Council sits on £1.5m windfall

A SUFFOLK council which raked in more than £1million extra because of the credit crunch was last night called on to share its windfall with struggling taxpayers.

Laurence Cawley

A SUFFOLK council which raked in more than £1million extra because of the credit crunch was last night called on to share its windfall with struggling taxpayers.

While most are feeling the pinch of rising fuel and food prices, St Edmundsbury Borough Council has seen the value of its sizeable investments soar because of interest rate rises brought about by the economic downturn.

The authority's finance chiefs expected to make £2.1million last year in interest on the £60million it has invested in bank and building society accounts.

But figures released by the council show how, because of the credit crunch-fuelled interest rate increases, it actually made £3.7million in 2007-2008. The £1.5million extra - which bucks the national local government trend of tumbling reserves - equates to about £35 per tax payer.

And tax campaigners last night called on the council to share its unexpected extra earnings with borough residents.

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Reg Hartles, of Protest Against Council Tax in Suffolk, said if the council could afford to cancel out any rise in tax then it should do so.

“Let's not keep a secret - if they've got this then it should be useful to the people, particularly at this time of roaring prices.”

However, despite the unexpected earnings, the council last night ruled out cutting or freezing next year's council tax level and suggested the increase could be about 4%.

The move was criticised by independent councillor David Nettleton who urged the council to use its wealth to help those living in the borough by keeping any rise to about 2.5%.

“We are all facing these problems and anything the council can do to help by offering a lower than inflation council tax rise would be a good thing,” he said. “We should be trying to reduce the amount of council tax rises.

“I don't think we can go for a reduction in council tax because we are not immune from rising prices and our costs have risen as well. But we can limit the council tax increase and try and reduce it each year. I will be calling for a rise of 2.6% next year.”

Paul Farmer, the council's portfolio holder for resources, said: “The vast majority of the council's investments are held in fixed term deposits with major financial institutions.

“Insofar as the credit crunch has kept interest rates high, then this has obviously had a positive effect on our investments. The finance staff have also consistently out-performed our independently set interest rate targets, as a result of their experience and expertise at investing funds.

“In my first budget as portfolio holder for resources I proposed a council tax increase below the Retail Price Index(RPI) of inflation(which currently stands at 5%), and for this to be maintained for the next three years.

“Barring exceptional circumstances I hope that this will be repeated next year, although it is too early to be more precise.”

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