Friday, December 5, 2008

Huge Pressure on Council Tax

At last night's full Council meeting at the Guildhall, I warned of huge pressures on next year's budgets at the City Council, and urged Liberal Democrat Councillors to start taking their role in scrutinising the Council's budget setting process more seriously.

In theory backbench Liberal Democrat Councillors should be scrutinising the decisions of their Executive Councillors. In practice I am struggling to think of a time when I can recall any Lib Dem speak in an open meeting to question the decisions about to be taken or fail to vote for an Executive Councillor's recommendation. Contrary to the 'not really a party politician' impression they like to give to the public, they appear to be heavily whipped, and speak only to criticise what opposition Councillors say.

This year, that approach has some serious risks - the Council's finances look to be in very poor shape indeed, for three reasons.

Firstly, there has been a catastrophic failure of risk management, as £9m is frozen in Iceland. The key people responsible for safeguarding the Council's (and therefore the taxpayers) financial assets seem to be asleep on the job, and we need a much greater emphasis on financial risk management.

Secondly, there are known pressures on the budget this year unlike those for many years. Money stuck in Iceland, coupled with falls in interest rates will seriously reduce interest income, and the Government's concessionary bus fares funding fiasco also leaves a £1.3m hole in the budget. The government grant increase will be dwarfed by these factors.

Finally, I don't think the Council has yet grasped the seriousness of the recession currently happening, and the effect it will have on Council income. Every area of the budget needs review. There will obviously be pressure on Council tax and housing benefits, and more difficulty collecting Council tax. But the impact could be much more wide ranging , from the pressures on organisations like the Citizens Advice Bureau that rely on significant Council funding, to income from charges that are already at or near the level of market resistance this year, like the price of city centre car parking and the cost of Folk Festival tickets. It will be no good the Council reporting back in a year's time that they've failed to meet their budget because these factors haven't been considered fully.

If the Council does keep to its planned (and already very high) 4.9% Council tax rise despite the huge pressures on income and costs this year, then there is likely to be some very damaging expenditure cuts, and/or a raid on reserves. If this doesn't seem to be the case, the question will be why did the Liberal Democrats allow Council tax to get so high, if it was so easy to make these savings now, they should have been made earlier. Either way, the Council needs to seriously raise its game in terms of financial scrutiny.

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