2% or 6% Council Tax Rise?
As a member of the Cabinet at Cornwall Council we as a collective have set our provisional budget for 2014/15. This includes a 1.97% rise in Council Tax for this period. This is to deal with £19m budgeted savings and the extra £23.9m that has to be found for this period. This is not the only pain, as £196m has to be found in the next five years which includes up to £50m for the 2015/16 period.
However, the stance of 1.97% rise is not fully supported throughout the entire membership of the council. As some members want another year of Council Tax freeze and now, a group of Councillors within the council want to see a 6% rise. The point of a rise is an interesting one, as you could rise Council Tax to provide and safeguard those services. But the flip-side is can people afford the rise?
I always like to put the impact of a rise into pound, shillings and pence. A 6% rise would result in a rise of about £1.40 per week on a Band D property. A 1.97% is roughly 42p per week.
For those who don’t know it, for every 1% increase raises just over £2m in revenue. So to protect all services, Council Tax would have to rise by a lot. For instance you would have to put up Council Tax about 19% to cover the cuts in the 2014/15 period.
You could argue the merit of looking at a bigger rise, but Government rules on rising Council Tax forbids a council from rising it above the 2% threshold without a referendum. The sting in the tail is a referendum will cost £920k. And you would still have to find this money from the existing budget if you lose the referendum. Even if the council agreed to the principle of a 6% rise, the council would still have to find roughly £15m of the £19m worth of extra cuts.
My view on this is two-fold. A 6% rise would be difficult to win on a referendum as households are already feeling the pinch; and finding the extra money over still massive cuts could be a step too far for many. I believe a 1.97% rise is right. But I do acknowledge there needs to be a bigger discussion on the 2015/16 budget and having to find up to £50m worth of savings.
What do you think?