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February 19th, 2014 |

Why The District Council Voted To Increase Council tax by 1.89 %

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It’s estimated that in 5 years time the District Council will get £687,000 a year less in government grant than we get now.

So its not surprising that District Councillors voted last night to increase the District Council part of the council tax by 1.89 %. That’s equivalent to 7 1/2 pence per week for a band D property. We don’t have a figure yet for the overall council tax – the biggest part is set by the County Council, but there’s also parish councils, the Fire Service and Essex Police.

In a recorded vote, the Conservatives, Liberal Democrats and the Rochford Residents Party voted in favour, and the Greens voted against. Green group leader Michael Hoy said this was because they couldn’t support earlier decisions made on the council budget.

Its worth writing here about the three main types of government grant and how they are changing.

The first is the traditional “Revenue Support Grant” from Central Government. Basically Whitehall has a complicated formula to work out how much grant each council gets. Very urban, with lots of inner-city problems? You get more grant. Very rural, so your dustcarts have to drive half a mile between each home? You get more grant. Have lots of commuters coming to work in your area and dropping litter in their lunch-hours You get more grant! Trouble is, Rochford District isn’t inner city and not rural enough either, and its residents commute to other places, so our grant has always been low. And now Revenue Support Grant is being greatly reduced. This year we get £2,282,000, but it’s estimated that in five years time we will get about 2 million pounds less.

On the plus side the government is letting councils keep some business rates. The calculations are very complicated, but it looks likely that this year we can keep £1,544,000 of business rates and that in five years time we will be allowed to keep about £600,000 more.

The third part of the picture is the “New Homes Bonus”.
Some people might think it is a positive incentive to provide new homes for people , others might think it is more like financial coercion, but anyway, the following explanation of the “New Homes Bonus” was included in a report to the council meeting on Jan 28th:

This Government incentive to encourage more homes was introduced in 2011/12. It is based on the increase in new houses and bringing empty homes back into use and the grant matches Council Tax for 6 years, with 80% being received by the district council, as the planning authority, and 20% going to the county. The growth in housing is measured from a statistical return which reports the Council Tax base as at September each year and the NHB is based on an average Council Tax rate.
There is also an additional reward of £350 for each new affordable home and Council provided Travellers’ pitch, which is measured in April each year, again split 80:20 to districts and county.

On the predicted housing figures for the years ahead, it’s estimated that we will get £440,000 this year from the New Homes Bonus and about £800,000 more in five years time. So like or hate it, the New Homes Bonus is going to be important for council finances. And in fact at last night’s meeting Tory leader Terry Cutmore said “:

“We will need to ensure that we achieve growth targets in new housing to make up for this loss”

However Chris Black replied on this point , saying that he would judge future planning applications on their planning merits, and that he hoped all councillors would continue to do so!

One Response to “Why The District Council Voted To Increase Council tax by 1.89 %”

  1. 1
    JIM Cripps:

    As I thought the Accountants have taken over the asylum , what a way to run the country – carrot and stick, we are going backwards rapidly.

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