cut in grant that is causing them!). And there is a sting in the tail of his bribe – the way council finance works, not raising the council tax this year means having a smaller base budget in future years, which means losing millions in future revenue – more cuts! Pickles even hinted last week that this was his real intention by the offer – to reduce councils’ long-term revenue stream.

Initially councils across the country rushed to embrace Pickles con trick. But it took one brave council – Brighton & Hove led by the Green Party – to call his bluff and say no to the offer, as it would entail much bigger cuts in future years. Instead it proposed to increased council tax by 3.5% (less than inflation).

Slowly other councils have realised the wisdom of such an approach. And despite increasingly desperate appeals and threats from Pickles (no doubt in the name of “localism”), a steady stream of councils – 10 Labour, 5 Conservative and 1 No Overall Control – have now backed Brighton & Hove’s stance. More seem likely to follow.

A small victory

There have not been many victories for common sense in the public sector under the Coalition Government. And preventing Eric Pickles from claiming credit for keeping council tax frozen may seem small beer. But progressive councils and councillors should take note: it is possible to stand up to this Government, to fight for your principles, and win.