Time to talk about council tax?

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Council tax

by Jan Pahl

Anyone who cares about the quality of life in our towns and cities should know that there is a problem with the funding of local authorities. 

The evidence is there in the waiting lists for council housing, scruffy parks and gardens, closed libraries and museums, neglected historic buildings, litter and graffiti defacing our communities. 

All these reflect the cuts which have been imposed on local councils by central government. Yet widespread concern about these issues does not seem to be converted into public debate about the money that we pay through council tax to local authorities.

So it was encouraging to see that this week the House of Commons debated the issue.  The debate on February 5 highlighted the drastic cuts which have taken place since 2010-11. Figures were presented which showed that spending on planning has fallen by 55%, on housing by 48%, on cultural facilities by 43%, on highways and transport by 40% and on the environment by 20%. 

In the debate that followed, concern was cross-party.  Anna Soubry, the Conservative MP for Broxtowe in Nottinghamshire, said: “The cuts have been going on for too long and county councils such as Nottinghamshire will now have to cut through muscle and into the bone. They simply need more money. On that basis I will be abstaining this evening.”

Stephen Lloyd, the Lib Dem spokesperson for work and pensions, described the East Sussex County Council budget meeting. He said: “The situation in East Sussex is a catastrophe. The situation with core funding means that meals on wheels are being cut. Unless additional money comes, services for vulnerable children will be savaged.” 

Andrew Gwynne, Shadow Secretary of State for Communities and Local Government, meanwhile, has highlighted the impact of cuts on local services. He points to massive cuts in adult social care, children’s services, homelessness provision and public health and concluded that “By 2025 the gap facing local councils will rise to £7.8 billion, which is something that should shame us all.” 

The arrangements for council tax have not been revised since 1991, when the current banding system was put in place. What people pay depends on the band into which their house is placed. With the top band based on a house valued at £320,00, this means that someone living in a house of that value pays the same as someone living in a house worth £3 million pounds – or £30 million pounds. 

Other countries seem to manage better. For example, an American hedge fund manager, Ken Griffin, recently bought two homes, one in New York and one in London. Each one cost over £100 million. The property tax he will pay in New York will be at least $280,000 per year – but in London he will pay just £2842 in council tax.

The current situation hugely benefits the rich and disadvantages poorer citizens. Those on low and medium incomes spend a far higher proportion of their incomes on council tax than do their richer neighbours. So the poorest 20% of households pay three times as much, as a proportion of their income, as the richest 20%. 

It was good to see the House of Commons debating the issue this week.  What is needed now is a wider public debate about restoring some of the funding which has been taken from councils. This should be a key issue in the local elections coming in May. Reforming the funding of local councils could lead to a fairer society and to a better quality of life for us all.

Jan is chair of the Canterbury Society and Professor Emeritus of Social Policy at the University of Kent, but is writing here in a personal capacity.

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