Labour rejects Tory proposal to freeze council tax
This evening was the budget meeting of Copeland Borough Council.
The Conservatives proposed a one-year council tax freeze to be funded from the extra reserves which had been found while sorting out the accounts.
Instead the controlling Labour group voted that down and forced through a wholly unnecessary 4.5% increase in the Copeland share of the Council tax.
Last year, while setting a medium-term financial strategy, the council had agreed to change its approach to reserves. Following professional advice, councillors of all political persuasions recognised that the council has far more taxpayers' money held in various "reserves" - e.g. sitting in the bank or invested - than is actually needed.
In the past Copeland Council kept millions of pounds of taxpayers money in various reserves, sufficient to deal in full with each of all the possible contingencies which might require unusual expenditure. The new policy agreed last year, following the most recent advice from the Audit commission, is to set an overall level of reserves linked to a proper risk assessment.
That appropriate level was some millions of pounds lower than the council was then advised that it had in reserves. Therefore a programme was agreed to reduce the level of reserves over three years. At that stage, the expectation was that the council tax increase in 2009 would be 3.9%.
Since then several things have happened.
1) The economy has gone into the worst recession in my lifetime and most ordinary taxpayers are feeling the pinch
2) Accountants and consultants have been trying to sort out Copeland Council's accounts for 2006/7 and 2007/8 - which they have still not finished even though we are nearly at the end of the 2008/9 civic year! But one thing which did come out of the work on the accounts is that previous officers had salted away even larger reserves than the council had assumed when it set a three-year plan last year, to the tune of an extra £2 million in current account reserves alone.
3) The recession has, for the time being, knocked back the council's income, but officers have found savings to offset most of this. The net effect of these changes in costs and expenditure on the current account finances of Copeland Borough Council in a full year is considerably less than the extra £2 million in reserves.
The council would be able to spend significantly more, or raise significantly less in tax, than had previously been planned and still have more money left in current account reserves at the end of the 2009/10 financial year than it had been predicted a year ago that we would need.
A 1% increase in council tax raises Copeland Council some £36,560. Hence the 3.9% increase which had originally been planned would have meant asking local taxpayers for an extra £142,500. Foregoing that increase would still leave the council with about a million pounds more in the bank at the end of the 2009/10 financial period than we were expecting a year ago when we set the medium term strategy.
Given the extent to which local residents and families are suffering from the recession, the Conservative group argued that for this year the council could and should cancel that tax increase. We therefore proposed a zero increase this year in the Copeland council share of the council tax.
This is not something which could be done every year. The council tax freeze was proposed in highly exceptional circumstances. It would have been possible to forego a council tax increase this year because of the extra £ 2 million in reserves, and desirable because Copeland, like everywhere else in the UK, is suffering from a severe recession. This could have been done without any cuts in jobs or services.
Instead the ruling Labour group voted for a 4.5% increase in the council tax. They have never given a satisfactory explanation why a greater increase than the 3.9% increase planned for this budget in last year's medium term strategy is now needed. Compared with the Conservative budget proposals, what Labour has voted through is to take an extra £164,500 in tax from local residents and leave it sitting in the bank.
The Conservatives proposed a one-year council tax freeze to be funded from the extra reserves which had been found while sorting out the accounts.
Instead the controlling Labour group voted that down and forced through a wholly unnecessary 4.5% increase in the Copeland share of the Council tax.
Last year, while setting a medium-term financial strategy, the council had agreed to change its approach to reserves. Following professional advice, councillors of all political persuasions recognised that the council has far more taxpayers' money held in various "reserves" - e.g. sitting in the bank or invested - than is actually needed.
In the past Copeland Council kept millions of pounds of taxpayers money in various reserves, sufficient to deal in full with each of all the possible contingencies which might require unusual expenditure. The new policy agreed last year, following the most recent advice from the Audit commission, is to set an overall level of reserves linked to a proper risk assessment.
That appropriate level was some millions of pounds lower than the council was then advised that it had in reserves. Therefore a programme was agreed to reduce the level of reserves over three years. At that stage, the expectation was that the council tax increase in 2009 would be 3.9%.
Since then several things have happened.
1) The economy has gone into the worst recession in my lifetime and most ordinary taxpayers are feeling the pinch
2) Accountants and consultants have been trying to sort out Copeland Council's accounts for 2006/7 and 2007/8 - which they have still not finished even though we are nearly at the end of the 2008/9 civic year! But one thing which did come out of the work on the accounts is that previous officers had salted away even larger reserves than the council had assumed when it set a three-year plan last year, to the tune of an extra £2 million in current account reserves alone.
3) The recession has, for the time being, knocked back the council's income, but officers have found savings to offset most of this. The net effect of these changes in costs and expenditure on the current account finances of Copeland Borough Council in a full year is considerably less than the extra £2 million in reserves.
The council would be able to spend significantly more, or raise significantly less in tax, than had previously been planned and still have more money left in current account reserves at the end of the 2009/10 financial year than it had been predicted a year ago that we would need.
A 1% increase in council tax raises Copeland Council some £36,560. Hence the 3.9% increase which had originally been planned would have meant asking local taxpayers for an extra £142,500. Foregoing that increase would still leave the council with about a million pounds more in the bank at the end of the 2009/10 financial period than we were expecting a year ago when we set the medium term strategy.
Given the extent to which local residents and families are suffering from the recession, the Conservative group argued that for this year the council could and should cancel that tax increase. We therefore proposed a zero increase this year in the Copeland council share of the council tax.
This is not something which could be done every year. The council tax freeze was proposed in highly exceptional circumstances. It would have been possible to forego a council tax increase this year because of the extra £ 2 million in reserves, and desirable because Copeland, like everywhere else in the UK, is suffering from a severe recession. This could have been done without any cuts in jobs or services.
Instead the ruling Labour group voted for a 4.5% increase in the council tax. They have never given a satisfactory explanation why a greater increase than the 3.9% increase planned for this budget in last year's medium term strategy is now needed. Compared with the Conservative budget proposals, what Labour has voted through is to take an extra £164,500 in tax from local residents and leave it sitting in the bank.
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