Why a 2.95% Council Tax rise?

I am sure a debate is likely to rage over the next few days about the County Council's proposal to increase council tax by 2.95% this year - including some who consider that a Council is not properly Conservative if they choose not to accept central Government's one-off payment of 2.5% this year if they choose to freeze council tax (known as the Pickles promise).

Last year we did choose to freeze council tax and accept Eric Pickles' offer - because the funding was for 2.5% each year over a period of four years.  This year it was a one-off offer.  That makes a difference because any council tax increase this year carries forward into next (in simple terms if you add 2.5% onto a base of £100 it becomes £102.50 - and that figure carries over to next year and any increase is added on to £102.50 and not the original £200).  In fact, the cumulative impact of not having that 2.5% on our council tax over ten years amounts to some £30m.  The other option would, of course, be to take the Pickles' money and make a bigger increase next year - which would trigger a local referendum.   There are two issues here that cause problems:

• In order to deal with the the financial issues the council faces we have a medium term plan that includes investing in prevention.  How on earth can anyone embark on that sort of medium term thinking when there is a huge question mark over your plans at the end of year one?
• A local referendum would cost money to deliver, money that could be spent on services

That last point is an important one, it is not that anyone is scared of listening to local people, rather that we have already consulted as part of our consideration for the current budget proposals.  That (statistically valid) consultation showed that there was appetite around the County for a small council tax rise - provided that the money was spent on residents' priorities; we have done this.  As an example by investing more in Adult Social Care in order to slow down the reductions and allow us to make the long term savings we need in a much more measured and joined up way, and by investing an extra £90m in roads (which means roads, pavements and cycle paths).  Both of these areas were shown to be priorities in our consultation.

One other very important factor here is that Cambridgeshire is not and never has been a wasteful and high taxing council.  We have a reputation for sound financial management and as this graph shows, we are the seventh lowest taxing shire county in England.

This highlights yet another flaw with the Pickles' promise; we faced years of a Labour Government diverting funding to its own local councils to the detriment of Cambridgeshire.  We, as a County, also suffered much lower grant increases than our neighbouring counties year on year, yet every authority, however efficient, has an increase of 2.5%.  It is much easier to take 2.5% off your base and take the Pickles promise if you are a council that has been wasteful and bloated in the past, Cambridgeshire never has been.

That does not mean we have been complacent.  We continue to eradicate waste and find better ways of working.  The cost of our senior officer team has reduced, and we have already identified other management costs that can be taken next year.

One other argument that has been used is that we should be working closer with other councils in order to reduce overheads.  We have done this by combining many of our back office functions (legal and HR services for example) with Northamptonshire through creating an organisation called LGSS.  This is already making savings and we are looking to make more by involving other councils.

Before I come to a conclusion on this I want to cover one more issue.  I am sure the naysayers will point at the review of members allowances as an example of us being wasteful.  I, and others, keep making the point that this review is something we are legally required to do.  It is a poor system and, as a Council, we have asked Government to change it - but as things stand now we have to do it (and actually the sums involved in member allowances are a tiny part of our overall budget). It is wrong for MPs to recognise the flaws in voting on their own remuneration and then to have a system that makes councillors vote on theirs.

I have a great deal of time for much of what Eric Pickles and the DCLG are doing. Their ideas on housing are very challenging but are headed in the right direction, many of the planning reforms are much needed and the localism agenda is a breath of fresh air.  Indeed, on balance, last year's Pickles' promise was right.  But this year's proposal of one-off funding is flawed and the suggestion that it is both  immoral and not Conservative to take a local decision on council tax, based on local circumstances is also flawed.