Council tax hike looms

DISTRICT councils will be forced to impose yet more council tax rises or cut back on services because of shortfalls in Government funding, it has been claimed.

Chancellor Gordon Brown laid out his plans for future financial dealings in his spending review on Monday – but it contained bad news for local authorities.

The district council part of the revenue support grant – paid by the Government to help councils provide services – is set to increase by just 0.6%.

But, with inflation in East Anglia hovering around 3%, it seems that the region's councils are going to be out of pocket and searching for a way to make up the shortfall.

And the Local Government Association claimed yesterday that Downing Street financial chiefs are already expecting council tax to rise by an inflation busting 6.7% next year.

Peter Matthews, head of financial services at Ipswich Borough Council, said the authority faced the age-old problem – increase council tax or cut services.

He added: “We have assumed in our budget forecast that the grant is 3% but if it's only 0.6% - which it appears to be - then the additional shortfall for Ipswich will be £250,000.

“That means that the council tax increase alone for that would be 2.4% - with inflation it would be at least 5.4%.

“The council tax bill will go up to maintain the level of services - but if that doesn't happen we will have to look at service provision.

“It does look as bleak as that. The Government have put us in a difficult position on the face of it. I hope to be meeting with Ipswich MP Chris Mole to discuss it.”

Mark Bee, leader of Waveney District Council, echoed Mr Matthews' comments.

He said: “Gordon Brown is starving district councils of much-needed cash with this paltry award, way below inflation.

“It will hit councils such as Waveney very hard indeed, and there appears to be no reduction in the levels of expensive bureaucracy imposed by central government.

“All this will have to be borne by hard pressed council tax payers.”

Roger Saunders, leader of Mid Suffolk District Council, said if their grant was increased by just 0.6% then an increase in council tax or a cut in discretionary services would be the only options.

He added: “Last year it was about £200-300,000 less than we would have got if we'd got inflation and that caused great pressure – we had to remove 30 posts from the council.

“We really would be upset if we've got to increase council tax above inflation in the coming year, because we asked the public to bear with us last year.

“One has to wonder what he ulterior motive of central government is – do they want to remove district councils completely?”

John Griffiths, leader of St Edmundsbury Borough Council, also spoke of his disdain for Government grant cuts.

He said: “I very much hope that government will not cut our grant but let's be absolutely clear that if it does, it will be yet another stealth tax on the citizens of St Edmundsbury and I think everyone is becoming aware of this tactic.

“Any cut in our grant would have a direct impact on our council tax. At St Edmundsbury we are doing everything we can to reduce any rises in council tax and last year we succeeded in doing this.”

A spokesman for Forest Heath District Council added: “We are running on a very tight budget at the moment.

“We would have to look very carefully at our finances should we receive any less money from the Government.”

Deputy leader of Suffolk Coastal District Council Andy Smith said: "The sheer, raw hypocrisy of the Government's statements is unreasonable.

"It makes a great play of the generous settlement but buried deep in the small print the whole funding for district councils looks bleak. It is catastrophic for councils like us. In round terms two thirds of our money comes from the Government with one third raised locally."

He added: "This element alone, as far as one can judge, would put 5% on council tax if we had no increases in expenditure, which is just not possible, not least because the Government keeps putting more responsibilities to the district councils."

But a spokesman for the Office of the Deputy Prime Minister last night refuted the claims made by the region's district councils.

She said: “The Spending Review 2004 announced a 2.7% increase in general grant.

“With the extra money for specific grants and the £6.45billion which authorities can generate through efficiency savings, we believe that authorities will be able to improve local services without imposing large unsustainable increases in council tax.

“The Deputy Prime Minister expects to see low single figure increases in council tax next year – and that remains our position.”