Tory town halls fuming over Cameron's council tax plan

Tory town halls fuming over Cameron's council tax plan

While the Conservative leader insisted on BBC Radio Four that his party was "genuinely localist" and committed to giving councils more "freedom and control", senior figures in town and county halls were apparently quietly fuming.

According to one senior source, the Tory-controlled Local Government Association was not even consulted about the plan, which involves giving parliament the power every year to set council tax levels in England – then laying down that any proposed increase in a particular area must be approved by electors in a local referendum.

The coolness of the LGA response was reflected in an official statement from the association, whose chairman is the leader of Westminster council, Sir Simon Milton. "Local authorities should have the power to determine, without interference, the appropriate levels of council tax for their areas," it said curtly.

Milton has already warned that further above-inflation council tax rises are likely because of a Whitehall one per cent council grant increase in the next financial year – described by the LGA as the worst settlement in a decade. Below inflation rises are likely over the next two succeeding years.

Whitehall determines around three-quarters of council funding, through both.....continued below

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Tories in local government clearly regard the Cameron plan as both ill-thought out and impractical. For a start, it relates to all 'precepting authorities' in a given area – which means that, in a two-tier county, where services are provided by a county council and a district, electors could potentially face two referendums – and a third, and fourth, if a fire and a police authority decided they wanted increases above a level set by parliament.

In addition, the Cameron plan would lead to greater uncertainty over council funding – with, effectively, annual spending curbs - because councils have now been given an idea of council funding levels over the next three years under the comprehensive spending review. Ministers have already indicated they will cap councils whose budget increases exceed five per cent next year.

But the plan also fails to address the dilemma over the council tax itself – a hastily arranged form of revenue raising, by a beleaguered Conservative, government after the poll tax fiasco in 1991. Then the Thatcher government had to raise VAT from 15% to 17.5% - still the current rate - to cut soaring tax bills. Many finance experts now regard the tax as unsustainable

Probably the biggest indictment of the Cameron plan is that it dodges the skewed proportion of funding at the heart of the council tax: namely that householders are being asked to shoulder an increasing share of council funding, while business is getting off lightly.