The government announced additional funding of 1 billion for local government spending in England in 2005-06, designed to 'reduce pressures on council tax'. The provisional local government finance settlement for 2005-06 provided for an increase of 6.2 per cent. Local authorities warned that many of the funding pressures still remained, and could lead to even larger council tax increases in future years.
Source: Pre-Budget Report 2004: Opportunity for All - The strength to take the long-term decisions for Britain, Cm 6408, HM Treasury, TSO (0870 600 5522) | House of Commons Hansard, Debate 2 December 2004, columns 805-821, TSO | Press release 2 December 2004, Local Government Association (020 7664 3000)
Links: Report (pdf) | Report (pdf links) | HMT press release | Hansard | ODPM press release | LGA press release | ALG press release | Guardian report
Date: 2004-Dec
A paper argued that it was 'perfectly feasible' to reverse the existing 75:25 central-local funding split, and implement a system that was both fair and flexible.
Source: Balance of Funding: Implementing the Combination Option - Explaining the impact on local authorities and taxpayers, Local Government Association (020 7664 3000)
Links: Report (pdf) | LGA press release
Date: 2004-Dec
The government began consultation on plans to introduce three-year revenue and capital settlements for local authorities, police authorities and fire and rescue authorities from 2006-07, designed to give authorities greater certainty and stability in funding.
Source: Three-year Revenue and Capital Settlements, Office of the Deputy Prime Minister (020 7944 3000)
Links: Consultation document (pdf) | ODPM press release
Date: 2004-Dec
A survey examined the extent to which local authorities were using borrowing powers granted in the Local Government Act 2003 which took effect from April 2004. Around half of all councils were already using the new powers, or had plans to use them. An estimated 900 million of prudential borrowing was contributing to capital investment programmes in England and Wales in 2004-05; and an estimated 742 million was planned by councils for 2005-06, and 594 million for 2006-07. By far the biggest barrier to borrowing was the unwillingness by councils to push debt repayments on to council tax bills - 86 per cent of authorities cited this as the main limitation to the power.
Source: Loosening the Reins: A survey of local authority approaches to prudential borrowing charging and trading, Local Government Association (020 7664 3000)
Links: LGA press release
Date: 2004-Nov
The government responded to a report by a committee of MPs on local government revenue. It said that many of the issues raised by the Committee fell within the remit of a continuing inquiry.
Source: Government Response to the ODPM Select Committee Report: Local Government Revenue, Cm 6321, Office of the Deputy Prime Minister, TSO (0870 600 5522)
Links: Response (pdf) | MPs report | ODPM press release
Date: 2004-Oct
A think-tank report set out proposals for a 'comprehensive, yet practical' reform of the local revenue finance system in England.
Source: Tony Travers and Lorena Esposito, Nothing to Lose but Your Chains: Reforming the English local government finance system, Policy Exchange (020 7340 2650)
Links: Link removed
Date: 2004-Sep
A report argued for new local taxes to drive development in areas that needed regeneration, and to reconnect business communities with local government. The existing local taxation system was too centralized, and insufficiently joined-up. Land values should be tapped to finance infrastructure investment, through measures such as taxing parking spaces in out-of-town shopping and business centres. The report also considered the potential for introducing charges on development, and on unused land with development potential in designated growth areas, that local authorities could then use to increase the capacity of local services.
Source: Nicholas Falk, Funding Sustainable Communities: Smart growth and intelligent local finance, Town and Country Planning Association (020 7930 8903)
Links: Report (pdf) | Urbed press release
Date: 2004-Sep
The Scottish Executive announced (following consultation) that local authorities would be able to raise the council tax rate for second homes and long-term empty properties, in an attempt to increase the supply of affordable housing.
Source: Council Tax on Second and Long-term Empty Homes: Analysis of consultation responses, Scottish Executive (0131 556 8400)
Links: Report (pdf) | Shelter Scotland press release | Guardian report
Date: 2004-Aug
The final report was published of a review of future options for funding local authority services. It said that the council tax should be kept, but reformed - probably by adding to the number of bands, or forming regional bands to reflect variations in house prices. It also suggested that the only way to achieve a major shift in the balance of funding between central and local government was through a supplementary local income tax, and by letting councils set business rates. The government immediately announced a further, independent, review of the options for reform. Local government leaders said that delaying reform would mean prolonging injustice.
Source: Balance of Funding Review: Report, Office of the Deputy Prime Minister (0870 1226 236) | House of Commons Hansard, Debate 20 July 2004, columns 177-189, TSO (0870 600 5522) | Press release 20 July 2004, Office of the Deputy Prime Minister (020 7944 3000) | Press release 19 July 2004, Local Government Association (020 7664 3000)
Links: Report (pdf) | Hansard | ODPM press release | LGA press release | NLGN press release | CIPFA press release | Help the Aged press release | Guardian report
Date: 2004-Jul
A report by a committee of MPs said that council tax should be retained, subject to certain reforms. The evidence for a local income tax was 'not remotely persuasive'. Gearing of local government finance had a negative impact on local authorities by distorting accountability, magnifying any weaknesses in the formula grant system, and making the entire system less clear. There was no evidence that gearing had any positive effects on efficiency.
Source: Local Government Revenue, Ninth Report (Session 2003-04), HC 402-I, House of Commons Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Select Committee, TSO (0870 600 5522)
Links: Report | LGA press release
Date: 2004-Jul
The 2004 Spending Review provided for average annual real increases of 2.7 per cent in formula grant from the government to local authorities over the three years to 2007-08; and annual average real increases of 4.8 per cent in the levels of local authority investment through capital support and private finance projects. Local government leaders said that the plans posed a serious threat to service standards and council tax levels.
Source: Stability, Security and Opportunity for All: Investing for Britain s long-term future - 2004 Spending Review/New public spending plans 2005-2008, Cm 6237, HM Treasury, TSO (0870 600 5522) | House of Commons Hansard, Written Ministerial Statement 13 July 2004, columns 61-62WS, TSO | Press release 13 July 2004, Local Government Association (020 7664 3000)
Links: Spending Review report (pdf links) | Hansard | ODPM press release | LGA press release | Guardian report
Date: 2004-Jul
A survey indicated that local authorities in England and Wales were forecasting a 5.9 per cent increase in net revenue expenditure in nominal terms in 2004-05 to 71.6 billion, compared to a 9.7 per cent increase the previous year. The amount of specific and special grants distributed by central government to be spent on particular services had increased by almost 40 per cent since the previous year, further increasing the total spend on services in nominal terms by 10.8 per cent to 84.3 billion. Central government grants accounted for 81 per cent of authorities spending, with the remainder provided through the council tax.
Source: Finance and General Statistics 2004/05, Chartered Institute of Public Finance and Accountancy (020 8667 1144)
Links: CIPFA press release
Date: 2004-Jul
The government confirmed plans to cap the spending of five local councils and a fire authority, in order to curb 'excessive' council tax demands. Local government leaders said the decision undermined local choice and local democracy.
Source: House of Commons Hansard, Written Ministerial Statement 8 July 2004, columns 42-43WS, TSO (0870 600 5522) | House of Commons Hansard, Debate 19 July 2004, columns 71-98, TSO | Press release 8 July 2004, Office of the Deputy Prime Minister (020 7944 3000) | Press release 8 July 2004,Local Government Association (020 7664 3000)
Links: Hansard8 July | Hansard 19 July | ODPM press release | HOC Library research paper (pdf) | LGA press release | Guardian report
Date: 2004-Jul
A think-tank report said that the new power of local authorities to charge for discretionary services (introduced in the Local Government Act 2003) gave local government a powerful new tool to promote the well-being of local communities.
Source: Clear to Charge, Local Government Information Unit, available from Central Books (0845 458 9910)
Links: LGIU press release (pdf)
Date: 2004-Jun
A report said that a local income tax scheme could supplement rather than replace the council tax; be matched by parallel reductions in national income tax rates; be set only by larger, multi-service local authorities; and be collected by the Inland Revenue, largely through payroll deductions.
Source: Chartered Institute of Public Finance and Accountancy, Reviewing the Case for a Local Income Tax Supplementary report, Office of the Deputy Prime Minister (0870 1226 236)
Links: Report (pdf) | CIPFA press release
Date: 2004-May
A discussion paper examined the contribution non-domestic ratepayers made towards the cost of local services, as well as some of the issues that would need to be addressed if the non-domestic rate were to be returned to local control.
Source: Rita Hale, The Relocalisation of the Non-Domestic Rate: Discussion paper, Chartered Institute of Public Finance and Accountancy (020 7543 5600) and Rita Hale & Associates Ltd
Links: CIPFA press release
Date: 2004-May
A think-tank report reviewed the current system of local government finance in England and examined its shortcomings. It concluded that even the most basic requirements of a good local finance system were not being met.
Source: I m a Local Councillor, Get Me Out of Here!, Policy Exchange (020 7340 2650)
Links: Summary
Date: 2004-May
A think-tank report argued that local democracy could be revived if local councils raised all their money locally - not with an extra tax, but by turning value-added tax (VAT) into a genuinely local sales tax.
Source: Douglas Carswell, Paying for Localism: How to revive local democracy by replacing VAT with a local sales tax, Adam Smith Institute (020 7222 4995)
Links: Report (pdf)
Date: 2004-Apr
The government identified seven 'high spending' local authorities whose council tax levels would be capped in 2004-05. Local authorities expressed 'frustration and disappointment'.
Source: House of Commons Hansard, Debate 29 April 2004, columns 1019-1035, TSO (0870 600 5522) | Press release 29 April 2004, Local Government Association (020 7664 3000)
Links: Hansard | ODPM press release | LGA press release | Guardian report
Date: 2004-Apr
The government said that, in England, the average council tax per dwelling would be 967 in 2004-05, compared with 908 in 2003-04, a rise of 6.5 per cent. For a Band D dwelling (occupied by two adults) the tax would be 1,167, compared with 1,102 in 2003-04 - up 5.9 per cent. Campaigners for the elderly described the increases as 'utterly scandalous'. The government announced (in the Budget) that people aged over 70 would be given an extra 100, payable with the 2004 Christmas bonus, in recognition of council tax rises.
Source: Press release 25 March 2004, Office of the Deputy Prime Minister (020 7944 3000) | Press release 25 March 2004, Age Concern England (020 8765 7200) | Prudence for a Purpose: A Britain of stability and strength - Economic and Fiscal Strategy Report and Financial Statement and Budget Report, HC 301, HM Treasury, TSO (0870 600 5522) | House of Commons Hansard, Debate 17 March 2004, columns 321-336, TSO
Links: ODPM press release (1) | ODPM press release (2) | Age Concern press release | LGA press release | Budget report (pdf links) | HMT Budget press releases | Budget speech | DWP press release | Guardian report (1) | Guardian report (2)
Date: 2004-Mar
A report argued that if the government was committed to the concept of 'new localism , it would have to give councils access to a wider tax base and the ability to raise another significant local tax - such as the return of the business rate to local control.
Source: Rita Hale and Anna Capaldi, Who Pays for Local Services? The balance of funding between government and councils, Local Government Association (020 7664 3000)
Links: Summary (pdf) | LGA press release
Date: 2004-Mar
A report argued that the council tax should be made fairer, rather than abolished. It proposed: additional council tax bands, so that those in the top band paid ten times as much as those on the bottom band, instead of three times as much; replacing the national banding system with a regional one to reflect the wide variations in property prices and housing market inflation over the previous decade; doubling or trebling the savings allowed before council tax benefit was withdrawn; and a fundamental redesign of council tax benefit so that it was treated as a tax credit rather than as a means-tested welfare benefit.
Source: Peter Kenway, Council Tax: The Answer?, Local Government Information Unit (020 7554 2800) and Centre for Council Tax Reform
Links: Report (pdf) | Guardian report
Date: 2004-Mar
Local authorities recommended the replacement of council tax with a combination of a fairer property tax, the relocalisation of the business rates (nationalised when the poll tax was introduced in the 1990s), and the transfer of a proportion of national income tax to fund local government, either as an assigned revenue or as a local income tax. It said that new powers to raise or lower taxes would reinvigorate local democracy, boost turnout at local elections, and end the 'blame game' between central and local government.
Source: The Balance of Funding: A combination option - Proposals for reforming local authority revenue, Local Government Association (020 7664 3000)
Links: Report (pdf) | LGA press release | Guardian report
Date: 2004-Jan
The government announced the final local government finance settlement for 2004-05. It confirmed an extra 7.3 per cent in funding. For the second year running, every local authority would receive at least an above-inflation increase in central grant, with many getting substantially more. Local government formula grant would rise by 5.5 per cent, with increases in specific grants taking the overall increase to 7.3 per cent.
Source: Local Government Finance Report 2004/05, Office of the Deputy Prime Minister, TSO (0870 600 5522) | House of Commons Hansard, Written Ministerial Statement 30 January 2004, columns 21-22WS, TSO | Press release 29 January 2004, Office of the Deputy Prime Minister (020 7944 3000)
Links: Report | Hansard | ODPM press release | Letter to local authorities (pdf)
Date: 2004-Jan
A local government think tank published research into the long-term causes of the government s council tax 'crisis'. It highlighted the need to address the historic underfunding of council services, as part of the government s review of the central and local balance within council funding.
Source: Rita Hale Associates, Settling the Account Local government funding investigated, Local Government Information Unit, available from Central Books (0845 458 9910)
Links: LGIU press release (pdf)
Date: 2004-Jan