£100m council tax ‘time bomb’ set to explode in Yorkshire

The leaders of some of the region’s largest councils have said it would be “political suicide” for them not to take the Government’s offer of a one-off grant to allow them to freeze council tax again this April – but warn this will hugely increase the pressure on already-stretched budgets in years to come.

One council in North Yorkshire – Richmondshire – has chosen to defy the Government and raise council tax in its forthcoming budget, turning down its grant in the process.

The Yorkshire Post understands York Council also intends to propose an increase in council tax levels this year.

Richmondshire’s decision has provoked an immediate backlash from the campaign group Taxpayers’ Alliance (TPA), which announced a “day of action” in Richmond – and now warns it would consider similar protests in York.

The TPA is calling on authorities to freeze or cut council tax immediately, accusing those turning down the grant and raising tax levels of being “out of touch”.

But Richmondshire Council leader John Blackie said: “We have recommended an increase of three per cent. To freeze council tax now would mean having to fund a disproportionate amount of savings the year after next.

“The gap would be to such an extent that without a significant hit on residents next year the council would simply run out of money.

“What is on offer is an accountancy trick – looks good, but at the end of the day, we all pay.”

On Monday Local Government Secretary Eric Pickles revealed more than 150 councils in England are preparing to freeze or reduce council tax next year, with the help of a one-off government grant. The former Bradford Council leader said bills had more than doubled since 1997 prior to last year’s freeze, and that any authority voting against a freeze was “voting for a punitive tax-rise”.

Many of the councils which have accepted the grant – worth nearly £50m for town halls in Yorkshire – claim they are now left in an impossible political position ahead of elections in May.

Town hall bosses said the “double whammy” of the grant being removed next year, coupled with the fact there would be no additional tax revenues from this year owing to the freeze, would leave a £100m funding gap across the region by 2013-14 as inflation continues to rise – meaning yet more sweeping cuts to services on top of those already announced. Councils will not have the option of simply introducing larger tax rises the following year, because the Government has ruled that any authority planning to increase council tax by more than 3.5 per cent must first consult the public in a referendum.

Keith Wakefield, leader of Leeds City Council, said: “We are acutely aware that accepting this grant now will store up a major financial challenge for next year.

“We know that many residents are finding things really tough at the moment, so for that reason and after a lot of debate we agreed to take it. However, we do so knowing that this short term benefit will mean that the council has to find significant further savings, or raise extra income, to meet next year’s funding shortfall.”

Wakefield Council leader Peter Box said: “We’re taking the grant but it’s a time bomb. The Government is just not being straight with people about how this works.

“However, many of our residents are going through tough times right now.”

Richmondshire follows 15 other authorities around the country who have confirmed they will defy the Government and raise council tax this year, including four Tory-controlled authorities.

But the TPA said local authorities should instead “learn to work more efficiently”. The campaign group will be holding an Action Day on February 18 in Richmond to protest against the rise.

TPA chief Executive Matthew Elliott said: “It’s incredibly out of touch for town hall bosses to inflict a council tax rise on hard-pressed households, many of them already struggling with the rising cost of living.

“Council tax has nearly doubled in the last decade without a corresponding increase in the level of services. Local authorities across Yorkshire have to find millions in savings and learn to work more efficiently, they need to stop pretending just a little more cash is the answer to all their problems.”