COUNCIL TAX MORE THAN DOUBLED UNDER LABOUR

Council tax has soared across the country under Labour. Council tax bills have hit £1,414 on Band D in England in 2009-10, a rise of £41 on the previous year (DCLG press release, 26 March 2009).

By contrast, council tax was £688 in 1997-98 when Labour came to power (DoE press release, 20 March 1997). This means council tax will have risen by 105 per cent, or an extra £726 a year. Since all other Bands are set as a percentage of Band D, every single Band (from A to H) has similarly doubled.

 

FIDDLED FUNDING

Labour has fiddled the system of local funding, taking money away from Conservative areas, particularly in the South East.

As the independent Audit Commission has noted, ‘grant redistribution – which moved grant from London and the south to the midlands and the north – led to some councils putting up council tax more than others. We found a clear association between the size of grant increase a council received and their increase in council tax’ (Audit Commission, Council Tax Increases: Why Were They So High?).

Shire counties have been the hardest hit since 1997, with rises of 120%, reflecting the Government’s fiddled changes to the funding formula. Scotland by contrast is benefiting from another council tax freeze this year. Council tax bills are now £265 a year less than in England.

 

LIB DEMS’ LOCAL INCOME TAX WOULD INCREASE THE TAX BURDEN

Liberal Democrat plans to replace council tax with a local income tax would mean an extra 6.6 per cent levy being charged on the basic rate of income tax (Lyons Inquiry into Local Government, Final Report, March 2007, p.267). This would simply shift the tax burden on to working families.

A typical working family in England would pay a LIT bill of £3,364 in 2009-10, equivalent to £2,189 a year more than their average council tax bill. In the South East, a typical working family would pay a LIT bill of £3,782, or £2,436 a year more than their average council tax bill.

 

OUR POLICY POSITIONS AND PROPOSALS

Freeze council tax for two years, in partnership with local councils. The example of Scotland shows how a council tax freeze can work.

Give local residents the power to stop high council tax rises, by requiring any excessive rise by a council (or a precepting authority) to be backed by a local referendum.

Oppose Labour’s agenda to raise council tax further through its plans for a council tax revaluation and higher council tax bands. We will abolish council tax inspectors’ rights of entry into people’s homes.

Allow councils to keep more of the council tax receipts from new house building, rather than being equalised away, to encourage more homes to be built with supporting infrastructure.

Give councils more freedom and discretion to fund their local priorities – not Whitehall’s, such as by ending the ring-fencing of grants to councils.