Council tax freeze will create budget ‘black hole’, warns UNISON

UNISON, the UK’s largest union, is today (24 October) urging councils to think long and hard about the damaging impact on vital local services before they are tempted to freeze council tax. The Government is attempting to ‘bribe’ councils to accept the freeze in return for a totally inadequate 1% payment that will leave local councils with a black hole in their finances.

The Chancellor has offered councils a grant equal to a 1% increase in their Council Tax if they agreed to freeze their council taxes in 2013/14.

Next year Councils in England already face the loss of nearly £2 billion, plus inflation of around 3% and budget pressures from a growing elderly population*.

Council’s that agreed to freeze their council taxes this year (2012/13) were given a grant that was equivalent to a 2.5% increase instead. But it is a one- off payment and it disappears in 2013/14.

So the first call on any extra income will be to fill the gap created by the loss of Council Tax Freeze grant (2012/13)

For example Kent County Council has to find £14.448m to cover the grant. If it freezes Council Tax again in 2013/14 it will only get £5.779m – it will need cuts of £8.669m simply to fill the gap.

Heather Wakefield, UNISON Head of Local Government, said:

“The Government is plunging councils into further economic meltdown. Offering a 1% ‘bribe’ to freeze council tax will leave a financial black hole that can only be filled by cutting more jobs and vital services. It is a bad deal for council taxpayers who are losing quality services and cuts to everything from elderly care to libraries, children’s services and swimming pools.

“It shows the wisdom of councils like Peterborough, Surrey and East Cambridgeshire who rejected the freeze grant last year because they wanted more control over their finances”.

Ends

Notes to Editors:

A full list of councils is available from the Press Office

1. Examples of funding shortfalls – full list of councils attached For Essex County Council this will mean a shortfall of £8.724m; Birmingham nearly £5m; Hillingdon £1.6m; Norfolk £5.173m; Sheffield £2.959m

2. *Next year Councils in England are already faced with: · The loss of £200m in formula grant in 2013/14; · Loss of nearly £600m as 2012/13 Council Tax Freeze Grant is removed; · The removal of around £500m to pay for the 2013/14 New Homes Bonus; · Finding up to £400m as government support for Council tax benefit is cut; · Inflation of around 3 per cent; · Costs that flow from automatic enrolment to pensions; · Budget pressures from a growing elderly population.

3. In 2011/12 the Government offered Councils in England a grant equivalent to 2.5 per cent of their council tax (costing £652m), if they agreed to freeze their Council Tax in 2011/12. The grant is payable in 2011/12; 2012/13 and 2013/14 and is now being built into the local government finance system. Every local authority in England froze their council tax.

4. In 2012/13 the Government offered Councils in England a one off grant equivalent to 2.5 per cent of their council tax, if they decided to freeze their Council Tax in 2012/13. 22 Shire Districts; 11 Unitary Councils; 2 County Councils and 1 Metropolitan District Council decided NOT to freeze their council tax. They do not face this budget hole.