Councillors Vote To Freeze Council Tax

Council Chambers at the Old Wesleyan Chapel

Your council tax won’t be going up next year.

Councillors have agreed unanimously to accept a Government grant to freeze council tax rates for a further year.

However, there were serious reservations expressed that by accepting the grant, the Council could be storing up significant problems for the future.

At the recent Policy and Resources Committee meeting, Director of Finance, Peter Lawrence, who joined the meeting by Skype from his home in Exeter due to transport problems, told members that the Government wanted to encourage councils to hold Council Tax at 2010/11 levels.

In order to make that happen, the Government last year offered a ‘Council Tax Freeze Grant’ of 2.5%, which, for the Isles of Scilly Council, totalled £30,587.

This amount was built into the base for the annual funding formula so effectively continues to be awarded in each subsequent year, thereby preserving the 2.5% increase for last year.

However, this year, the 2.5% freeze grant will be a one-off, and will not be built into the base and will not be given in subsequent years.

This means the Council will need to increase council tax by 2.5% next year just to keep at current levels and, even more worrying for members, any rise above 3.5% will need to be supported by a local referendum.

Councillors were presented with a series of options including accepting the 2.5% grant, or refusing the grant and raising council tax by 3%.

The 3% rise would result in an increase of £30.90 on the current Band D tax level of £1030.14.

The implications of accepting that grant were not lost on Councillors.

Julia Day said the grant will be the, “cause of much strife.” She said the Council should increase the tax rate incrementally year-on-year, or they could end up in the situation they were in several years ago, where “council tax rates had to rise by 25% just to cover the budget.”

She added that, while she wanted to accept the grant, the long-term consequences needed to be made clear to the community.
 

“Looking at falling off a precipice”

 

Julia said while there was a degree of growth in current budgets, “we have to accept that we are looking at falling off a precipice in the not-too-distant future. We’re going to hit a very hard barrier very quickly.”

Councillor Chris Savill was mindful of the mood in the community.

She said, “you only need to take a stroll in Hugh Town to realise that our main industry is not thriving.”

Chris said the Council would need to “take a risk and accept the grant” but also said she believed “we have not done enough to cut our expenditure.”

Councillor Amanda Martin echoed that view saying, “we need to retrench on our spending, and budgets need to be streamlined in a way that has not yet been envisaged. Austerity means exactly what it says.”

She added that the Council’s PR would need to be very clear about the implications of this, adding, “Members of public also need to balance their budgets so need to have plenty of warning.”

Councillor Fred Ticehurst referred to the current situation as “keeping our balls in the air,” saying it was attractive to take the 2.5% grant to keep council tax at the current rate.

But he said the Council, “wouldn’t be seen well in the community if we increased council tax by 3% and it ‘got out’ that we declined a grant that would allow us to freeze council tax.

“People wouldn’t understand the implications of accepting the grant. We’re storing up problems in a year’s time,” he added.

Fred was also mindful that any rise above 3.5% in the future would have to go to a local referendum. He said, “You don’t have to be a sage to predict what the outcome of that would be.”