HUNTINGDONSHIRE residents cannot rely on their Council Tax bills not going up next April.

The district council's cabinet has not yet reached the stage of recommending a precept for 2012/13, but tomorrow evening (Thursday) it will discuss increasing its share of Council Tax rather than accepting the Chancellor's largesse in exchange for a further freeze.

Last year, in what the then cabinet member for finance, Councillor Terry Rogers, described as a “bribe”, HDC agreed to accept from Whitehall the equivalent in cash of a 2.5 per cent increase in the levy. That was a four-year deal, meaning HDC got an extra £184,000 a year until 2014/15.

But the freeze meant the council's base income from Council Tax did not keep pace with inflation – fuel bills, for example, will have risen between 13 and 16 per cent, although the rise in £20million-plus annual paybill costs has been kept to a minimum – potentially storing up problems for the future.

But the 2.5 per cent one-year-only 'bribe' from the Chancellor for 2012/13 is seen as deeply unattractive for district councils such as HDC, which has one of the lowest precepts in the country.

A Band D taxpayer in Huntingdonshire contributes £124.17 a year to HDC's coffers – the 20th lowest rate among more than 200 districts. The average is £168, and the highest £310. HDC's precept generates a total of £7.4m from around 70,000 households.

If HDC were to take the second 'Council Tax freeze reward grant', officers predict that it would result in the need for £415,000 extra savings by 2015/16, representing a significantly higher proportion of the precept than if there had been a steady increase.

As it is the cabinet will be considering the effect of 2.5 per cent annual increases in the tax – half the current rate of Retail Prices Index (RPI) inflation and an even lower proportion of local government inflation.

But, thanks in large measure to savings already in the pipeline and generated over the past 12 months, the council is in a much happier financial position than it was last December.

HDC looks set to do particularly well from the New Homes Bonus (NHB) – a sum based on the tax revenue from new homes completed in local authority areas, which generated £830,000 in 2010/11, just over £1m in the current year and, on the basis of plans in the pipeline, is predicted to bring in more than £6m by 2016/17.

However, the bonus has to be paid for, and the Government has not said how it plans to do that downstream at the same time as eliminating the national budget deficit the reducing the overall level of debt. The assumption is that cash will be given with one Whitehall hand in the new homes bonus while being removed with the other from councils' revenue support grant (RSG).

By the end of the planning period HDC's net funding could be coming in more or less equal proportions from NHB, RSG and Council Tax payers.

In the meantime, and in spite of restoring some proposed cuts such as in contributions to the voluntary sector and reprieving CCTV coverage, the council is running well ahead of its efficiency targets.

But the future is darkly unclear, and the council has decided to leave at least £4m in its revenue reserves against a very rainy day, instead of the £3m it had previously planned.

“There's a lot of uncertainty, as we can see from world markets just this week,” the council's current cabinet member for finance, Cllr Jonathan Gray, told The Hunts Post. “We're not going to come out of this period of reduced growth for some time to come.

“Further changes will be required, either improving revenue or finding further savings. There's still work that can be done to achieve efficiency savings, but I don't think we shall find that we have over-clubbed it.”

HDC will be looking closely at the rate at which future Council Tax increases would be capped without approval in a referendum. Before spending £100,000 on a poll, the council would want to be confident in getting local people's backing.

And, although paybill costs have been kept under control for the past two years, at more than £20m a year, it is an area crucial to the council's economic performance.

“We want people to continue to be motivated,” Cllr Gray said.