Market Digest

The average rise in council tax per household next year will be the lowest ever, Local Government Minister John Healey announced.

Figures published today show that the average Band D council tax increase will be three per cent. The average household council tax bill is almost £240 lower than the average Band D amount, and will increase by 2.6 per cent – the lowest such increase since council tax was introduced in 1993.

The first ever three year local government funding settlement giving councils an extra £8.9 billion, including 4.2 per cent more next year, is helping authorities to plan ahead and better manage the pressures their communities face. Planned efficiency savings over the settlement period are expected to reach £4.9billion.

The Government has been clear it expected an average council tax increase substantially below five per cent next year. The vast majority of local authorities have complied, with 23 councils, excluding their parish precepts, actually freezing or reducing council tax.

However, Mr Healey is also announcing today that Surrey and Derbyshire Police Authorities have set excessive increases that have been “designated” for capping action. They now have 21 days to make their case to government.

Derbyshire Police Authority has set its budget increase to 4.99% and its council tax to 8.68%. Last year Surrey Police Authority was capped and was set a notional budget for 2008/09, providing the basis for judging future increases. Based on those notional amounts, Surrey has set its budget increase to 4.82% and its council tax to 7.07%. This is the first time that the Government has had to take action twice against the same authority.

John Healey said:

“Most councils across the country are tightening their belts, which is xactly what the public wants to see. Today’s figures show that the vast majority of local authorities have kept increases to a minimum.

“The average household council tax bill will rise by 2.6 per cent – the lowest increase since council tax was introduced in 1993.

“An extra £8.9 billion from the Government’s three year funding settlement and £4.9 billion of planned efficiency savings are helping councils maintain both high quality public services and low council tax, and for the first time ever the public now see on their bill how efficient their council is.

“With a tough economic year ahead councils will need to do even more to control costs and I remain ready to be tough with capping powers to protect council taxpayers from excessive increases.”

Notes
1. The capping principles are that authorities’ 2009-10 budget requirements are excessive if they set:

* firstly, a budget requirement increase of more than 4 per cent between 2008-09 and 2009-10;
* and also; a Band D council tax increase of more than 5 per cent over the same period.
* for an authority which was set a notional budget requirement following capping action in 2008-09, these principles operate by reference to the notional budget requirement, and a related notional amount of council tax calculated for that year.

2. Authorities that have been ‘designated’ for capping action now have a statutory period of 21 days in which to respond. The Government will then consider in the light of their responses whether to, for each authority:

* Confirm the designation and set a cap for 2009-10; and if so at what level.
* Withdraw the ‘designation’ and ‘nominate’ the authority instead; taking action either to cap them in advance for 2010-11 or set a notional 2009-10 budget which restricts their scope for future increases.

3. Unless a designated authority accepts the maximum budget proposed by the Secretary of State for 2009-10, any maximum budget (‘cap’) set by the Secretary of State is subject to approval of an order to approval of the House. Affected authorities would then need to re-bill their council taxpayers for a lower council tax in 2009-10.

4. Information on council tax increases for all authorities is available at:

http://www.communities.gov.uk/publications/corporate/statistics/counciltax200910

Source: Communities and Local Government UK