Gordon’s sleight of hand…

Council tax……something which across the population fills people with anything from mild irritation to dread to overt outrage, sometimes resulting in direct action or demonstration.

I’m not going to get into the fundamentals around whether the council tax system is fair or not today and I’m not even going to start on about how efficient, or otherwise, different councils are. Indeed, after a successful background in business, when I was elected to Lichfield District Council just over three years ago, I really expected to find the waste and incompetence which most people, and certainly the media, believe is rife in local government. But I didn’t. In fact I was almost shocked at how business like LDC was and is. It is clear to me now that local government is, in most cases, vastly more capable and offers much better value for money than traditionally it did many years ago.

Now I’m sure at this point some people will leave this post safe in the knowledge that I’m biased and have no idea what it’s like in the real world of business and life. I’m not and I do. Read on and you will learn some real facts about why council tax rises so incessantly.

In this post I want to tell you some of the cast iron facts that have become clear during Cabinet’s discussions on setting council tax this year for Lichfield District Council. Now, just to make it clear I accept that, as in all big organisations public or private, not every single penny is spent as well as it could be……but on the whole LDC is a pretty tight ship.

So, I hear you say, if it’s a ‘tight ship’ why does council tax go up faster than inflation each year?

The main reason is straightforward; pensions and national insurance. Remember Gordon Brown’s infamous pensions snatch and his hike in NI to pay for the Health Service? It’s really taken hold over the last few years.

Since 2003 LDC’s employers’ pension contributions have gone up by nearly £700,000 a year. Since 2003 employers’ NI payments by LDC have gone up by nearly £450,000. That’s £1.15 million a year compared to 2003. Do you know how much that equates to in LDC’s council tax charge?

Each 1% rise in LDC’s part of the council tax brings the council just over £40k. Just for clarity you should also understand that Lichfield DC bills for and collects council tax but only keeps about 10% of what you pay. Most of the remainder goes to the County Council.

You will have now worked out that our friend Gordon Brown’s slight of hand so far equates to an extra 25% each year on your council tax compared to 2003. Getting the picture?

But we’re not finished yet! Remember Gordon’s grand announcement in the Budget last year that the government will give free public transport for pensioners? One slight problem with that……the government, bless their cotton socks, didn’t give local government anything like enough money to do it. That’s now costing council tax payers in Lichfield about £70k each year (just under 2% on LDC council tax).

One last thing that you should know…..and this’ll knock your socks off. I’ll bet you think that all the extra housing that the government has imposed on Lichfield brings the District Council lots of lovely lolly (it’s been said at rate payers’ meetings). How wrong you would be! The money that LDC gets from central government is…….wait for it…….based on the housing census figures from 2001. So that’s a couple of thousand more houses to use LDC services with almost no extra money!

Excluding the extra houses, which I’ve no idea how to accurately calculate the cost of servicing, Gordon Brown’s slight of hand is now worth an extra 27% in council tax each and every year. Terrible, awful councils putting council tax up by around 4% (not 27%) each year.

LDC is a small council and will have made efficiency savings of around half a million last year (around 12% in council tax) on a total revenue budget of around £11million. Over the next three years (if Tories are still in control after May) we’ll be making further savings of around £2million a year.

Everything I’ve written you can check and double check. There are numerous other initiatives from central government that you don’t realise you are paying for through local council tax. I’m not moaning. We, and all local government, will work through it. It’s just that when the media talk about ‘Town Hall waste’ it winds me up. Council tax may or may not be fair but you should know the true story on Gordon’s very profitable slight of hand and the reason why LDC’s portion of the council tax will be going up by a little more than the rate of inflation this April.

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