Forum Brief: Council tax

The Local Government Association has warned councils face an £800 million funding black hole.

The funding gap could lead to higher council tax bills, an average of over £100 each, unless the government provides extra funding, the association said.

Edward Davey, ODPM spokesman, said: "Many people are already suffering under unfair council tax bills. The prospect of another year of inflation-busting rises will cause concern and fear.

"The government's failure to fund local councils can only result in huge council tax hikes or savage service cuts.

"The public expect the government to learn the lessons from last year's school funding chaos and council tax revolts. But the message is clear: Labour is not listening."

Forum Response: Local Government Association

Sir Jeremy Beecham, chair of the LGA, said: "Whilst there has been a significant and welcome growth in government funding for local services, this has not matched the additional spending commitments government has made on behalf of the people who receive council services. Schools, children's and adult social services, traffic management and cleaning up the environment are only some of the many areas where spending has to rise.

"The problem for this coming year is the perception that council tax levels have already reached the heights of acceptability, but most councils have nowhere else to go to raise income. We are working closely with the government to find a long-term solution to this problem, through the balance of funding review. But this won't fix next year's council tax levels and spending needs.

"The perverse effects of the current funding system mean that shortfalls have exaggerated consequences for authorities and council tax payers. But by the same token, if the government goes some way to bridging those shortfalls, that will go a long way to tackling the problem.

"So I hope, in the spirit of cooperation that means the government can agree with us as to the problem, we can find a short-term solution. Unfortunately for now, that solution isn't in local authorities' hands, but in the hands of the government."

"For our part, councils will continue to maximise efficiency savings year on year, and we at the LGA will carry on leading the case for continuous improvement in town halls.

"If the government fulfilled its promise to allow councils more financial freedom, that would also go some way to letting us fix our own problems, rather than being forced through a Whitehall spending straitjacket, into higher council tax increases."

Forum Response: Local Government Information Unit

A spokesman for the LGIU told ePolitix.com: "The £800 million shortfall estimated by the Local Government Association must be taken seriously.

"It would be undesirable if ministers continued putting councils in a position where the delivery of the responsibilities that Whitehall has placed upon local government is not properly funded, and then engaging in a PR campaign that paints councils as generally profligate and inefficient as a pretext for imposing central government capping.

"In those circumstances, it is disingenuous for the government to present itself as the knight in shining armour riding over the hill to rescue local council tax payers from their wicked councillors. In fact, they are behaving somewhat like the dog in the old joke about the cross-breed between a Rottweiler and a St Bernard - it bites off your leg and then goes to get help.

"Instead, we hope that there is a mature debate about addressing the current budgetary pressures on local authorities - in education, the new duties in children's services and in other areas.

"Moreover, if central government wants to create a real impetus for councils to be more efficient and accountable, there is all the more reason to press ahead with radical reforms to make local taxation fairer and for local government to raise more than half of its revenue locally."