Transcript
Newshost:
Hello and welcome to this BBC News Interactive forum. The average English council tax bill is to rise by the biggest amount since the tax came in a decade ago, according to a new survey. For the first time, the average bill is expected to be more than �1,000 a year. The Government says it'll decide soon whether to use special powers to cap the increases.
Well joining me to answer your many questions on the rises is the chief executive of the Chartered Institute of Public Finance and Accountancy, Steve Freer - they produced today's survey and also the deputy leader of East Sussex Council, Daphne Bagshawe - welcome to you both.
I suppose the $64 million dollar question is why these big increases?
Steve Freer:
What's different this year, I think - the principle difference is the Government have changed the formula which distributes central government grants to local authorities and that's a very important and necessary thing to do from time to time. But I'm afraid in the year in which that formula is changed does tend to create turbulence and instability in the system and that's what we're experiencing.
The other point to make, I think, is that there is huge pressure on local authorities, particularly to put more money into the education service - that's a big pressure from central government, a big political priority - and also big pressures in other services, like social services where there are more elderly people requiring more services - those services cost money and some of that has to be paid for through the council tax.
Newshost:
Now Daphne, you are the Deputy Leader of East Susex County Council and you've put through, I think I'm right in saying, the biggest increase of any shire county this year - just under 20%. How's that come about?
Daphne Bagshawe:
Well it's come about because of the changes that Steve has been referring to. We have been the worst affected of any county and therefore it's not surprising that our rise is the highest in the country.
Last year our council tax was in fact the lowest for any shire county in the country so we are pretty upset at these changes - pretty angry about them.
Newshost:
And yet Nick Raynsford has said again today that every council in the country for the first time ever has had an above-inflation rise in its grant.
Daphne Bagshawe:
Yes, I heard Nick Raynsford today and I've been hearing him for a long with the same old thing. But the fact is the pressures on us are far higher than the level of inflation he is talking about and he knows that perfectly well because he and his government have created most of those pressures.
Newshost:
Understandably a lot of the questions we're getting are about why these big increases - here are just a couple. Stuart Clark, England: How can the Council Tax, year on year, go up significantly more than inflation and average wage rises while services are continually cut?
K, Belsey, England: Council Tax has been going up 10% every year for as long as can remember, so it is nothing to do with the present government.
Joanne Rickards, UK: How are rises justified when services are not improved?
This is the crucial question isn't it because although we're seeing these big rises, it doesn't necessarily mean we'll see an improvement in services?
Daphne Bagshawe:
No I'm very sorry to say it doesn't and I've a great deal of sympathy for the people who've sent in those questions.
I'm afraid what is happening is that subtly and inexorably central government is reducing the proportion of funding it provides for local authorities leaving local authorities having to raise the rest of it through the tax.
Nobody likes imposing tax and if the Government can force local authorities to do its dirty work for it, it will and that's what's happening.
Newshost:
That's a political point that I'll pick up with you later on.
Daphne Bagshaw:
Absolutely
Newshost:
But Steve Freer it is puzzling to many people that they're paying these big increases but this won't necessarily feed through into improved services. So where's all the money going?
Steve Freer:
A couple of points to make really. First of all it's important to understand that local authorities aren't just under pressure from rising costs although of course they do experience inflation like the rest of us. Many of the services are subject to other pressures, particularly demand pressures. I gave the example of social services - the growing numbers of elderly people requiring services. Another good example is waste disposal services. I'm afraid all of our households are generating more waste. It has to be collected, it has to be disposed of - that costs money.
The other point I would then go on to make is that I think in some cases we will get and are beginning to experience the improved services that you've spoken about. I think the best example there is education where there is huge pressure to get more money into schools' budgets. Some of it is about maintaining the current service - meeting inflation pressures and so on. But a lot of it is about getting genuinely new money through there for increased investment to improve the service.
Newshost:
Catherine West, England: Why should a person (or couple) living in a studio or 1-bed flat pay the same Band A Council Tax as someone living in a Band A property, which could be double the size and even be a detached residence?
Steve Freer:
These are questions about equity and the most appropriate forms of taxation. To say that that's a well-argued debate is an understatement. That debate's being going around for a long time and, as you said in your introduction, we arrived at this method of taxation - the council tax - after the very bad experiences of the community charge at the beginning of the 1990s.
Newshost:
That begs the question about when we get a revaluation of properties because of course the bands that people are paying their tax on are based on 1991 prices and we all know what's happened to house prices since then. The next one, I'm told, won't be until 2005. Here's a question from Gerry in Scotland: Scotland is at least two revaluations ahead of England and our council tax bills are about 30% more.
Are people right to be frightened about a revaluation?
Daphne Bagshawe:
Well I think they are because I think that the revaluation will inevitably mean for many people again rises in the council tax. Really it's becoming ludicrous that it's called the council tax because it's effectively the government tax collected through the council and this is the problem. We have huge pressures from the Government as well as from service users and these services do have to be paid for. Local authorities deliver schools, they deliver roads, they deliver social services and so. So there are huge pressures on us which we accept and I think all we ask is more transparency and honesty from the Government in how we are expected to fund these.
Newshost:
Now I know that you've accused the Government, like other Conservative councils, of moving money away from the south to the north and that's one of the reasons perhaps why bills in the north are going up a bit less than they are in the south. But is it the case, perhaps, that under the Conservative government we had a similar thing where Labour accused the Conservatives of pushing money towards the shire counties?
Daphne Bagshawe:
I think that's a fair comment because I think that local government generally is pretty fed up with central government - I know I am. But I've never seen anything more blatant than this shift of funding. It has had a tremendous impact on my own county but right across the south and the south east, we are all in the same boat. And it's not just your local councils - it's your police authority, your fire brigade, your local hospital trusts and so on. It's everybody who has the misfortune to live in the south of the country.
Newshost:
I've noticed Steve Freer in fact that with the figures you've produced there are some very big increases in what we call the precepts of other authorities that add their bills to the council tax - like the police authorities - somewhere up in the 70%. Why's that?
Steve Freer:
I think there's only one in the 70% - just to deal with that point. But I think basically that is because the system copes much better with large multi-purpose authorities - in other words, authorities that are providing a variety of different services - than it does with, on the whole, smaller authorities that are involved with the provision of a single service like police or like fire. The formula has always been susceptible to rather extreme changes in relation to those sorts of authority.
Newshost:
Before I take the next question from our e-mails, can I just ask you about schools. Because one of the concerns this year has been for the first time the Education Secretary has in a sense forced through cash increases to school budgets. It might sound like a good thing from the point of view of the parents but it has caused a problem for councils hasn't it?
Steve Freer:
Its cause, I think, two problems for councils. One is the very simple and straightforward point that if government insist that all of the money goes into schools, it leaves very little for other services and those are the services unfortunately that can't be ignored and cuts in those other services is just about as unpopular as putting up the local tax.
The other problem is a technical problem, that in some cases the Government is forcing through to schools theoretical increases in resources for schools that aren't actually backed by cash in the local authority. So that really does create a strain on the local authority finances.
Daphne Bagshawe:
Yes, that happened to us in fact. Our theoretical increase for schools was �13.8 million which we were instructed was to be passported on - we actually received �10 million from central government. Now our schools understood that and I hope that we've managed to explain to parents what is really going on because they assumed we'd been given �13.8 million for schools - we actually only got �10 million for all our services .
Newshost:
But can those parents who are paying increased council tax expect more equipment in schools, more books as a result of the rise?
Daphne Bagshawe:
Well they can to this extent that we, as the local authority, have picked up the bill which the Government has failed to settle.
Newshost:
Let's take a live e-mail from Chris Jones in Scarborough: I live up north and our increases are 17% - while I appreciate county councils must maintain standards, it's unfair that council taxpayers have to foot inflation-busting increases while the majority of us accept low increase and/or fixed incomes?
Steve Freer:
Well again this is back to demand, I'm afraid. If the authorities simply had to cope with inflation no doubt the council tax increases would be in line with inflation, but unfortunately they don't. There are a whole variety of further demands upon them and if they don't meet those demands it translates into cuts in services and as I said a moment or two ago, that is just about as unpopular as putting up the local tax. So this is real horns of a dilemma stuff for the local authority and local politicians, like Daphne, have to make very difficult choices.
Newshost:
Back to this north/south debate again which is going to come up I think a lot. We've got Donna in Preston who asks: Why is the rise in the north west considerably lower than that in the south?
Steve Freer:
Well the formula has been comprehensively reviewed this year and one of the effects of the new formula that's been put in place is that resources have tended to move from the south east corner towards the north west, as it were. The easiest way to think about this is a line really across from the Wash on the east coast down to the River Severn on the west coast and if you're below that line, you'll tend to be paying more than the average increase and if you're above it, you'll be slightly better off.
Newshost:
Can I ask Daphne. Do you accept perhaps that the people in your county, in East Sussex, where house prices are quite high, are generally better off than those in the north?
Daphne Bagshawe:
No I don't.
Newshost:
That you should be shifting funds to areas of more deprivation?
Daphne Bagshaw:
No, I don't accept that we are not ourselves a county with very severe areas of deprivation and of course what Steve has described is quite true - that's what is happening but it doesn't answer why it's happening. My answer to why it is happening is very clear - there are a great many Labour marginal seats in the Midlands and the North and no so many in the South - that's my answer.
Newshost:
Well here's someone from London - Tim B - who's calling for even more central control. Council tax is a lottery, he says, why shouldn't all taxes be controlled by central government rather than irresponsible councils?
Daphne Bagshawe:
We are certainly not an irresponsible council but we are dealing with a pretty irresponsible government. Anybody who can imply to parents and schools that there's �13.8 million extra for education, when there's only �10 million for the lot, is an irresponsible government.
Newshost:
We've given the control of interest rates to the Bank of England, should we give the fixing of this funding formula to an independent body?
Steve Freer:
I think that's possibly something that should be considered. It's an option. But I'm bound to say, even if an independent organisation were given responsibility for the formula, you still have a formula. I think one of the great lessons of our current situation is that any changes in that formula - the formula is very fragile - the cake is only of a fixed size, if you slice it differently, there are going to be some winners and there are going to be some losers and the losers won't be very happy. That's the bottom line, I think.
Newshost:
Richie Fuller, UK: What extra services am I going to get following this increase? At the moment my waste is picked up (if they turn up!). The Police are too busy when I have called them three times last year and my street lighting has been out of action for months.
Daphne Bagshawe:
Again I've every sympathy and all I can say is we are only being able to fund a standstill budget on our increase so he's quite right. Perhaps if the Government didn't require local authorities to waste their time doing a great deal of work for the central government which doesn't enhance services at all, we'd have more money to spend on the things that matter. We'd all like that.
Newshost:
Do you think the increase in your area is going to cause hardships - especially perhaps among pensioners who are on low incomes?
Daphne Bagshawe:
I am absolutely sure it will. I am very, very worried about it. We have a high proportion of elderly people on fixed incomes. We are trying to fund a sort of helpline support for those people through our Citizens Advice Bureau precisely because we know how hard it's going to hit them. You know, there are not just "fat cats" in the south of the country - we have plenty of elderly on fixed incomes and we're very worried about them.
Newshost:
We had a pensioner from Devon on our One O'Clock News today saying that she would refuse to pay the increase and would go to jail.
Daphne Bagshawe:
Well good luck to her. I hope she doesn't end up in jail, I'd be inclined to pay her fine myself.
Newshost:
Let's go to an e-mail from Matthew in Caterham: Maybe the Government is giving more funding to the north but funding to the south is still rising above inflation. Why is it then that councils feel the need to impose double-digit rises upon us? Unions such as the FBU are being laughed at for asking for a large pay rise, why should councils expect us to pay such increases?
Steve Freer:
I think we've been round that one.
Daphne Bagshawe:
Well the FBU may be being laughed at but does your correspondent really think that they're going to settle for the rate of inflation - I don't - and it's local authorities that will have to pick up that pay bill - this is what happens all the time.
Steve Freer:
Can I come back to the one about shouldn't the Government sort all this out and settle the taxes. I think the point I would want to make there is that we've been there before in sense - we had a system of universal capping under the previous government and this Government has been careful to retain the power to cap local authority budgets. I think they've been one or two statements recently threatening that that power might be invoked. But actually this Government has made a virtue of stepping back from capping and having what I would describe as a sort of more grown-up relationship with local authorities. And I do think it would be terribly unfortunate if actually government tried to resolve some of these difficulties by reverting to capping. I think that would be very bad for the relationship between local and central government.
Newshost:
Louise Callaby, Isle of Wight: 44% of the workforce here earn less than �10,400 a year. Why are island residents treated as part of the wealthy South of England?
Daphne Bagshawe:
Well it's this old question that this tax is having a real impact on people who can't afford to pay it. And her predicament is repeated in my own county many, many times.
Newshost:
Is the logic perhaps to go for the Liberal Democrat solution of a local income tax?
Daphne Bagshawe:
The logic is never to go to the Liberal Democrat solution for anything and this is no exception to that. All we want is an honest degree of co-operation between the Government and local authorities. If we could have that, I think we could make progress but it's lacking at the moment.
Newshost:
There's another point which is that at the moment that the Government are dampening these increases and how the funding is changed with these floors and ceilings. In other words, they're maximising the gains - but that's not guaranteed to go on is it?
Steve Freer:
I think it is likely to continue. I think what the Government is doing through those sorts of mechanisms is demonstrating its desire to try to maintain some control over the rate of increases. And you might say in the light of today's figures that it's not succeeding.
Newshost:
But if you took that dampening away, it would be even worse wouldn't it in terms of the increases?
Steve Freer:
Absolutely. It really would be a case of very extreme increases.
Daphne Bagshawe:
We can't rely on it continuing Steve. It's supposed to be a transitional arrangement and as such we must expect to come to an end at some point and we have to budget for that in our risk provision - another pressure on our council tax charges.
Newshost:
Peter Harris, East Sussex: Why is it that our council tax has risen by about 10% year on year and yet inflation has been about 2 - 3% during the same period? I though the idea of outsourcing services like rubbish collection was supposed to be more efficient?
Daphne Bagshawe:
Well I think it has been more efficient and cheaper - that's our district colleagues - I think they've done a good job there. But you're quite right when you say he's forgotten that last year it was only 4.9% and we've already answered the point about inflation not being our only pressure.
Newshost:
So its pretty sure that the Government won't want this to happen again next year?
Steve Freer:
I think there's a sporting chance that it won't actually. I think there is a sense in which because of the formula changes this year, this is a year of transition. I don't say the taxes will go down next year but I think the rate of increase will almost certainly slow next year.
Newshost:
Another centralising here to finish with from Keith Sanders: Local councils don't listen to the people or indeed add any value to our lives. It's time to dispense with them, cut costs and centralise all services.
Daphne Bagshawe:
Well I can only say if you didn't have your local authorities trying to deliver you effective services at low cost, you'd be even worse off than you are and you may find that hard to believe but it's true.
Newshost:
Well thank you very much for joining us and for answering all these questions. That's all we have time for, my thanks again to our guests Steve Freer and Daphne Bagshawe and to you for your e-mails and your questions as well. Thank you for joining us.
One-Minute World News 
News services
Email this to a friend 
Printable version 
