It was only this week that Eric Pickles was attempting to shift attention away from the government’s 25.6% local government cuts by criticising councils who are or will be rejecting the government’s offer to provide funds for the councils to extend the council tax freeze. Pickles argued that local councils have a ‘moral’ obligation, as councils who choose to increase council tax are undermining ‘hard-working tax-payers’. This ignores the problems councils have experienced, as they try to offset the ever-increasing reduction in their budgets alongside their depleted revenue from the council tax freeze. The problem councils have regarding their budgets and how to deal with the government-led austerity measures is something I tackled last year.
Firstly, for councils to set illegal budgets, there would need to be a coordinated response by a considerable number of councils to have a realistic chance of working. However, council tax provides one of the few ways for the council to increase its revenue to be able to cover essential social services – something Pickles is ignoring when he talks about ‘morality’ (means about as much as ‘morals’ does for Cameron re capitalism). I also discussed the potential use of the Tax Incremental Financing, which has been restricted by the Treasury:
Given the market, relying upon such income may prove difficult; especially given the severity of the cuts - offsetting loses through this would be difficult. Also, such borrowing is focused upon private sector investment, which is unreliable and driven by profit, not equality. It also has a hint of PFI to it. The Tax Increment Financing is about using projected future gains through taxes to fund investments, rather than a concentration on maintaining current services. Therefore, the effects this will have in the short-term is limited, especially when attempting to stop cuts to the front line, such as the cut to the Crisis Centre. This is not to undermine its potential for investing in areas, particularly deprived ones. However, there are concerns this can result in gentrification.
Essentially, the government is cleverly taking the attention and blame away from themselves and making people blame their local councils. This is especially damaging, as the divide between the North and South gets bigger (consider this breakdown of cuts to local councils, and their disproportionate effects). If the council tax is raised by more than 3.5% then it triggers a local referendum (despite concerns, regarding the ability to hold referendums, by the Electoral Commission, the government brought these proposals forward by a year); it has been mused that such an option can raise awareness to the problems and constraints being placed on the councils up and down the country.
Brighton have decided to increase council tax by 3.5% (avoiding a referendum), given that the government is cutting their budget by 33% over four years, arguing that it will equate to only 57p a week more for the average family. Given the government would only cover 2.5%, and the freeze would put up taxes in the long run given that it is a one-year ‘gimmick’ as the grant is worth £3m, so Brighton would be £5.4m worse off if they accepted the grant, Brighton’s decision is logical. Surrey County Council have also decided to raise their council tax, as they also commented on the gimmick nature of the proposal and how if they took it they would end up with a £70m funding hole. Despite this, a campaign to make council tax fairer and income based so that people with less money and resources don’t suffer through any raise, is also essential.
France’s process of decentralisation started really in 1982, with Article 1 of the Constitution amended to emphasise the importance of decentralisation stating that the “Constitution states that any transfer of jurisdiction must go hand-in-hand with the provision of resources equivalent to those previously budgeted for the performance of those particular functions.” However, despite more roles and apparent power being given to the French local government, there has been complaint against the inadequate transfer of resources for these new roles – especially given the recent three-year freeze on resource transfers between the state and local government.
UK councils face similar problems when it comes to being conferred with extra rights such as providing a watered down and cut social fund scheme, without adequate resources to cover such a move, as shown in a recent letter by many charities against the proposals:
Crisis loans and community care grants are the ultimate safety net for the most vulnerable in society. For example, they enable women and children fleeing domestic violence to clothe themselves and furnish their homes; or parents in rural areas who cannot afford a car to visit their child if they are taken into hospital unexpectedly. We are deeply concerned at the government’s proposals to abolish these elements of the social fund and pass some of the funding to local authorities, without any statutory obligation to ensure they provide emergency support to vulnerable people. With councils already experiencing large cuts to central government grants, we fear that some areas will choose to provide no, or extremely limited, support – especially given that funding for crisis loans will be almost halved from £67m in 2010-11 to £36m in 2013. The government’s own research shows some local authorities expect the extra funding will be diverted to plug gaps elsewhere.
When the councils are being criticised for wanting to increase council tax given their limited options, but then are passed more responsibilities without adequate resources alongside excessive cuts to their budgets, the government is playing the media and the public in an attempt to deflect attention away from their own failings and inadequacies. We have to make people more aware of the facts and the structural limitations for councils and encourage positive action within the limited choices available.