Friday, 1 March 2013

Barnet's Council Tax Freeze - Short Term Expediency or Long Term Disaster?

Yesterday it was announced on the BBC that 40% of Councils surveyed are increasing their council tax even though they are being offered incentives from central government to freeze tax. Barnet have announced that they will freeze council tax for a further TWO years until 2015. This will mean that by the end of the period, Barnet's council tax will have been frozen for five consecutive years. This may look like a good deal for council tax payers but it really isn't that simple.

Set out below is a graph which shows the impact of a five year freeze will have over the next ten years.

Each year the Council freezes tax, we fall further behind the amount we need to collect to keep services running. Councillors say, we have to make savings but there are lots of areas where we simply cannot make savings. For example energy costs - last year the council spent over £1.5 million on gas and electricity and that is a cost that will continue to rise over the next ten years. Another example is the cost of Freedom Passes. Although free to users, Barnet Council is billed for the cost of the passes by TFL. Because Boris put up fares in January, the cost of Freedom Passes rises accordingly and this year that means Barnet have to find an additional £326,000. This brings the total that Barnet pays for Freedom Passes to over £15 million a year or 9.6% of the amount raised by council tax. Every year there is a freeze and Boris puts up fares, the funding gap grows. Many of the contracts Barnet have entered into include inflation clauses, so the costs automatically increase each year.

One of the biggest areas of potential cost increase is that of adult social care. Remember that Barnet have been trumpeting their "Graph of Doom" ( a horribly offensive title - I prefer to call it the "Graph of Choices") far and wide claiming that we will not be able to fund any other services because of these costs yet they make no provision for this when setting a council tax freeze.

The other side to the equation is that Barnet are putting up charges for services, in some cases, by well above inflation. For example, next year the charge for painting a white line for a vehicle cross over goes up by 12%, replacement green wheely bin 60%, removal of 1 non electrical item of furniture or rubbish 170%. At a more basic level, the cost of going for a swim or having a game of table tennis or badminton all go up by 5%.

One of the key reasons why 40% of council have opted for an increase in council tax is the government are only funding the shortfall for one or two years. However, you never catch up for those years of freezes. If you add up the difference between the council tax collected with a five year freeze and council tax increasing at 2% per annum, the difference over the period shown is a colossal £132 million. Even if you add back the central government support, it still shows a shortfall of over £120 million and that means services will have to be cut.

The Local Government Information Unit (LGIU) has also carried out a survey and their findings show that over 80% of councils want the freedom to increase tax including many Conservative Councils.

So what does a 2% increase mean for Barnet residents? For a Band D dwelling it means an additional £22.26 per annum or 43 pence a week. From my perspective, an additional 43p a week to maintain essential services for vulnerable adults, children and the least advantaged in our society seems reasonable to me. In fact every resident has already being paying a similar surcharge for the last 7 years to fund the Olympics - Ken Livingstone's famous 'Walnut Whip' and that went virtually unnoticed.
I suspect that after the next election we will suddenly find that there is a massive shortfall in finances and council tax will have to rise significantly above inflation so in many ways we are simply deferring the increases till a later time. I just wish Councillors would sit down and discuss these strategies with residents before they embark on these entirely politically motivated and unsustainable campaigns. Surely any rational person would be taking modest inflationary increases now and if they are not required immediately then put them into reserves. In three to five year's time, when we may have a different economic outlook, adjustments can be made but freezing tax now simply limits our options in the future.

Agreeing a council tax freeze at a time of such financial uncertainty, and with such pressure on essential services, seems to me nothing short of reckless.

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