Council Tax Freeze in York?

It seems that for the first time since the LibDems were in control of the York Council in 2011, a tax freeze may be applied for the forthcoming year.

Council Tax Dec 2014

The new Leader of the Labour Group on the Council is set to do a 180 degree police about turn. He says that he will freeze Council Tax levels at the present rate irrespective of whether the government provides a subsidy.

The previous regime had planned another 1.8% Council Tax increase bringing in around  £1.3 million to the Council’s coffers.  A higher increase than this might have required a referendum to find out residents views.

Where the £1.3 million will come from is anyone’s guess although for the last 4 years the York Council has been offered a government subsidy to freeze tax levels.

The offer for the current year was worth £778,000 and was subsequently rejected by Cllr Alexander. So there is still money to find if the pledge is to be honoured.

Last February the Council agreed a 2 year financial strategy.

Since then pressures on Council spending have continued to increase. As well as inflation, currently running at 1.3%, the number of elderly requiring care continues to rise and the Councils botched performance on waste management means that landfill tax bills are also increasing.

 Add in a potential liability of over £1 million for Lendal Bridge (and maybe Coppergate) refunds and the budget looks tight to say the least.

Several of the economies forecast last February have failed to mature most noticeably in the field of social care. There an auditors report found that £3.9 million in savings had not been delivered.  

There will be some good news to ease budget decisions for the Council. Fuel prices are falling, it will receive another “new homes bonus” payment from the government and business rates income will increase as the economy continues to improve.

Pretty much every taxpayer will expect that a freeze on new expenditure would be introduced at the same time as any freeze on Council income levels. The Council will need to redirect its resources to improving basic services. It will need to shelve some of its major capital projects, reduce the amount that it is borrowing and thereby cut interest and repayment costs.

“Media centres”, “access bridges” to the York central site and the like, should in future be financed by the private sector..

Over the last 4 years Council Tax increases in York have been:

  • 2011/12 Freeze (last LibDem Council budget. Government subsidy accepted)
  • 2012/13 +2.9 (First Labour budget – Council Tax freeze subsidy rejected by James Alexander)
  • 2013/14 +1.9% (CT freeze subsidy rejected)
  • 2014/15 +1.9% (Ct freeze subsidy rejected)

In all, the average York resident is paying £67 a year more in Council Tax than would have been the case if government subsidies had been accepted during the last 3 years.

The vast majority of Councils did accept the subsidy offers.

Council Tax in York – value of exemptions published

Student accommodation costs taxpayers £18 million over 5 years.

The York Council has published a table showing the amount of Council Tax not collected over the last 5 years because of approved “exemptions”.

The amount not collected totals £34 million.

By far the largest proportion of this is accounted for by student occupied accommodation. This accounts for around £18 million of the total. Central government claims that this is recognised in the grant distribution formulae which is aimed at equalising resources between different Councils (and is effectively funded from income tax). However the precise make up of individual central government council support grants is largely opaque.

 The figure is likely to re-energise the claims of those who feel that student accommodation should attract either Council Tax or Business Rates payments.

Other reasons why properties did not attract Council Tax liability included:

  • Empty and unfurnished property (£4.5 million)
  • Awaiting probate (£1.9 million)
  • Student halls of residence (£1.7 million)
  • Occupation by members of the armed forces (£2.9 million)
  • Property occupied by people with a mental handicap (£2.3 million)
Council Tax exemptions click to access

Council Tax exemptions click to access

Footnote
There are three main reform options for Student flat exemptions

1. Charge each student Council Tax with benefits (rebate) available to those on low incomes. This is essentially the position at non-student occupied private sector lettings. OR

2. Levy Business Rates on exempt student occupied properties. Some private landlords might qualify for small business rate relief. OR

3. Make the additional grant, that central government says it pays Councils with a high student population, entirely transparent. Residents should be able to understand and audit the assumptions behind the figures. OR

4. Leave things as they are which means that some residents – who may have no more income than many students – may pay more for local public services subsidising, not students, but private landlords.

There is a good argument for 3 above given that most landlords do pay tax on their incomes and it is a system that should be easy to implement.

York Council set to underspend budget allocated to help poor

Local Assistance Scheme only half forecast

It looks like the York Council will underspend its budget for welfare payments during the current financial year.

click to enlarge

click to enlarge

The budget was delegated to the Council by the government replacing – in part – the Social Welfare fund.

It is intended to make emergency payments to less well off people who encounter unexpected expenses.

The York scheme is called the York Financial Assistance Scheme (YFAS).  Its explanatory booklet says that the YFAS can be used to help with, for example:

• Expenses and household items to help you move out of residential care or stay in your home

• Rent or council tax payments

• Financial assistance in an emergency.

By the end of January nearly half of the Council’s £315,000 YFAS budget had not been committed.

A total of 1062 payments had been authorised with the authority saying that 176 of them were made to people aged under 25.

Given that the budget is not being fully spent this year, it is surprising that the Council announced last week that it will  to add another £100,000 to the payments that it intends to make next year

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Meanwhile many fears about Council Tax income are proving to be unfounded.

The York Council had collected 85% of monies due by the end of December. The same percentage as in 2012.

However the number in arrears with their Council Tax payments had increased from 5556 in 2012 to 7040 in 2013.

Of these 2601 were receiving Council Tax support (formerly known as “benefit”)

Perhaps surprisingly the numbers who had been referred to bailiffs had fallen from 3996 to 2902

The Council is budgeting next year to collect an additional £1/4 million through “further improvement of collection performance”.

Council leadership policy mistake costing average York resident £50 a year

The government has announced that how individual Councillors vote on crucial budget decisions – like Council Tax levels – will, in future, be published.

In York, such decisions are often the subject of a “recorded vote” anyway although it can be weeks before vigilant taxpayers can find the records in meeting minutes.

Meanwhile the government has again offered to underwrite the income required to freeze Council Tax levels. £779,000 has been offered to the City. The funding would continue in future years.

The Council has made poor decisions over the last 3 years when turning down this funding.Council tax

The inexperienced Labour leadership – wrongly – assumed that the subsidy would be available for 1 year only. In reality the government has built the payment into the basic grant that the City receives.

This means that York Council taxpayers are – on average – now paying over £50 a year more for local services than they would have been if the Council had accepted the central government offer.

Next year a band D council taxpayer will have to find  £1,165.54 to pay for York Council services, to which will be added the costs of Fire (4% increase planned) and Police (2% increased proposed)

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The York Council is planning to give £1 million to the Leeds Council “infrastructure fund”.

In addition, around £300,000 in additional (new) Business Rates are being “pooled” with West Yorkshire Councils.

These are optional payments with no guarantee that any of the money will be invested in York.

 

 

Labour add £1 million to York’s annual debt repayment levels in just 24 months

The Council has admitted that increased borrowing means that Council taxpayers are now paying £1m a year more in debt charges than in 2011.

Kings Square work

Kings Square work

Most has been used to bolster what the Council describes as its Economic Development Fund.

£18 million has been committed to this fund already which is being used to pay for projects such as:

• Refurbishment of Kings Square

• Acquisition of an “Arts Barge”

• Tour de France start

• Newgate market refurbishment

• New City centre bus stops

Of the annual additional payments around £0.5 million goes on interest charges while £0.5 makes staged repayments of the principal.

It will take over 20 years to fully repay the borrowing