Tories to require high taxing local authorities to hold referenda

David Cameron is making a big speech tomorrow morning on council tax. It appears, according to advance reports, that the Conservative leader will commit the party to give local voters the power to veto large rises in council tax.  "Any authority," says the Mail, "wanting to impose a rise above a rate fixed annually would be forced to hold a local referendum seeking the approval of voters."

With inheritance tax, surveys suggest that the council tax is Britain's most hated.

More tomorrow.

12.30am: This from PA: "Tories see council tax as a potent political weapon due to growing voter discontent with bills which have risen, for a typical Band D property, by 92% in England and 103% in Wales since Labour came to power in 1997.  Average Band D bills in England reached £1,321 this year, compared to £688 a decade ago. The total council tax take across Britain has increased from £11 billion in 1997 to £23.5 billion this year.  Mr Cameron will argue today that referendums would be cheap to hold, because postal voting slips could be sent out in the envelope containing the yearly council tax bill."

10am: The press conference at the Young Foundation has just finished. Cameron drew heavily on the principles outlined in his Co-op speech in Manchester and post-bureaucratic speech in San Francisco before getting onto the proposed council tax referenda. Emphasis added:

"All politicians in opposition talk about giving more power to local councils. But all governments seem to end up centralising power. I want to prove that we will be different. That we really mean it when we talk about localisation. That’s why I am announcing today a significant new element in our policy platform: the democratisation of council tax.

Since Labour came to power council tax bills have doubled – largely thanks to unfunded burdens and extra bureaucracy from central government. The new powers we will give local councils will reduce the pressure to increase council tax bills. But I don’t propose to hand over power to councils without strengthening the accountability of councillors to the people they serve.

Today, that accountability is enforced through capping – an old-fashioned idea straight out of the bureaucratic age. I want to replace bureaucratic accountability with democratic accountability. Capping will be scrapped - and I want to allow local people themselves to have a say over local taxation.

So the next Conservative government will require councils that want to introduce high council tax rises to submit their plans to a local referendum. They must explain to local taxpayers why they want to raise taxes by so much and they must show what they would do – a shadow budget – in the event of their plans being rejected. Council tax referendum ballots would be sent out with the annual council tax bill – and if people voted against the rise, a rebate would be credited to the next year’s bill."

Download this pdf to read the full speech.

1pm: SocietyGuardian's Peter Hetherington claims that the LGA and Tory Town Halls aren't happy with the plan

Comments

[Andy Peterkin]

YES.

[matthew]

it's all very well, but some of us are paying £2,000/year ALREADY.

[Paul D]

How expensive are referenda? Not saying this is a bad idea (anything that increases local democracy is to be welcomed) but the cost of a referendum has to be paid somehow and will only add to the local tax burden

[Steevo]

As an American I find this an excellent issue to exploit. We have required voter referendums on school levies, "death tax" and vehicle registration to name a few. I'm currently involved as a recipient in a near future estate transfer. I was pleased to know that the limit before taxation will be imposed is currently 2 million. Simply put, some taxes can more easily be understood by the public at large as immoral. Its intuitive as simply wrong and more difficult to justify by those in favor and their willing accomplices in the media.

Those increases in property tax are hard to imagine.

[Alex Swanson]

We all know that council tax is high because:
(a) Central govt imposes all sorts of rules and regulations which local councils have to meet; and
(b) then refuses to adequately fund the work required.

Unless a Cameron govt would make drastic changes in either or both of these then statements such as these are just posturing. Yet again, I get the impression that eye-catching man-in-the-pub announcements are being made because they sound good, but are not thought through.

[Serf]

Fantastic idea

[greg]

If Wandsworth or Westminster increased their bill over the set limit, would that make them "high taxing authorities"?

[Chad Noble]

Good. Well done.

If there is a real local need for a cap-busting rise, then the council will have to make and win its case with the local people.

Why stop there though, surely central government should operate in the same way too, with capped inflation-linked rises, needing a referendum to spend more?

Come on Cammers,lead by example!

[Cllr Brook Whelan]

This is a well timed move into the debate about Council Tax, and it will certainly get the Government on the back foot.

I believe that we should go even further though. I think we should allow Councils to raise 100% of their revenue, and not have to go to government with a begging bowl each year.

If councils could raise all of their own revenue, it would make them more accountable to voters and crucially would mean that they can manage finances on a more logical basis.

In Canada (I think), they do this, and for local authorities there that are poorer than the average, the federal government in Ontario gives a top up so the poorer areas do not lose out.

Not sure what others think about this idea...

[Julian Melford]

A good step in the right direction.

Local authorities should get on with delivering local services rather than playing politics at the local taxpayer's expense.

Council taxes should be used for financing essentials such as running local elections and meals on wheels for senior citizens. Ideally local taxpayers should be able to opt into anything above this such as providing grants for so-called community groups, indicating how much a year they're prepared to pay.

Political levies are voluntary for trade unionists, why can't the same rights be afforded to local taxpayers?

[James Maskell]

Hmmm...the public would veto every single rise in the country and central government would be jostled to cough up the difference. While a noble cause, this is likely to lead to farce.

[David Boothroyd]

Julian, by 'playing politics' do you mean things like Westminster council's longrunning political campaign against the Mayor of London? PS It's no use trying to imply that Conservative policy is against the council tax given that you're not proposing any changes in the system.

[Dominic]

AFTER APRIL 2008 MILLIONS OF SQUARE FEET OF EMPTY COMMERCIAL BUILDINGS WILL LOSE ALL RELIEF

It is very important that the party are aware that from April 2008 Labour is closing down relief on business rates and from this date if a building is empty after three months a 100% charge will be levied which could be catastrophic for all kinds of businesses especially property oriented combines the implications of this unfair ruling is mind boggling. Empty listed buildings are exempt at present but are under review. One member of a business rates department said we are going to have a bonanza.

[Malcolm Dunn]

No it won't lead to farce James it will lead to local councils having to justify every significant spending increase proposal which is a good thing. One favourable by product is that it should highlight the fact that most local government finance is provided by central government.Hopefully it will lead to change.

[Felixstowe Fiddler]

Let's be honest about this. The bulk of local authority expenditure is paid for by income tax payers through block grants from the Treasury. Although the overall subsidy has fallen annually in real terms for the past 15 years under both the Tories and Labour, the equivalent of the old rate support grant is still the main financier of county and town hall services.
Forcing councils to hold referendums on excessive expenditure sound good in theory but the Tories should bite the bullet and introduce these reforms:
a) Do away with all county and district councils in the shires and replace them with larger, more cost effective unitary authorities which would eliminate duplication and lead to massive back office savings and reduce the number of pen pushers.
b) Re-ward councils and axe the number of councillors. Do we really need three councillors in each ward to represent us on the cemeteries and allotments sub-committee?
c)Scrap central government subsidies and force councils to raise all the cash they need for services from their own residents.
d)Introduce a local income tax exempting pensioners and others on state benefits.
e)Put a minimum and maxmum figure for council services to a referendum. This would also be a tool against voter apathy at election time.
f) Scrap annual council election and elect authorities by PR.
Some of this might might sound slightly Liberal Democrat but that doesn't mean it should be rejected. We need a proper, focussed debate on council revenue.

[Tony Makara]

This is a very exciting proposal. Taking decision making down to grassroots level. A complete reversal of the diktat that our people have to suffer from grubbing and wasteful local government. Another smart move from Mr Cameron.

[Bill Brinsmead]

Town and Parish Councils in England currently have the power to precept the Council Tax in their area to pay for any additional local services or amenities they wish to provide. Most precepts are low – in the range £5 to £25 on Council Tax Band D.

Town and Parish Councillors lose elections when they fail to persuade their electors that a proposed precept is justified or fail to set a precept to fund some needed local facility.

Limited local accountability – we should build on it.

[Lindsay Jenkins]

A referendum on council tax rises is excellent.

Dominic @ 9.46 makes a critical point. The ending of commercial building relief - no doubt seen by Labour as an easy bonanza - first goes against commonsense. There has to be give and take in the system and there are good and obvious reasons for protecting listed buildings

Second, the tax hike will hit at almost certainly the worst possible time when the property market will have hit the buffers.

The result could be catastrophic. The Party should be shouting from the rooftops.

[Malcolm Dunn]

Felixstowe Fiddler, your point (a)is very close to Labour Party policy with their regional assemblies. I would hope most Conservatives would oppose this vehemently.Decisions need to be taken at a truly local level.Regional Assemblies really are not the answer.
(c) and (d) taken together would mean massive rises for anyone paying higher rate tax.As that tax kicks in at quite a low level many people would be hugely penalised.Why should wealthy pensioners not pay for their local services?

[Chris]

An excellent idea, but dependent on councils receiving fairer settlements from central government in future.

As a small 'c' Conservative I love the theory behind making councils responsible for raising all of their income, but in the real world it won't work due to demographics varying so widely across authorities. Vulnerable people would be left without vital services in the authorities where they are most needed.

Felixstowe Fiddler,
a) A good idea, and thankfully one which is being pursued by the present government albeit at a very slow pace

b) This wouldn't work combined with a) - Unitary councils wield the power of a borough and county council combined, meaning that there is more work to be done by fewer councillors. I agree with you that quite a lot of the time there can be too many councillors at a district/borough level, but some unitaries have far fewer members to handle a lot more work eg. St Albans has 58 councillors and is merely a district council for 131,000 residents, whilst Southampton, a unitary authority has 48 councillors to cater for 217,500 residents.

c) Wouldn't work due to demographics as I explained above ^

d) No, what has my income got to do with the amount of rubbish I throw out, or my usage of the fire brigade?

[Adam]

I don't agree with holding referenda to decide on council tax increases. How many people will be bothered to vote and what about the costs involved? We can't get enough people out to vote during local elections let alone referenda on a regular basis. This appears as a bit of a gimmick which can be easily exploited by the party in control at westminster to effect political change at a local level - the govt could reduce funding of a council and force it to increase council tax above the set threshold which would trigger a referendum. The govt would blame the council who in turn would blame the govt and threaten to cut services if it lost the referendum. The public will always reject council tax increases and if the party in control of the council loses the referendum and the next election as a result, the govt will be pleased but the public will inevitably be worse off.

[Comstock]

Council Tax may be unpopular but at least it is open. This will just lead to more stealth taxes, such as Taliban parking enforcement and (as both Labour and Tory councils in London already do) raising money from yellow box junctions.

[Yet Another Anon]

Surely the better thing to do would be to set fixed proportional caps on what devolved government, local government and central government can spend and require emergency measures to cut spending if total spending rises above these levels except in the case of being involved in a national emergency such as major devestation in Total War or from a major meteorite strike exemptions could be specified exactly.

[Jake]

Referenda eh ? I thought the British establishment frowned on this sort of device ,

things ARE changing .

Does that mean England can have one - just one - on the topic of
Should there be an English Parliament with the same rights and competencies as the Scottish parliament ?

go on , tell us .

[David Boothroyd]

Referendums! Not Referenda!

[johnC]

A good idea, but why base the council tax bill on the assumption that the budget will be approved in a referendum, and then give a refund back a year later if it isn't ? This would lead to more bureaucracy and no doubt some unfairness, e.g. for people who move house during the year and cannot claim their rebate. Better to base the council tax bill on the (likely) assumption that the increased budget will be rejected, and then issue a supplementary bill if it is carried.

[passing leftie]

And we could have referendums every time a council wanted to cut services, too.

Or each party could put forward its budget proposals in a document, and everyone could read those documents and decide which party offered the best ones, and they could...

Wait - we already do that. It's called an election.

If Tories think that lower local taxes will be popular, then set your stall and then people have the choice. If they want lower taxes, they can vote for them.

[anyone but brown]

OT but there seems to be a scandal growing over whether Jacqui Smith is involved in a cover up over the illegal immigrant/security guard scandal. She has been forced to make a statement in the House at 3.30pm.

Apparently the Tories may demand her resignation and are demanding to know what Brown knew about it and when.

http://news.sky.com/skynews/article/0,,91211-1292635,00.html

[David Belchamber]

I am all in favour of subsidiarity - the concept, that is, not the word.
Let DC flesh out his ideas for putting the idea of local democracy into practice. Mind you, I would be more in favour if councillors were elected for their services to the community, rather than to their political party.

[William Norton]

Oh for heaven's sake, how many times do I have to say it: its referendums.

[David Cooper]

As ever with any proposal to try to bring high spending local authorities to heel, it would be worth giving some thought to the likelihood of "bleeding stump" tactics on their part in retaliation - namely, rather than trimming off the fat, deliberately choosing to hack off a limb and leave the bleeding stump. No matter how easy it would be to sack a few (OK, a great many) outreach liaison coordinators and save their salaries and cosy pensions, there is always going to be a certain type of council that would cut a vital service and try to blame it on an incoming Conservative government for introducing a scheme such as this. Perhaps it would come down to our local councillors in the affected areas getting their retaliation in first by identifying suitable areas for savings, in which case should Harry Phibbs' 100 point plan be more widely publicised?

[Matt Wright]

David @ 13.27, agree in part but in fact its a major misconception that Independent councillors are somehow better than those that stand for a party (I say this knowing many decent Indies and respecting some of their intentions). Firstly a significant number of Indies have political allegiances but are hiding them from the voters; secondly once you get more than 2 or 3 Indies they tend to form a group and operate a whip; fourthly the Indie group therefore tries to behave like a party but somehow fails to "herd the cats" so its the worst of both worlds; fourthly and fundamentally humans naturally want to come together to organise themselves and this makes sense to get things done (if there were no parties people would rapidly make them and rightly so). I'm afraid the public will learn all this but I concede in some areas the idea of "Independents" has become fashionable. There are some good people who are Independent councillors of course but the concept as put across to the public is a bit of a con really,

Matt

[Vernon]

What an utterly ridiculous idea. Who on earth is going to vote in favour of higher taxes?

An expensive waste of time. If you don't like the way your local council runs things, kick them out at the next election.

[True Blue]

Oh for heaven's sake, how many times do I have to say it: its referendums.

A few words do take the Latin plural, and the OED gives both as an option.

[David Belchamber]

Matt, I accept that you are quite correct in what you say and that my suggestion is totally impossible .... but moulds have been broken before.
I think also that we mean different things by "independent"; I think you mean "Independent" almost in the sense that there is an "Independent Party".
I mean that there should be no party affiliations at all; I just cannot see why being a "conservative" or "labour" councillor is more important than just being a councillor.
I think that a good council should consist of public spirited people wanting to manage their community to the best of their ability but whose politics would be purely a matter for them and the ballot box.

[Yet Another Anon]

In Canada (I think), they do this, and for local authorities there that are poorer than the average, the federal government in Ontario gives a top up so the poorer areas do not lose out.
Libraries could charge for access to services, park charges and museum charges to fund costs could be brought back. People could be billed directly for waste disposal costs.

Introduce a tax to people owning property based on a certain amount for every given bit of land area and scrap Council Tax. If neccessary revenue from some taxes collected by the Treasury could be collected directly by local authorities and spent locally - excise duties for example. Devolved government could be responisble for collecting and spending VAT. Along with spending cuts this could remove the neccessity for any kind of funding being provided from Central Government and the Barnet Formula could be scrapped entirely and replaced by self funding. London no doubt would complain highly as most Londoners seem to be under the impression they pay for everyone else when in fact London remains massively subsidised by the UK overall especially English Regions not just through direct funding, but through public money for Civil Service offices most of which are still in London.

The capital of the UK should be moved to somewhere more central such as Derby, Sheffield, Huddersfield, Buxton, Macclesfield or Manchester.

[James]

Local referendums? - another day, another UKIP policy.............

[Oberon Houston]

Not sure about this. The reason is that the devil is in the detail. Lets take a hypothetical referendum, firstly as a rose tinted example... Council Tax bills go out, with an attatchment with a list of extras, say, more bobby's for the town centre, a day-care centre for the local hospital and a boost in spending for local schools to improve sports facilities. A couple are voted through and everyone is happy.

Now, here is the nightmare version. Council Tax bills go out from Derek Hatton House, the headquarters of the Trotskyist led council for the recently renamed district of Pollytownee. The referendum calls for a 500% rise in the top two bands of council tax payers to pay for a Marxist Museum, the building of social housing next to Posh Lane and 1,000 new posts in the anti-social exclusion department. Every non-CT payer (students, welfare exemption's etc.) also get to vote, councillors pound the streets getting votes (not Posh Lane) and its happily passed by a huge majority. Cameron is quoted as saying this is local democracy and he cannot interfere, an enraged Tory back-bencher introduces a PMB to legislate against this and the Government, and councils are plunged into a crisis.

Okay, ott, but we need to be careful with this.