Essex councils could find it 'impossible' to balance budgets after Autumn Statement
Local leaders have been reacting to the Chancellor's plan for the economy
Average council tax bills could rise to over £2,000 in government plans to let local authorities raise council tax by 5 per cent without holding local referendums.
Chancellor of the Exchequer Jeremy Hunt set out his autumn statement earlier today (November 17), which included plans for spending cuts and tax rises as the UK heads into a recession.
Spiralling inflation, which hit 11.1 per cent in October, as well as drops in government funding have left millions of pounds missing from local councils’ budgets.
The government is now raising the limit by which local councils can increase council tax without holding a local referendum to 5 per cent, in a bid to plug the gaps.
‘The richest could pay more – the rest of us have been squeezed’
Colchester Borough Council’s portfolio holder for resources Mark Cory (Lib Dem, Wivenhoe) said the budget will put extra pressure on local councils.
He told the local democracy reporting service: “I think it’s a budget that’s trying to be sensible but unfortunately it misses a number of areas where the richest could pay more and the energy companies making lots of money could pay more.
“Instead it tries to pass the buck down to local government. The same with rents from our council tenants as well, so I worry that it will put more pressure on councils and the Conservatives are suggesting we raise council tax to let our budgets flex more. I don’t think we can do that in this current climate.”
Mr Hunt has temporarily increased the windfall tax on oil and gas companies, which have made profits upwards of hundreds of billions of pounds as a result of rising energy prices, from 25 per cent to 35 per cent.
Cllr Cory said this did not go far enough and that the government should be looking at more innovative approaches which could relieve the burden on local residents and councils.
He said: “I think there are people with much bigger assets, equity firms for example, that should be paying that have made money during this time while the rest of us have been squeezed.
“I don’t think there’s much help for us and instead we’re just going to have to make further tough decisions about spending in council areas, in council budgets.”
‘Councils are finding it impossible to balance their budgets’
After Rishi Sunak became Prime Minister following a vote from Conservative party members, Basildon Borough Council leader Andrew Baggott (Con, Burstead) wrote to him requesting a lift in the threshold.
According to the letter, Cllr Baggott said a temporary lift from 2 per cent would protect public services such as as community centres and leisure facilities from cuts.
He said: “With CPI now running at over 10 per cent per annum, and substantial increases in the cost of utilities, councils, such as ours, are finding it impossible to balance their budgets (a legal requirement) without significant and substantial cuts to existing services.”
Basildon Borough Council’s share of council tax has been frozen for four years. In February, the authority once again voted to freeze it at £278.91 for Band D properties for the financial year 2022/2023.
Mr Baggott continued to say the government’s calculations of core spending power assumes authorities always increase council tax by the maximum amount, but this is not the case in Basildon.
Reacting to the news the threshold will be lifted, he told the LDRS: “I wrote to the PM requesting exactly this regarding increasing council tax so very welcome indeed.”
‘It’s welcome but it doesn’t solve the problem’
Portfolio holder for the economy at Uttlesford District Council Neil Reeve (Residents for Uttlesford, Broad Oak & The Hallingburys) took a more neutral view.
He said higher council tax would not change the overall picture in the rural, north Essex district, because the money raised from a 5 per cent rise would not contribute significantly to its budget gap.
He said: “For Uttlesford, it actually doesn’t help very much, because it really doesn’t provide very much towards our budget.
“Every little bit counts and of course it helps as it’s an ongoing thing, once it goes up it carries on into the future so that helps the overall budget.
“But in terms of the overall contribution to the bottom line, it’s welcome but the difference is not significant to our budget.”
Cllr Reeve later said there has been a steady reduction in government funding to councils over the last decade and that this policy is a continuation of this direction. As a result, this increasingly places the financial burden for overspends onto councils.
He said: “It’s just a way of hiding. Saying you’ve done something but actually you’re hiding it.”