Tuesday, February 17, 2009
WHAT TO DO ABOUT COUNCIL TAX
John Redwood has an item today on making councils more efficient. He says council officers:
compile a list of “unavoidable” commitments to add to last year’s total. On goes the revenue consequences of last year’s new projects, the need to make crucial repairs to capital assets which they otherwise have not provided for, pay rises agreed, automatic bonuses, the consequences of government circulars seeking more actions by Councils (whether they are statutory or advisory), and any other item they can kitchen sink. They usually claim Council inflation is much higher than CPI inflation, and put a large figure in for that as well.
This produces typically the “need” for a 6-10% increase in Council Tax for a so-called “standstill” budget. If Councillors accept this work of fiction, they are on the hook for a bruising and ultimately unsuccessful budget process. If Councillors counter by saying they want to do something new in one or two areas, that is extra making the Council Tax increase even higher. If they request a reduction in the proposed tax increase – and they usually do – officers then come forward with “cuts”. These are usually carefully chosen to cause maximum political pain. They typically propose surrogate tax increases - higher car parking charges, planning fees, congestion charges and the like, and insensitive reductions in service, often aimed at the most vulnerable.
In the bargaining that follows the worst of the “cuts” are avoided, the fat in the budget is left untouched ...
So what should Councillors do? They should do what they do with their own family and business budgets. In tight years all items of spending are under review. The aim is to cut out the least desirable items, not the most sensitive, and to deliver the same or more for less by spending more wisely. To do this the first round of budget papers should n ot present existing spending as a given
I proposed (figures slightly edited for Scotland):
Central government could help by cutting ”government circulars seeking more actions by Councils (whether they are statutory or advisory)” - cutting not only new ones but duties under old ones would cut costs. I would also like to see a more open application of the rate support grant. Spread out it comes to about £2360* per head but is allocated according to “need” which in practice means according to what the council is spending now & its political pull. Currently the RSG accounts for 83% of spending & by rewarding high spenders ensures more of it. If the RSG moved, over several years to a per head rate or anything independent of spending then councils which could make 17% efficiency savings would see zero council tax & those who couldn't would find their minds concentrated wonderfully. 20% is not exactly an extreme figure - barely over 4% a year across a Parliament & something which real industries manage regularly.
Alternatives would include taking schools out of the council's remit & giving that money directly to the schools under a voucher system - something I have already supported. The same could be done with road maintenance since road traffic has, since the demise of the horse, been ever less local. These would mean, assuming all the money was still spent, which I think it should be, that council spending would be say halved & the grant reduced to 66% (33% grant left, 50% of spending left). This might make it more difficult to cut council tax to zero but equally more difficult to make it go sky high. On the other hand by taking out the areas where Holyrood circulars are most legitimate make it easier to get rid of the rest & thus cut costs even more.
There may also be a case for double counting pensioners, or children or some other group but I would have to be convinced of it & would prefer to keep the calculation of RSG as simple & open as possible & there is little more simple than councils get a flat amount per head.
* "I turn now to the detail of the Order. In 2009-10, we will provide local government with total funding of over £11.8 billion, an increase of £658 million or 5.9% over the comparable sums for 2008 09" John Swinney to Scottish Parliament which comes to £2360 per head
Mark Wadsworth has a post which inter alia says that council rubbish collecting comes to about £100 a year per famioly. One of America's old city bosses, Pendergast of Kansas City, allegedly had only 3 rules - keep the streets clean, don't touch the schools, don't kill anybody west of 15th St. Seeing how little of the money they get goes into the first 2 of these a little culling of council employees would have its benefits.
compile a list of “unavoidable” commitments to add to last year’s total. On goes the revenue consequences of last year’s new projects, the need to make crucial repairs to capital assets which they otherwise have not provided for, pay rises agreed, automatic bonuses, the consequences of government circulars seeking more actions by Councils (whether they are statutory or advisory), and any other item they can kitchen sink. They usually claim Council inflation is much higher than CPI inflation, and put a large figure in for that as well.
This produces typically the “need” for a 6-10% increase in Council Tax for a so-called “standstill” budget. If Councillors accept this work of fiction, they are on the hook for a bruising and ultimately unsuccessful budget process. If Councillors counter by saying they want to do something new in one or two areas, that is extra making the Council Tax increase even higher. If they request a reduction in the proposed tax increase – and they usually do – officers then come forward with “cuts”. These are usually carefully chosen to cause maximum political pain. They typically propose surrogate tax increases - higher car parking charges, planning fees, congestion charges and the like, and insensitive reductions in service, often aimed at the most vulnerable.
In the bargaining that follows the worst of the “cuts” are avoided, the fat in the budget is left untouched ...
So what should Councillors do? They should do what they do with their own family and business budgets. In tight years all items of spending are under review. The aim is to cut out the least desirable items, not the most sensitive, and to deliver the same or more for less by spending more wisely. To do this the first round of budget papers should n ot present existing spending as a given
I proposed (figures slightly edited for Scotland):
Central government could help by cutting ”government circulars seeking more actions by Councils (whether they are statutory or advisory)” - cutting not only new ones but duties under old ones would cut costs. I would also like to see a more open application of the rate support grant. Spread out it comes to about £2360* per head but is allocated according to “need” which in practice means according to what the council is spending now & its political pull. Currently the RSG accounts for 83% of spending & by rewarding high spenders ensures more of it. If the RSG moved, over several years to a per head rate or anything independent of spending then councils which could make 17% efficiency savings would see zero council tax & those who couldn't would find their minds concentrated wonderfully. 20% is not exactly an extreme figure - barely over 4% a year across a Parliament & something which real industries manage regularly.
Alternatives would include taking schools out of the council's remit & giving that money directly to the schools under a voucher system - something I have already supported. The same could be done with road maintenance since road traffic has, since the demise of the horse, been ever less local. These would mean, assuming all the money was still spent, which I think it should be, that council spending would be say halved & the grant reduced to 66% (33% grant left, 50% of spending left). This might make it more difficult to cut council tax to zero but equally more difficult to make it go sky high. On the other hand by taking out the areas where Holyrood circulars are most legitimate make it easier to get rid of the rest & thus cut costs even more.
There may also be a case for double counting pensioners, or children or some other group but I would have to be convinced of it & would prefer to keep the calculation of RSG as simple & open as possible & there is little more simple than councils get a flat amount per head.
* "I turn now to the detail of the Order. In 2009-10, we will provide local government with total funding of over £11.8 billion, an increase of £658 million or 5.9% over the comparable sums for 2008 09" John Swinney to Scottish Parliament which comes to £2360 per head
Mark Wadsworth has a post which inter alia says that council rubbish collecting comes to about £100 a year per famioly. One of America's old city bosses, Pendergast of Kansas City, allegedly had only 3 rules - keep the streets clean, don't touch the schools, don't kill anybody west of 15th St. Seeing how little of the money they get goes into the first 2 of these a little culling of council employees would have its benefits.
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I did though the effect of what I am saying here would, at least over the short term, do the opposite. Instead of raising more tax from land it is intended to end the last land tax in competently run local authorities. That doesn't mean I am against Land Value Tax as a strategic goal, I think it is a good one, but that getting councils run competently is a prior tactical objective.
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