HDC outlines measures for bridging �5m Budget shortfall

COUNCIL Tax in Huntingdonshire could leap by more than one-third in two or three years’ time to compensate for loss of Government grant that is almost certain after the emergency Budget.

Raising Huntingdonshire District Council’s precept to the average of the 200 other district authorities would raise an extra �2.6million, according to council leader, Councillor Ian Bates.

The council fears that central government grant – currently almost �13million a year – could be cut by as much as 35 per cent (�4.55million).

The idea of a huge hike in Council Tax precept is just one of a number of money-raising and money-saving options on which the council will be consulting members of the public, businesses, its own employees and other public sector organisations over the coming months.

The plan is to get a feel by the end of September for what measures would be acceptable to people in readiness for publication of the Treasury’s comprehensive spending review on October 20, which there will be some indication of how much pain will be felt where.

HDC aims to fill an assumed funding gap of �5million over the next three years. But Council Tax is likely to be frozen in the first and possible also the second year of that period, so the 36 per cent hike could all come in 2013/14.

“We are trying to protect front-line services, which are a crucial part of the delivery of this council,” the leader said.

HDC’s services include refuse collection and recycling, planning, leisure centres, housing services, licensing and car parking. Less than 10 per cent of the council’s budget of �80 million this year comes from Council Tax. After income from planning and licensing fees, leisure centres and car parking charges, HDC is having to find �25million from central and local taxpayers.

In addition to the Government’s �13million contribution, Council Tax will account for �7.24million, and �4.7million will come from reserves – primarily what is left of the proceeds of the sale of the housing stock to social landlord Luminus in 2000.

Those reserves, of which there will be around �11million left by the end of next March, are likely to be raided again next year to help meet the funding gap, Cllr Terry Rogers, executive councillor for finance admitted.

But every �1 removed from the reserves is �1 that is not earning interest, which, until the Bank of England progressively reduced rates to 0.5 per cent, was a nice little earner for HDC.

Other potential savings and money-spinners on which HDC will be consulting include rationalising its senior management and staff numbers by not automatically filling vacancies among the 789 (full-time equivalent) staff, freezing pay, sharing support functions with other parts of the public sector, ‘re-shaping’ services, increasing the cost of activities at the district’s five leisure centres and putting up charges for activities such as licensing, planning and car parking.

HDC’s share of Council Tax is quite small. The 20th lowest rate of the 200 district councils in England takes less than �125 from a benchmark Band D household. A 36 per cent hike (which is what would be required to achieve the average) would pull in an additional �44.70 a year or 86p per week.

But it would not be as simple as that: HDC is not acting in isolation. Every other component of Council Tax – the county council and police and fire authorities – will be facing almost identical funding pressures, and all are well below the average in the precepts they currently levy.

So, if the whole of the Council Tax went up by 36 per cent, that would add more than �500 a year to the Band D bill for local services. That would make the eyes water.

However, such a move would put HDC back almost exactly to where it would have been if plans formulated five years ago had not been scuppered by Whitehall capping of Council Tax.

Cllr Rogers and the then leader, Derek Holley, realised then that the precept was too low. They planned to increase it by �1 a month progressively (a steadily declining percentage increase) until it reached a level that avoided what would have had to be an increase of 50 per cent plus when the reserves ran out and could no longer be raided.

In year one, they got away with that – a rise of more than 14 per cent. In year two, the Government changed the capping rules, and a 12 per cent rise was reduced to five by Whitehall. HDC abandoned the plan from then on.

If it had been allowed to carry on, the Band D precept would now be �166.54 – not a million miles shy of the �168 district average.

Liberal Democrat leader Councillor Peter Downes complained that the budget strategy statement had been sprung on members at Wednesday’s meeting of the full council without notice and without the opportunity to respond.

He claimed it deliberately confused two sets of financial pressures – those brought on HDC by the actions and policies of the Tories over the last 10 years, and the extra pressure of the current recession and the new Government’s attempt to reduce the national deficit by squeezing the public sector.

To a large extent, he said, HDC was the author of its own misfortune because using the housing stock sale proceeds to massage its precept downwards had now clearly backfired.

“They then try to fudge the issue by blaming our plight on the ‘worst economic inheritance ever’,” he added.

“We welcome the fact that they are now showing a long overdue urgency, but we deplore the way in which they are muddling local and national pressures and misleading Huntingdonshire residents.

“The proposals we put forward recently [in February when this year’s budget was set] for even fairly minor economies were either dismissed or kicked into the long grass. So I hope they are going to be ready to grasp the bigger nettles lying ahead. I fear Huntingdonshire residents will see a decline in services and/or will have to pay more for them.”

Cllr Downes said the party would respond fully after considering the detail of the consultation.

His colleague Cllr Mike Shellens added: “There needs to be a vision towards which we are all moving, rather than being buffeted by happenstance.”