“The lowest Council Tax increases for years”?

The BBC this morning heralded the “success” of keeping average Council Tax rises down to 3%, and gave a Labour Councillor a free ride to praise the government and local government, with no critic of the rises and no Conservative allowed anywhere near the item.

Shouldn’t someone have asked if good Councils can cut the Council Tax, as they have, why aren’t others doing the same? Shouldn’t someone have pointed out that with RPI inflation down at zero, this is a large 3% real increase in spending, at a time when the national economy is in real decline.

If local government takes 3% more real income, at a time when real national income is falling by say 2% (or more), then individuals and families have considerably less to spend on the things they think are important, and on the necessities of family life. Why is this good news? Why doesn’t the public sector have to rein in, to leave a bit more for everyone to spend, rather than a bit less? Why do we never have news items on the big cuts having to be made in private budgets to accommodate public sector excess, as they recruit more PR staff and send out more glossy brochures?

And can these “Keynsian” gurus of the BBC explain how cutting private incomes by higher taxes in “reflationary”?

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  1. freddy
    Posted February 27, 2009 at 9:40 am | Permalink

    It keeps coming back to: what are you going to do about the BBC ?

    • Bazman
      Posted February 28, 2009 at 4:03 pm | Permalink

      Merge ITV 1 with channel 4 and 5? Or turn the BBC into Sky with the same quality of programming?

  2. Ian Jones
    Posted February 27, 2009 at 9:46 am | Permalink

    3% tax rise but the spending on the other side is increasing at a much higher rate using debt to fund it.

    Same with the bank refinancing. All debt used to try to get the economy moving via Keynesian policies.

    We all know where it ends, its like we have time warped back to 1977!!!!

    Very depressing.

  3. alan jutson
    Posted February 27, 2009 at 9:57 am | Permalink

    Its probably the thought of the great clunking fist.

    BBC are probably afraid that the Government will cap their own requests for an increased Licence Fee at a lower level if they give them too hard a time.

    I am getting rather fed up with the light touch interviews of what was once a great World Service.

  4. Robert
    Posted February 27, 2009 at 10:30 am | Permalink

    The “Keynsian” gurus cannot explain how cutting private incomes by higher taxes in “reflationary” because it is the economics of the madhouse. The state can’t create wealth, it can only dispense wealth earned in the private sector. The more the state spends, the less there is available for wealth creation.

  5. Neil Craig
    Posted February 27, 2009 at 10:48 am | Permalink

    BBC all over. Never knowingly failing to suggest taxes could actually go down as well as up. Government spending primarily exists to pay government employees, its official purpose is always secondary & the BBC are public employees.

  6. Cllr Ross Grant
    Posted February 27, 2009 at 10:52 am | Permalink

    If only Labour could deliver 3% in Leicester.

    We were told to be grateful they have reduced the council tax rate from their original 4.94% to 4.48%.

    The Leader, Ross Willmott, in summing up the budget told us he considered anything below 5% to be low. There is an easy manifesto pledge to keep.

    And the media either decided to cover the future prospect of job cuts (BBC Radio Leicester) or the smoke screen item of awarding freedoms of the city before the budget debate (Leicester Mercury).

    No coverage of a disastrous tax rise.

  7. Demetrius
    Posted February 27, 2009 at 11:04 am | Permalink

    The “reality” of the extra council spending is not on real service provision, it is simply more more going out on past commitments that are impossible to reign in. The actual service to people is diminished whilst the money figures increase. In any case the BBC no more understands “Keynsianism” than it does much else. What is happening is Enronomics, if you want to be academic, and Flying Pig Economics if you want to be critical.

  8. Mark Wadsworth
    Posted February 27, 2009 at 11:13 am | Permalink

    It surprises me that people are up in arms about a 3% council tax hike, that will cost the average household £40 a year or so, but the threat to increase National Insurance by 1% next year – which will cost the average household £200 a year as well as destroying jobs, reducing business profits and slowing the economic recovery – is met with a deafening silence.

  9. Quentin
    Posted February 27, 2009 at 11:22 am | Permalink

    Those with only 3% rise in Council Tax got off lightly.
    In the Westcountry our rise will be near 5% due to equalisation for the new Unitary Authority. This new Authority was sold to us on the promise of huge million pound savings for the taxpayer.
    Strangley we will not benefit from these ‘massive’ savings by way of tax cuts.

  10. backofanenvelope
    Posted February 27, 2009 at 11:26 am | Permalink

    You just know what is going to happen. The job cuts will fall on the blue collar workers – dustmen etc. Not on the bureaucrats. The only way out of this is to stop them doing things. Freeze recruitment, limit increases in Council Tax to the rate of inflation, make 25% of the councillors stand for re-election every year to make them more responsive.

  11. TomTom
    Posted February 27, 2009 at 11:47 am | Permalink

    This figure excludes precepts for Police, Fire and Parish Councils….presumably they will not be payable by residents this year ? Usually they outstrip Council Tax increases by a wide margin

  12. Stuart Fairney
    Posted February 27, 2009 at 11:54 am | Permalink

    The ‘elephant-in-the-room’ is of course, that this is a broken system, but because of the Poll Tax and its destruction of Thatcher, no-one has the courage to go anywhere near it and thus we are stuck with the same nonsense every year.

    It really is time to end central collection of business rates and make councils fully responsible for thier own budgets. Only in this way can they be truly accountable.

  13. Publius
    Posted February 27, 2009 at 12:02 pm | Permalink

    I read, too, that council’s are supposedly doing everything they can to control costs. Well my local council certainly isn’t. This month, for the whole month, it is running a “LGBT Month”… just as, every year, they run a “Black History Month”. Both complete with various taxpayer-funded events.

    I resent it that my ever-increasing Council Tax is spent on this kind of fluff when I am forced to cut my own expenditure to the bone.

    As for the 3%, I notice a trend in spin-circles and the attendant slavish media to use which ever measure of inflation suits the spin. So, for example, the (currently higher) CPI is used when the spinners want to justify a price increase (e.g., the latest Council Tax rises); yet the lower RPI is used when pay rises are being discussed.

    I say it’s spin, but I do wonder too whether it’s a reflection of the increasing and shocking thickness of so much commentary in the media.

  14. Lola
    Posted February 27, 2009 at 12:47 pm | Permalink

    I just cannot reconcile the conundrum of taxes and private business. Capitalism, free trade, free exchange and competiton delivers more for less every day – witness the Trabant/Ford Mondeo – whereas government and leftyism does exactly the opposite and in fact just fails to deliver. I just do not understand why as the world has got richer our taxes have not gone down.

    • Bazman
      Posted February 28, 2009 at 4:12 pm | Permalink

      Government leftyism and banking? Is that what went wrong with the banking system. Communism for the rich at its finest. A ruined and bankrupt system and ideology with the leaders walking away rich and becoming the new power.
      Both sides of the same coin.

  15. no one
    Posted February 27, 2009 at 1:09 pm | Permalink

    since we are in negative inflation and will be until the devalued pound ripples through to the inevitable increased prices for imported goods even keeping council tax the same is a bad deal

    me i cannot see the value in all the money wasted on humps and road thinning wrecking our cars and causing pollution as we have to slow down to a crawl through them when the problem could be so much more easily solved by good old fashioned traffic police on the roads

    to say nothing of the local authority education departments which take so much of the public money, id just send the cheques direct from the treasury to the headmasters and let the education departments all out into the real world

    and of course licencing which is corrupt as late licences are banned near senior council officials and freely available elsewhere etc

    what else does the council do? money to police should be given directly to force, same with fire services

    we need a radical rethink

    they cannot even empty the bins properly, why do we continue to let them get away with it?

    must say conservative councils are on the whole just as bad as labour though

  16. Satnam Singh
    Posted February 27, 2009 at 1:33 pm | Permalink

    what will you be doing about the bbc?

    Reply: I am pressing for substantial change – they need to be “modernised” to get into the competitive digital age.

  17. Robin
    Posted February 27, 2009 at 3:26 pm | Permalink

    (1) Government spending has needed reforming for 20 years (2) Government reform requires public backing. (3) The BBC News shapes the public perception. (4) The BBC News gives the perception that tax rises are OK and spending cuts are not (5) The BBCs News budget comes from Government spending (6) the BBC News does not support spending reform. (7) Needed spending reform will never happen whilst the BBC maintains this stance. (8) Reform of BBC News is an necessary prerequisit before reform of public spending.

  18. Matthew Reynolds
    Posted February 27, 2009 at 6:46 pm | Permalink

    This proves the point that the BBC are more than a little biased to say the least. The £100 billion p/a of state sector waste as pointed out by the Tax Payers Alliance could be cut out if Ruth Lea was allowed to devise the needed reforms ! That could finance getting the budget deficit en-rout to zero while undoing the high tax madness that is Browns doing.

    Sounds like a prescription for an economic recovery to me !

  19. mike stallard
    Posted February 27, 2009 at 9:02 pm | Permalink

    Thank you for detailing the BBC bias – again!
    On Conservative Home, there is an interesting piece about the sheer unfairness of the government allocation to Local Government. It transpires that Labour areas (or prospective Labour areas) get a great deal more money than Conservative ones.
    Yvette Cooper in an interview yesterday trumpeted the success of the 2% VAT reduction. Now we learn that we are lucky to lose 3%!

  20. Stewart Knight
    Posted February 27, 2009 at 11:37 pm | Permalink

    3% on a compound 100% increase in real terms. The percentage figure is irrelevant until you factor in what the actual increase is in monetary terms. Great if you are paying £500 a year, but we aren’t paying that figure. Then of course there is the real cuts in services we have been seeing for years.

    Instead of moaning about the BBC John, do something about them, as we would like you to do. Campaign for it to be scrapped or made subscription.

  21. Paul
    Posted February 28, 2009 at 12:28 am | Permalink

    Surely, in the shadow of a forecast of deflation, ANY increase of Council Tax is unacceptable. Even a standstill position is a real terms increase?

  22. Graham Hamblin
    Posted February 28, 2009 at 6:45 am | Permalink

    They could start by stopping their self congratulating magazines? 350,000 delivered by the Royal Mail in Staffordshire!

  23. backofanenvelope
    Posted February 28, 2009 at 9:39 am | Permalink

    “They could start by stopping their self congratulating magazines? 350,000 delivered by the Royal Mail in Staffordshire!”

    The same thing has just happened in Cornwall. They just do not take any notice of what anyone says about it.

    I return to my basic suggestion. Make 25% of the councillors stand for re-election each year. In May, just after the increased council tax bill hits the electorate.

  24. Quentin
    Posted February 28, 2009 at 11:34 am | Permalink

    On top of Council Tax rises we have increases in water charges.
    Last year South West Water blamed the increase on the fact that as we are the only county to be completely surrounded by sea we have to pay more.
    This year South West Water blamed the increase on us being the least populated county.
    All I know for sure is that Cornwall has the highest water charges in the country and yet we are the poorest.

  25. Matt
    Posted February 28, 2009 at 1:16 pm | Permalink

    This isn’t a party poliitical issue – Conservative and Labour Councils are equally bad at controlling costs (see even your local Council John). The issue is whether services demanded of local government can actually be delivered more efficiently OR if local Councillors have the wherewithall to cut services. If local Councillors (the majority of whom are Conservative) cannot do that what will the next government do to address it?

  26. Loki
    Posted March 1, 2009 at 9:11 am | Permalink

    Mine will rise 8.6%. But then I live in Northern Ireland – so no-one will care!

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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