Agenda item

(Director of Finance & ICT) To consider the attached report (FPM-013-2013/14).

The Director of Finance and ICT presented a report on the Council Tax Freeze Grant, including comments from the Finance Scrutiny Panel and considerations on increasing the Council Tax.

The Director of Finance and ICT reported at the last meeting of the Finance Scrutiny Panel a comparison had been requested to show the contrast in the Council’s financial position if an increase to the Council Tax was made instead of accepting the Freeze Grant. The Finance Scrutiny Panel considered the comparisons at their meeting on the 12 November 2013 and it had been decided to recommend a further freeze in the Council Tax to Cabinet.

The last time the Council Tax had increased had been in the 2010/11 financial year and since then the Department for Communities and Local Government (DCLG) had made grants available to support authorities choosing to freeze the Council Tax. These grants had been the equivalent of a 1% increase in Council Tax, approximately £75,000, and had been accepted for the three financial years from 2011/12 to 2013/14. The draft grant figures for 2014/15 and 2015/16 issued as part of the recent DCLG consultation protected authorities who had previously accepted freeze grants by including the freeze grant in the baseline for these authorities.

The arguments for increasing the Council Tax were that increasing the Council Tax by 2% for 2014/15 and 2015/16 would provide additional funds above the freeze grant of £75,000 in 2014/15 and £152,000 in 2015/16. This would be a continuing source of income and would ease some of the financial pressure on the Council and the net savings requirement could be adjusted down. He advised if the system of allocating funds to local authorities altered after the next election it would be possible that the freeze grants received would not be included as part of the baseline calculations for authorities and this could mean that authorities, that had previously accepted freeze grants could suffer greater funding reductions and had to make correspondingly larger savings in the future. The Council had not increased the Council Tax for three years and it could be argued that to increase now by only 2% for two years was not unreasonable. The annual increases of only £2.97 and £3.06 equate to less than 6p per week which would not be seen as significant by most people.

The arguments for not increasing the Council Tax would go against both the medium term aims in the Corporate Plan and the Cabinet’s current Key Objectives. The Corporate Plan 2011/15 included five medium term aims, one of which was to “Have the lowest district Council Tax in Essex and maintain that position”. The Council had a tough target for achieving net savings and it could be difficult to justify increasing the Council Tax while the General Fund reserve still exceeded £9.5 million. The decision on the level of Council Tax was a finely balanced one that needed to weigh up the various financial and political implications.

Resolved:

(1)        That the Cabinet Committee adhere to their previous decision to freeze the Council Tax for 2014/15 be noted.

Reasons for Decisions:

To ensure that Members had evaluated the option of increasing the Council Tax and in doing so had considered the views of the Finance Scrutiny Panel.

Other Options Considered and Rejected:

Members could decide that they wanted to increase the Council Tax by more than 2%, although this would require public support through a referendum.