Newspaper column

Evening Post - December 2002

Local Funding for South Gloucestershire

For years we have complained that South Gloucestershire does not get a fair share of the cake when national taxes are carved up between different councils. After a lot of campaigning, the Government finally agreed that it would change the system, and a few days ago they finally announced how things would be done in the future. So is it good news or bad news for local council tax payers?

The first thing to bear in mind is that South Gloucestershire is one of the lowest spending councils in the country. Of the 45 other "unitary" authorities in England, only three spend less money per head than our council. But because we have historically had such a small share of the national cake, the difference has had to be made up by above-inflation increases in the Council Tax. In short therefore, Council Tax rises have not been about propping up high spending but have been about plugging the shortfall in the money that we get from the Government.

The new system will still leave South Gloucestershire towards the bottom of the funding league table. However, there has been a slight improvement in our position, partly because the rules will, for the first time, recognise the high cost of recruiting and retaining staff in an area of relatively low unemployment. Until now such allowances have been allowed only to London and the South East, and it is a welcome change that there is to be some recognition of wage pressures in South Gloucestershire.

However, before popping the champagne corks, there are two important reservations to bear in mind.

The first is that for years now, Governments have built into their spending plans an assumption that council tax revenues will increase by substantially more than the rate of inflation. Cynics would say that this allows the Government to gain credit for keeping national taxes lower whilst leaving residents to blame their local council for raising local taxes. Even councils who simply stand still by providing the same services next year as this will still have to raise their council tax rates by much more than inflation.

The second important reservation about last week's announcement, is that South Gloucestershire's grant increase has been capped by means of a system of "ceilings". In effect, the new system recognises the unfairness of how South Gloucestershire has been treated in the past, but is in no hurry to put it right.

There is still a lot of number crunching to be done before the full impact of the proposed settlement can be evaluated. My initial judgment is that there has been some response to the campaigning that we have been doing, but that the Government's policy of loading an increasing share of the tax burden onto local taxes will mean that council tax bills will still have to rise significantly in the coming year simply to maintain existing services.

stevewebb@cix.co.uk