Our Tory friends made a big deal in their budget amendment today of not wishing to raise council tax too much. Here’s what they said.
‘Now more than ever we need to concentrate on keeping the burden of Tax as low as possible for our residents. The Coronavirus pandemic has impacted on our residents and their families, our way of life and the local as well as national economy. To automatically inflict the maximum possible increase, of 4.99% is unthinkable to us as Conservatives’.
Methinks that’s a little pious. It hasn’t always been that way.
I won’t talk about the times when I started as a councillor and 5% increases seemed to be the norm but let’s just reflect on the beginning of this Council. In February 2018 the Tories were less coy about their proposals and put their names behind the budget as tabled and proposed increasing council tax by the max permitted, namely 4.99%.
And if that’s not interesting enough in its own right then reflect what they proposed to do with it because 4.99% was more than they said they’d need. They said they’d put the balance down the back of the sofa just in case they did. They established the so-called ‘smoothing fund’. That’s tantamount to saying to the taxpayer: give me your money not because I need it but because I want it. Not quite highway robbery but close.
There was little change in 2019. Council tax was again set to go up by 4.99% and the money stuffed down the back of the sofa was quickly pulled out and used to plug the deficit. No thought was apparently given to the fact that plugging the deficit was not what the smoothing fund was set up for or that using it in this way was unsustainable.
But even that wasn’t enough and £1.3 million had to be taken from the MRP fund to balance the books. That’s a little more scrambling round down the back of the sofa.
That was also the year when the Tories hit on the wheeze of borrowing money, to the sum of £18 million, to cover a shortfall in the Highways budget. Only problem was they didn’t identify a source for this borrowing or reflect the cost of it in the budget papers.
Last year there was admittedly some moderation of the council tax rise, to just 3.59%, but a further massive increase in council borrowing: £21 million to fund the environmental and community funds. But still no mention of how they would be financing 2019’s £18 million borrowing. That’s total borrowing of just under £40 million over two years.
So here we are back to this year and it’s doing more of the same. There’s another £16.8 million to be borrowed taking the total over 3 years to £56 million. And there’s a mad scramble down the back of the sofa to grab £4.1 million from the MRP fund and £3.8 million from the transformation fund. This all adds up to £65 million of one-off funding over three years to plug holes in the revenue budget.
That’s unsustainable. You can’t pay ongoing revenue bills by raiding reserves or by borrowing. It’s just not sustainable.
This brings us back to piety. 4.99% is not unthinkable for the Tories despite what they say. They’ve done it before and they’ll probably do it again if they’ve got the chance. What we’ve got is a marriage of unprincipled piety to back of the sofa budgeting. That made for a budget which I would not, and did not, support.
[…] written before about the folly of implementing fiscally unsustainable budgets (click here) but what’s the point of presenting a MTFP when you know it’s not sustainable? I reckon […]