Derby City Council have just voted to raise council tax by 4.99%. This year the government have raised the limit to accommodate extra spending. Reform Derby proposed a 2% increase to acknowledge the current difficulties but reduce the impact on local residents. Labour said they couldn’t go for a rise and gave empassioned speeches on the subject. They were so incensed that when it came to voting they all ‘abstained’ again. Bizarre.
The financial officer at the meeting was asked for his opinion of our 2% rise and this is where the root of the problem becomes apparent. Successive leaders in the council ALWAYS go for the maximum amount and claim a low tax base is the reason. The real reason is that the financial officer runs the show and the parties are spineless followers of his word. He sees it as his job to expand the council budget as much as possible. This eases his position, should make the council finances more stable and keeps the departments happy. He said at the meeting that he ALWAYS recommends the maximum lift and could not recommend any other budget. Derby has a low tax base and we must get as much as possible. We were also accused of harming the most vulnerable as a cut to the proposed 5% budget might impact the discretionary council tax awards that go to those struggling to pay for it. I believe that fund was quoted at £7 Million but I would have to confirm that number.
Lets break it down. Like every council in the land funds have been squeezed by central government which means that the council has to run as lean and efficient as possible. This is fairly standard Tory practice and I believe councils should give value for money but the government should not squeeze too hard. That is not an easy balance. Derby City Council still wastes millions every year on all sorts of crazy projects. They have a lot of work to do to be responsible users of our cash. The argument of a low tax base also holds little water. While Derby is largely made of cheap housing stock and the base is indeed low, Tax base is the value of assets and therefore the limit on how much you can tax, a low tax base can return more financially than a high tax base as density is the key. You see in a row of cheap terrace houses might be 50 taxable units where in a modern development you might only fit 20. Those 50 also have less cars and less infrastructure so are cheaper to maintain. A low tax base can be a good thing. This excuse is quoted every year because it sounds good and right but the reality is that the statement is a meaningless soundbite. The other thing about a low tax base is you have to be careful how you tax it. These are not wealthy people and it is very sensitive to taxation changes. raising the tax disproportionately hurts the vulnerable.
My final point, How do you know that the council tax is too high and the people are struggling to pay it? Well the discretionary fund has to get bigger. For every person in the city using the fund there will be another 10 that have never heard of it. The fact that the fund exists and is so large shows how crucial this decision is. Derby’s council tax is already too high.