Dilemma of Council Tax balancing act

COUNCIL Tax for district council services in Huntingdonshire could rise by more than five per cent next year if services are not to be cut. The cost of retaining the same level of services will rise by 6.6 per cent after next April, simply because of infl

COUNCIL Tax for district council services in Huntingdonshire could rise by more than five per cent next year if services are not to be cut.

The cost of retaining the same level of services will rise by 6.6 per cent after next April, simply because of inflation and the rising population, finance officials calculate.

If the increase in "budget requirement" - basically, net spending after income from planning fees, licensing, leisure centres and the other things HDC can charge for - is to be kept below five per cent, the council will need to use some of its reserves to top up the pot.

The budget requirement is one of the factors the Government uses to decide whether to cap the Council Tax increase, as it did two years ago at a cost to HDC of £60,000 when Whitehall suddenly changed the rules.

About 60 per cent of the net £18.8million HDC will spend next year will come directly from the Government, though the council does not know exactly how much. But it expects to be squeezed hard by one of the lowest overall settlements for years across English local government. The rest - about £6.5million - will have to come from taxpayers.

However, Huntingdonshire Council Tax payers have one of the lowest rates in the country, currently less than £110 a year for a benchmark Band D property. Seventy miles away in Ipswich, a similar size population getting broadly comparable services pays two-and-a-half times as much.

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Using reserves, which are the council's equivalent of a family's savings, HDC can keep the increase in budget requirement down to just below five per cent, but even so officials are telling councillors: "Council Tax increases greater than five per cent are inevitable if Government grant increases by less than five per cent."

No increase from Whitehall would mean a Council Tax increase of 13.6 per cent, whereas a five per cent rise in the Government's contribution would allow HDC to keep the tax rise down to 4.4 per cent without cutting services significantly.

The reality is a bit different. Nobody knows the level at which any cap would apply, because the Government changes the rules each year after Council Tax rates have been set. Three years ago, it did not cap any rise where Council Tax was below the national average. That rule went out of the window the following (General Election) year, so HDC and South Cambridgeshire were capped and had to re-bill.

Last year, the rules were five per cent on both budget requirement and Council Tax. This year, it could be a limit on either total spending or tax - or something completely different. Either way, HDC and other councils will be setting their budgets and the level of Council Tax in the dark again, even though they will by then know how much Whitehall grant they will be getting, at least for the coming year.

Politically, it is frustrating for the ruling Tories who, against their normal instincts, want to raise Council Tax now to avoid steep increases later - even though it was the same instincts that got them into this dilemma in the first place.

What is even more galling is that Huntingdonshire residents are prepared to pay more, but the Government will not let them.

When they were asked in an independent survey two years ago, nearly two-thirds of residents said they would stomach Council Tax increases of 14 per cent, so long as HDC provided more and better services.

The big irony was this: overwhelmingly, the people who were prepared to pay more were those who use only the minimum of council services.

HDC's part of Council Tax bills is around 10 per cent of the total. Cambridgeshire County Council takes the lion's share - 60-70 per cent. The rest pays for the police, fire service and parish councils, though a few very rural areas have no parish council and therefore no parish precept.

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